There are many companies successfully doing good business in China. Most of them are large, have deep pockets and have core staff in China making sure it stays good. Names like Sony, Siemens, IBM (Lenovo)…
Smaller companies can run into trouble. This is a case study of a project we were able to rescue. I won’t give out technical or commercially sensitive details (we will never do that – in fact we offer an NDA, Non-Disclosure Agreement, to all our clients) but I will look at the overall project and the issues that arose.
For ease of reference, I will refer to the client as Mr Electronics. Mr Electronics had spent a year getting a product developed in China with the ultimate aim of manufacturing it there. Conventional wisdom was on Mr Electronics’ side. Most people believe that it is cheaper to make things in China than here. And the engineering effort was being done for free by the manufacturer. What is not to like about this arrangement? It has both the perceived benefits of making electronics products in China:
- low manufacturing cost
- low engineering cost
So where is the catch?
Well, you might have noticed that Mr Electronics had spent a year to date on the project. What I didn’t tell you is that it was simple product; conceptually simple and physically simple. It was battery operated and only did one thing. Every time the project was reviewed with the manufacturer and the question was asked if everything was now clear, the answer was “Yes“. Yet every prototype presented clearly showed the answer should have been “Clueless“. They were not speaking the same language! It wasn’t just English versus Chinese, but it was a completely different culture of how to communicate. Since “Yes” is the best answer, it is the only answer you get, regardless of the real situation. Mr Electronics is not alone in having run into this issue.
A year is a long time to not have your product available for sale!
In frustration, Mr Electronics approached us to review the project and advise on how to proceed. The production in this case was going to remain in China (you can’t win them all) since the manufacturer had developed the enclosure and that part looked to be acceptable. So we concentrated on the electronics and software. Within 17 days we had obtained the following outomes:
- analysed the specification and recommended changes that doubled the battery life while improving performance
- designed the electronics, PCB layout and software
- produced a fully working prototype unit for evaluation
- generated all the production documentation to make, program and test the PCB (circuit board)
Although I’m proud of the result we got here, my point is that they might have never gone to market if they had stayed on the original path.
So did Mr Electronics have a happy outcome? Not completely!
Mr Electronics isn’t very much out of pocket since the actual cost was low, even for 10,000 units. He is however out nearly 2 years of his life, hasn’t captured the market opportunity he originally aimed at and isn’t enjoying the profit stream he deserved since his product was a good idea and should have been a commercial winner.
Some key take home points for me were:
- get the right people involved and you can reduce your time and cost to market
- get the right people involved and you can get a better outcome than you can achieve on your own
- China might be cheap but that doesn’t guarantee you will get a commercially successful outcome
- “Yes” only means “Yes” when you are both speaking the same language
OK, this post looked at what can go wrong. And unfortunately Mr Electronics’ experience is not unique. But from here on I plan to stick to how to make things go right.
Next I will show you our Project Priorities Perspective and how it can help to bring focus and clarity to maximise the commercial outcome.
Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years. For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.