There are more than a few firms in China that have tried and failed to build a successful sales structure, but AMWAY is not one of them.

Even with their model being lumped in with pyramid scams for a long time, and thus being restricted in China up until a few years ago, AMWAY has successfully built a grassroots network of agents.

This is really brought out in the Journeyman clip below.

It should be said, that their primary competitors, Mary Kay and NuSkin, have also developed large platforms in China as well… and it should also be pointed out that all three have won AMCHAM CSR Awards for their innovative programs.

Focusing on the difficulties of transparency within the supply chain, Melissa Brown of Association for Responsible and Sustainable Investment in Asia (ASRiA) sat down for an interview covering a lot of the angles surrounding the integrity of supply chains in China.

I highly suggest taking your lunch break to watch the 15 minute clip, and then think about some areas you feel may be at risk within your supply chain. I have listed the 7 questions she was asked along with a few bullets on what she said… and added a few thoughts of my own in italics

Questions asked during this clip are:

1) How easy is it to get details about Asian companies?
- Need to have a sense about what is know and how to compare
- Need to use different tools - policies are not set the same way, available resources can be limited

Getting information about Chinese firms is not terribly difficulty, it is about time and the amount of money one is willing to spend. One can approach firms from different angles, as a buyer, as a supplier, through a friend, through Alibaba.. you can even stake a factory out for a week. But it all comes down to how much time you want to spend, and the budget you are willing to allocate

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According to a premarket release on The Street, Apple is reportedly in talks with China Mobile to bring the iPhone to China (a lot of people already have one).

First, as an investor in Apple all I can say is BUY BUY BUY.  give one to your friends, collegues, and don’t forget your boss!

Next, I am actually quite surprised China was behind the E.U. in the cycle.  Now, for my E.U. readers, I apologize but for me China just makes more sense.  First, they are being produced here (see  iPhone: Made In Shenzhen, Assembled by Foxconn), and their partner Foxconn (see Foxconn: Behind the Scenes) is fully capable of producing for the China market.  Second, China is a MUCH larger market than any of the E.U. markets on their own.

Sure, I have no doubt that negotiating this deal has been interesting to say the least, and I am being a bit selffish by saying they should have released here first… but all that being said, Apple has a “bright future” in China once China Mobile gets the servers in place.

oh.. one tip for the Folks at Apple.  my my friend’s iPhone can read Chinese, but I cannot write. I understand this is a “simple” thing to correct, but if you want to hit the mass market, I highly suggest you fix that.

oh #2… the abilty to write a Chinese character on the screen and have it be recognized would also improve the overall functionality for the Chinese users as well (and for us foreigners using electronic dictionaries).

For those that don’t believe… you have no idea how many iPhones are already here!

2 years back a foreigner names Randy Gutherie was made headlines when he was arrested for his part in the company 2 Dollar DVDs. It was an operation run from his apartment in Shanghai… and he was making bank!

We’ll, just 2 years later, it appears that Paramount and Warner Brothers are now going to be offering legal copies of DVDs in China for just 3 USD. 3 USD ….

according to the article, the studios will be working together because their common goal is to defeat DVD pirates

Both Warner Bros. and Paramount say that this will be the earliest release date and lowest price that their movies have ever been sold for, worldwide. And their reason for teaming up with one another is strategic: they are competing against piracy in China, not each other. The more legit movies that are available in one spot, the more attractive the outlets will become to prospective buyers. “We’re committed to developing a legitimate market in China, and having two more Hollywood studios gives us more critical mass,” Warner Bros. managing director of China distribution, Tony Vaughan, said in a news conference, according to the Associated Press.

one question running through my head is how wide the selection will be.

Because if it is across the board, I have a new business in mind to satisfy the market in the US full of 8 USD DVD… half the price of a DVD in the US market right now.

Sure, firms need to realize that to compete in a global market they need to have a global pricing structure, but having 15~20 USD per disc in one country and 3 USD in another is not a strategy. It is an arbitrage opportunity that someone with too much time on their hands is going to exploit.

“he believes holds the key to his fortune in China…” That is the end of the sentence started in Part 3 that is finished in Part 4.

so.. the entire statement “Peter has found a man he believes holds the key to his fortune in China..”… and boy oh boy does the next scene say it all (Run Peter RUN!!) .. this man (Cecil Pih) is going to steal your money.. and your product

According to Cecil.. “Doing business in China is like the wild wild west… except they know how to shot better than the cowboys” (By the way, Cecil moved into the lead on best quotes with that)..

Cut to Peter and Cecil describing their partnership and their strategy… starting with Shanghai on the whiteboard, and then moving from there through his “connections, clout, cash, and cultural understanding”

To close the deals .. you need wining, dining, and wenching (I am guessing he means going to KTV and saunas?) - Peter is up for the first two, but uses his age to get out of the third

Bank to Vance who has decided the adventure is something his 9 year old son should be witness to the fact that his partner is ripping Vance off (money, product, and even his land). Following his manager being roughed up, Vance decides to make a surprise visit… and it is clear from the minute he pulls into the driveway just where his money went (new Audi A6 … new office block fully kitted with panoramic windows and leather couches… and a new house with a swimming pool)

and so it is off to dinner where at the end of end of part 4, Vance’s bug fails..

