

Pen Type-A: a cautionary tale of manufacturing in China - mwhooker
https://gist.github.com/3014636

======
slyall
I guess some people here live in github but I really don't recommend it for
publishing text documents this way.

Sure I can read it by scrolling back and forth or downloading it and opening
it in something that will format it nicely and perhaps I missed the "make
readable" button. But serious it is 2012, there are dozens of ways to publish
things on the web that format them automatically for the browser to people can
"just read" them.

</rant>

~~~
ars
A copy to make it easier to read:

Project Update #27: The Storm

For backers only, Posted by cw&t

Hi backers!

First, for those of you still waiting for your pen(s), we're still on
schedule. The schedule was posted a few updates ago (update #22). The 3
remaining batches are shipped from our manufacturer in China on

July 7th (480 pens)

July 23rd (480)

August 7th (494)

In the last couple months, we fought hard to speed up production. We advanced
more money and were promised ship dates by our manufacturer and none were met.
In their eyes, delays were caused by us because we were so picky about the
details, but the truth is we weren't asking for anything out of the ordinary.
All we asked for was for them to follow the specifications in our drawings
they agreed to on day one. They weren't able to meet the specifications, so
they blamed production delays on little changes made during production to help
make the pen more manufacturable.

To try to move things forward faster, we proposed to place a new order with
our manufacturer in exchange for ramping up production. Instead, they
countered our offer and demanded we sign an exclusive 4 year contract, place a
new order immediately and pay an additional engineering fee, or they would
stop production of the current order.

We weren't interested in a 4 year exclusive contract with a manufacturer that
hadn't proved itself, so we didn't sign. On top of that, they took our olive
branch (the proposal to place a new order), sharpened it into a shank and
started stabbing us with it (metaphorically, of course, with lawyers).

They stopped shipping us pens. We lost some sleep. Lawyers got involved. There
was yelling over email, in person, and on phone calls. After many weeks, we
arrived at a compromise. We lost a lot of time, some money, and our faith in
Chinese manufacturing, but we're still moving forward. They won't be ramping
up, but they are completing this order and making pens (that we are super
excited about!) without changing the shipping schedule.

We're not placing any future orders with them or any manufacturer in China
ever again. It's an unfortunate conclusion, we can't even begin to tell you
how pissed off we are with them. It's the first and hopefully last time we'll
yell in a business relationship. It's not how we like to do things.

This all happened at the beginning of May. We have been aching to share this,
but we had to wait until the storm settled. We were mislead, and in turn, we
mislead you. We thought we would finish fulfilling all 5.5k pens in a timely
manner. Many of you are understandably frustrated and upset that a project you
backed is taking a year to complete. We are too, and we sincerely apologize.
We've made poor business decisions and we only have ourselves to blame.

We learned our lesson. We're now setting up to manufacture our next order of
pens in Vermont, USA. We won't be able to sell the pen for $50, but we're
happy to be out of China. Vermont lacks the charm of smoggy skies and broken
english, but when Vermont says they can do it, they mean it.

lots of love,

cw&t

PS. your drawings from us are coming soon! (2 of them are at the bottom) we
have about 110 so far and many more to go.

PPS We get butterflies every time we see your drawings. Keep them coming!
<http://pentype-a.tumblr.com/submit>

Check out some of the latest drawings (and some great pen hacks!)
<http://pentype-a.tumblr.com/>

~~~
noibl
How's this for broken english: due diligence.

Now you can take your naive, tarbrush, self-adoring brand of racism, sandblast
it, polish it and and stick it up your ass.

 _(Thanks for reposting, ars!)_

~~~
masukomi
I suspect you haven't heard the earlier installments of this story in which
they were absolutely lied to about physical and volume capabilities. They
found someone in china they could trust who led them to this manufacturer who
appears capable of doing the job, but uninterested in matching their high
quality requirements which they were quite aware of up front.