Best Quote:
Cecil - “everything is hot. money is hot. food is hot. the girls are hot.. you really could use your shirt in the wild wild west”

Color Commentary:
Peter - Peter just jumped into a pool that is way beyond his depth. He now has a partner that has “connections to the right people”, says Shanghai is the hardest nut to crack in China, and is unable to pronounce many of the cities he will visit massage parlors in… yikes.. nice choice Peter, but I really think you would have been better off with Ms. Dai’s sister’s father in law.

Vance - I have a feeling Vance is going to force feed his partner over dinner. He has been outright ripped off, and product is not moving. While I am sure Vance knows better than to hit a man while his is down, he might just kick him cause it is easier. Note to Vance - next time you want to build a factory in China (close to wood forests), remember that 97% of all pine enters via the Russian border… not the DPRK. Go to Haierbin, Houhot, or Suifenhe

Tony - No update in part 4… I wonder how the new site manager is working out.

This series has yet to fail me. I am sure that in the end all three are going to come out of this richer than all get out simply because the stage is being set for Vance going to jail, Peter being kidnapped, and Tony crying in the corner of a half built factory. the warning bells could not get any louder, there are bogies in the perimeter, we are going to DEFCON 4.

See you in a few days for Part 5… Hopefully Tony will enter the picture cause I really want to see the factory.

Part 3 starts off with Peter pitching, and it comes out that he has failed to make a single sale after one month - Time to fish or cut bait for Peter. Cut to Tony who has set up a mansion of a store at the SNIEC Cushion Show in Shanghai. .. who is trying to figure out who wants to buy his cushions… or steal his patterns.

“If you want a quarter of a million cushions in 10 weeks, you will get your cushions in ten weeks”

Cut to Tony inspecting the site… which is uh.. way behind schedule. fortunately Tony’s business partner has a family member (her sister’s father in law) who can manage the job (That was convenient…). Tony is scared, and the entire staff goes to lunch at 11am.

Cut to Vance on the Huangpu river and a bit more background on his business. 100+ suppliers for 50,000 bathrooms (a large supply chain for a single person). So… of to the border of North Korea where Vance looks to set up his own operation, and he has a warehouse of equipment that he got on the cheap from bankruptcy auctions (this guy is a true vulture). This scene wraps with Vance driving on top of what should be the foundation of his new factory (he paid 2.7 million RMB for it) and I must say that he took it well. (so did his assistance who got ripped into)….

PArt 3 wraps up with Peter strutting through Shanghai’s Thames town, sitting down for a port, and putting on a strong face… man… I would be freaking at this point (not a single sale in site)

I can’t wait to part 4 … cause the last line was “Peter has found a man…”

Best Quote of the scene:
Vance - “I like to stay here one night (Shanghai). TO get me myself into the spirit and give me that kick up the ass. Look at it (Grand Hyatt) - If someone can build an 88 floor hotel, then why can’t I develop a new bath

Color commentary:
Vance is still going strong even with the fact that his foundation has yet to be poured (really… worse things could have happened).

Tony.. ah Tony. The sister’s father in law of your site manager? Are you kidding? Has it occurred to you to call someone at Jones Lange LaSalle or CM2Hill for help? BEsides having his product designs stolen by 21 year old mobile phone carriers… he has now put all his hopes of China based manufacturing into the hands of his site manager’s sister’s father in law.

Peter - Well, he has at least found himself in Shanghai, and has his feet on the ground. But I am worried given the last line was “he has met a man…”. Asking for a port, waiting for a man, and in his finest suit. I think my premonitions of a shady distributor are coming true.

Honestly, I could not get entertainment like this on satellite.  This series is priceless!  I t is like three blind mice for China.. and I just can’t wait to see how these guys stat putting it all together (at this point, I still think all have a legitimate shot… but no doubt there is more fun to come!)

Stay tuned for part 4… I think it is going to be better than the first 3.

Part 2 jumps straight into the action with Vance making an inspection of product. while Vance is a real A$#hole and I am not a fan of his attitude, I must say that it is clear that Vance’s experience in doing business in China has taught him that onsite inspections are the only way to go… and that when possible, one must buy a quarry to get things done right…

Following his purchase of a quarry, we ride along with a singing Vance through as he drives through toilet bowl city and tap fixture city to meet his man on the ground (Black Horse) who will apparently undercut anyone. This section is interesting is topped off when Vance feels a piece is too expensive and to bring the pricing down he strips the product down into pieces and then deconstructs the pricing piece by piece.. and saves 40%…

Before he leaves though, he gets Black Horse to copy a product sold in Europe, and explains how he (read others) get around IP - just gotta change it a little bit.

Cut to Peter in HK getting a hand mate suit and making his first pitch in his new suit.

Best quotes of the segment:
Vance (edited)- “The think I have cruised in off the banana boat that has just strolled out me 5 star hotel with a hangover. the last thing I want to be doing is strolling around the old dirty yard in my Armani suit and Gucci shoes”

Peter - “To be born British is to win the first prize in the lottery of life” - something I am sure all his customers would agree to..

Color Commentary:
A lack of moral fiber aside, Vance has all the makings for a successful buyer. While perhaps a bit rough around the edges, he takes no one at their word until he sees the product for himself, he waits the other side out, he looks at things closely, and in negotiations he bargains on individual product costs.

Peter on the other hand is in la la land and is probably going to have a tough time seeing his customer with his nose so high in the air. Risking everything at the age of 70 on a new product and new country with a trophy in hand just smells of disaster. At this point, I am betting he finds someone to partner with who is shady, and who he trusts wholly cause desperation will blind him from logic. It is still early in the game, but I am not holding high hopes for Peter

Part 3 on Friday