~~~
noibl
You're wrong. I've been hearing about this unfolding trainwreck for at least
six months. All this talk about trust and lies is exactly what you always hear
from people who are out of their depth. Fine. No problem with that. It's the
'China's shit, America's ace' rubbish that's unnecessary and unfair.

~~~
malandrew
I'll provide a counterpoint that doesn't involve America at all. When I lived
in Beijing, I had a French friend of mine that lived in Shanghai and was
responsible for all the sourcing of clothing for a high end French fashion
label that had decided to move production to China. These are just two of many
stories he told me:

(1) He signed a contract with a manufacturer. During the signing of the
contract, the company intentially sealed the contract with a red stamp that
looked official, but was not that companies legal red stamp. They did this so
that if anything happened they would have an out if there were a dispute. A
dispute eventually arose and my friend found out the hard way to always have
those stamps double-checked to make sure they are legit and represent the
business with whom they were doing business. Had my friend been literate in
Chinese, he probably would have caught this, but the Chinese manufacturer
intentionally exploited his illiteracy in Chinese to produce a contract that
could not be enforced.

(2) On more than one occasion he would be called by a manufacturer to be
informed that the clothes had been produced and were ready to be shipped and
that all he had to do was deposit the rest of the money and they would ship
the clothes. After once discovering that the manufacturer had not even begun
production, but was lying to him to cover a cash flow problem he made it a
point of always flying out to the manufacture's plant the very next morning to
personally inspect the entire shipment before depositing money in the account.
After he started doing this, he repeatedly came across many manufacturers that
were caught completely unprepared by his unannounced trip and when he arrived
he discovered that no work had been done. This tactic to solve cash flow
issues is apparently a semi-common occurrence.

Ask any foreign national that has ever worked (not just lived as a student)
and you'll come across many many stories like the two above. I have my own
stories from the times I taught public speaking to Phds in China.

TBH, I personally don't attribute it to race or nationality. It's just that
many businesses in China have yet to move beyond a "caveat emptor" approach to
business to a trust based system. A "pareto optimality" mindset prevails
there. So many businesses transactions are negotiated on the Chinese side as
"A dollar they get in this is a dollar lost for me" while the foreigners
(depending on the country they are from, of course) are negotiating with the
intention of long term continued business and that the long-term relationship
will be far more profitable for both sides than trying to maximize short term
returns. If there is any miscommunication, it's not because of language, but
because the Chinese business is looking at it as a short term deal and the
foreign side is looking at it as a long term relationship.

Just to be fair, most markets at one point in their development have been
"caveat emptor markets". Europe and the US included. At some point a market
eventually gets past that mindset once trust becomes a competitive advantage.
In China, trust isn't yet seen as a competitive advantage because there are
still many naive foreigners coming to China to manufacture things without
knowing any better. Once the supply of naive business men going to China to
manufacture stuff dries up, I reckon you'll see more competition based on
trust.

------
patrickyeon
This should be a cautionary tale about contracting out manufacturing (which in
today's world, nearly means "trying to make anything physical"). Nothing is
particular to China, although time differences and language barriers surely
didn't help the matter. I say that having dealt with trying manufacturers
myself.

When it comes to contracting out work, the first time is always going to suck.
This whole industry has figured exactly who needs to provide what, and what
every word they use means, and you'll always miss something. Ideally, you have
somebody who's done it before coaching you through the process (well worth
hiring a consultant do that and save you some stress).

Less ideally, ask the people you are interfacing with a lot of questions.
Clarifications about what a word means. Or how they count days. Every step of
the way, ask them "what do you need from me? how can I speed this up and make
it easier for you? what's the next step and when does it happen? did we miss
anything?" Ask if they can send you example of the documents that they need,
so that you know the format and type of content they want.

Yes, it's a lot of leg work. It's worth it when the manufacturing goes right,
though. And it gets easier every time.

~~~
ricardobeat
> well worth hiring a consultant do that and save you some stress

Isn't finding a reliable consultant who has gone through the hoops as
difficult as sourcing manufacturing itself?

~~~
ktizo
Finding a reliable expert on manufacture, if you are getting something
manufactured, isn't a separate problem. It is one of the first tasks to
accomplish in sourcing manufacture. The detail involved in something like just
getting two simple injection moulded parts made that need to fit together
snugly is huge, if you don't want to just bin several batches.

------
hluska
I had a (shockingly) similar experience with Chinese manufacturers five years
ago. My experience cost me a company, my shirt, and a whole lot of lost sleep.
Consequently, I too decided that I will never, ever do business with another
factory in China. Not sure that is fair (as manufacturing problems happen
everywhere), but it is what it is...

Frankly, my story is useless - it is one entrepreneur's story of woe in a sea
full of them. However, when you take stories like mine, Pen Type-A's, and the
legions of others that have had problems in China, something more macro starts
to emerge.

I'm beginning to detect a strong country of origin bias against China - many
people are refusing to contract work out to that country. If this trend
strengthens, it will affect demand for Chinese manufacturing. As demand drops,
the Chinese economy will be starved of the western currency that has fueled
its unbelievable growth.

I'm not crying wolf, rather I'm just seeing some ugly clouds growing over the
horizon...granted, getting screwed by a Chinese factory is nothing new,
but....??

~~~
makmanalp
Eh, I don't see this happening because China still has the big manufacturers,
and they keep the big clients happy. Most of those manufacturers probably are
good at building to spec, but would not entertain a small project like pen
type a.

That's what China is all about: mass (with a capital M) manufacturing. In pen
type a's case, the up front costs and haggling are a major trouble but for an
order serveral orders of magnitude larger, the up front costs are a mere
rounding error.

~~~
hluska
Great points - thanks for your perspective! I think I got a little caught up
in the cult of me....:)

~~~
makmanalp
Not to detract from your point though, I _do_ agree (and I'm fairly certain
there are numbers _somewhere_ to back this up) that the super-custom small
batch manufacturing industry is alive and kicking in the US and other non-
fareast countries because of exactly what you describe.

------
unreal37
Sadly these guys wrote an identical blog post a year ago about how their
previous manufacturer was unprofessional. The new one was supposed to be top
notch, since they met him in person and toured the factory before signing.

[http://www.kickstarter.com/projects/cwandt/pen-type-a-a-
mini...](http://www.kickstarter.com/projects/cwandt/pen-type-a-a-minimal-
pen/posts/122492)

~~~
pash
The description and photos of the etching and milling "factories" are, for me,
the sort of thing that makes funding Kickstarter projects worthwhile:

 _... As we got into the car to head to the other factories, the factory owner
conveniently disappeared and we were whisked off with his assistant and a
machinist. It was unclear where we were going. After a long drive, the car
stopped and we were told to get out. There was no factory._

 _We were on a dark, narrow road where every storefront was some variation of
a live/work machine shop. Each one different. Each one specialized. A whole
town of them, crammed side by side on narrow streets lit only by the glow of
naked fluorescent bulbs. Think Bladerunner meets pre-industrial metal shops.
The energy was palpable. Clean? No. Could we find it on a map? No. Could we
have ever imagined that a factory work is outsourced to places like this?
Definitely not. And even though we had never seen anything like it before, we
could recognize it straight away. Every shop was run by highly skilled,
passionate, self-taught makers. A lot like the shops many of our friends back
home run. They are their own bosses. They live for and are proud of their
work. This was nothing like the factory where we spent the past few days. It
was invigorating._

 _The man that machines the screw parts is awesome and his setup is
incredible. He has six CNC swiss screw machines in a storefront garage, in the
back room is his office, a small kitchenette, a toilet (which you flush by
pouring a bucket of water into it) and a small room off the back where he and
his wife sleep. ..._

(I received my Pen Type-A a month or two ago, by the way. It's well made and
is a pleasure to use.)

~~~
zethraeus
Mine works well only if I use it regularly. After a few days of non-use it
dries up - even when kept closed. It might be because I haven't yet swapped
out the original ink barrel though.

Have you had similar issues?

~~~
niketdesai
Yep, even with it closed the tip dries and I have to wet it a bit / scratch a
bunch to get it flowing. Not sure there's a fix that is reliable.

------
jwilliams
The other risk I've seen in Chinese manufacturing is duplication of your
design. Some vendors will manufacture a larger run and then place the float on
the black market. This is particularly true for smaller orders.

I know of at least one niche electronics manufacturer - they have the parts
made in China, but they load the firmware back in Australia. They've gone to
great lengths to make the device useless without the firmware. It's a bit of a
pain shipping-wise, but gives them some security.

~~~
jwhite
How do they qualify the devices coming out of China without running firmware
on the manufacturing line?

~~~
jwilliams
I just asked - they supply a testing firmware that does the qualification. So
on ship (from China) the device will start, but only to POST level.

------
wpietri
For those wondering what they're talking about, it's this:

<http://shop.cwandt.com/>

And the Kickstarter is here:

[http://www.kickstarter.com/projects/cwandt/pen-type-a-a-
mini...](http://www.kickstarter.com/projects/cwandt/pen-type-a-a-minimal-pen)

------
angdis
Outsourcing works when you want to exploit economies of scale. This project
appears to be an attempt to create a high cost novelty product at a very small
scale. They probably would have been better off hiring the services of a local
machine shop, cranking out a few dozen gross of these things, and marketing
them carefully. Even better if they set-up shop and did themselves-- if we're
only talking about a few thousand units.

------
howdytooty
Waiting for a bad experience with an American company so that they can swear
off all United States based manufacturing and move everything to friendly
Mexico.

~~~
jrockway
In this case, it's reasonable. There are many reasons to avoid China, very few
of which are intrinsic to China. Manufacturing in the US means your
manufacturer is in the same time zone and speaks the same languages. You both
have the same understanding of contract law and a court system that you are
both familiar with. Traveling to the factory takes less time.

Honestly, I'm not sure why their made-in-china pens cost $50 each. It's a five
cent block of aluminium that's been hit with a laser. That probably costs $1
to make in China and $20 in the US (worst case). Selling it for $50 still
leaves plenty of money for the designers.

Anyway, their decision is reasonable. Hiring people in your own country is
easier than hiring people half the world away. If two Chinese guys wanted to
make a similar pen, I'm sure they'd be successful in China.

~~~
joe_bleau
Back in the day, several of us wondered why they seemed so bound and
determined to do it in China: <http://news.ycombinator.com/item?id=3037108>

~~~
verroq
I always thought cw was a native Chinese speaker.

------
yaix
What you describe is a quite normal business relationship with a Chinese
company.

There is always the "unreasonable counter offer" once they know there is
almost no way back for you. There is always yelling (but not insulting!),
that's a normal part of the negotiation process.

It sounds to me like your "manufacturer" is already the distrubutor of
whatever-pen-you-invented in Asia. Its not uncommon that they produce for
their client and then produce another batch for themselves and sell it in
China. Kinda like Zuckerberg did when he made Facebook while "working for"
some other dudes. Standard practise in China.

Anyway, producing something inovative in China usually means having somebody
there to check up in person and each step of the way. And spell out the
contract very precisely down to the last screw. Never expect "reasonableness",
it is always seen as an opportunity to make a few extra bucks. And a mainland
Chinese company boss will discuss for a whole day to gain 10 Kuai extra.

Ymmv, that's only my personal experience after some years in China.

~~~
ktizo
_producing something inovative in China usually means having somebody there to
check up in person and each step of the way_

That sounds a lot like getting something innovative made anywhere in the
world. If you are producing your first batch of any innovative product, make
sure you hire a very very chilled out and friendly expert who can speak the
same language as the manufacturer, and who can virtually camp next to the
factory for the first three batches. If you don't do this, then you are either
making something easy with large margins and don't care about wastage, or you
just don't care.

------
rossjudson
Hmm. Sounds like something straight out of [http://www.amazon.com/Poorly-Made-
China-Insiders-Production/...](http://www.amazon.com/Poorly-Made-China-
Insiders-Production/dp/0470405589).

------
jdietrich
No. No. No.

Pen Type-A is a cautionary tale of overestimating your abilities, and of why
Kickstarter is unlikely to have any sort of transformative impact.

Having read through the "updates" section of their Kickstarter page, it is
clear to me that nobody on the team knows anything about manufacturing, least
of all Chinese manufacturing. I am completely unsurprised by the fact that two
amateurs end up making lots of amateurish mistakes.

This situation is no different from what happens when a non-technical manager
tries to outsource a software development project. He doesn't know enough to
spot good working practices or recognise when he's being fobbed off. He
doesn't understand the myriad technical issues that could completely derail a
project. He's a child in the big bad world, unaware of how little he knows, or
how costly his naivety could be.

~~~
yaix
So what? They are starting and learning. Let them. Good thing, they actually
seem to learn from mistakes, that's good.

------
tcarey83
Why more websites that put everything on a single line that forces me to have
to scroll left forever? WTF?

~~~
eropple
Because gists are for publishing code. This is not the intended use case.

------
kamaal
Good,

But this works fine only as long as some guy makes the same pens and starts
selling for prices way lesser than you do.

This is the reason why China exists. Because there is 'Some guy' who always
sells things for prices lesser than somebody else. And not manufacturing in
China isn't an option for companies like Apple, Dell etc. For their volume,
the cost advantage is simply too huge.

------
gcb

       People dream up a product
       Other people give them money
       First people gives money to China and hope product materializes
    

Heck, even software, being done by yourself, is not that simple

Also, this is only a sob history. Nobody will learn anything from it. How did
they find factories in China? How did they find one in the us?

~~~
ricardobeat
If you read their posts you'll find all about that.

