Last week while sitting around my mom’s table in Portland, I picked up an article in the local paper (The Oregonian) and had a bit of a laugh when reading the article
More firms hire snoops to get edge on rivals

Speaking about this growing industry in the U.S., the article looked at just what competitive intelligence professionals were doing to learn about new product launches, staff sizes, and other nuggets of data…. and what made this story interesting to me, after doing a lot of competitive intelligence in the U.S. and China, was (1) that the author made it seem very cloak and dagger and (2) the consultant interviewed showed just how fun the job could be

Competitive intelligence analysts like Neubauer collect inside information by simply talking to people who work for or are associated with companies that his clients want to learn more about. At the top of the list, firms want to know what products or services are in their rivals’ pipelines, so that they can plan counter moves.

The article makes out CI to be 100% about collecting insider info, and developing strategies to do so:

Competitive intelligence analysts like Neubauer collect inside information by simply talking to people who work for or are associated with companies that his clients want to learn more about. At the top of the list, firms want to know what products or services are in their rivals’ pipelines, so that they can plan countermoves.

What I have always found interesting about doing “competitive intelligence” is that I would say only 25% requires a different tool set than your average market researcher or consultant. Assuming that market researcher or consultant are (1) knowledgeable of the industry and (2) are in regular contact with others in the industry. In fact, if a researcher is both, then it is really a matter of reframing and redirecting their attention and data to form many of the opinions on an industry, or specific player.

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For those who read Last week, you may have noticed that I made a quick reference some Dr. Tea gave to the boys inside the beltway… well, here are a few more details on Dr. Tea as well as her testimony.

So first… Dr. Tea (Professor Mary Teagarden), is a close friend of mine and of many Thunderbirds is one of those old China hands who have spent the better part of the last 30 years working with China. She lived in Beijing when you still had to ride your bike across town to schedule international phone calls, she has advised dozens of companies entering China, she has worked with various government entities, and that is why she was asked to The Hill to give her thoughts on the recent product recalls.

Next.. the hearings Committee Questions Consumer Product Safety Commission, Mattel on Lead-Tainted Products and Toy Recalls

The session was split into two panels, and while toys were the primary focus, more important issues were discussed (support for agencies, legislation needed, etc). The participants included:

Panel 1 included:
Dana Best, M.D., M.P.H. - American Academy of Pediatrics (PDF testimony here)
Olivia D. Farrow, Esq., R.S. -Assistant Commissioner,Division of Environmental Health Baltimore City Health Department (PDF testimony here)
Michael Green - Executive Director, Center for Environmental Health (PDF testimony here)
Lori Wallach - Director, Global Trade Watch (PDF testimony here)
Mary Teagarden - Professor of Global Strategy, Thunderbird School of Global Management (PDF testimony here)

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Perhaps by continuing to post on product failures, I am flogging a dead horse, but once again I have found another report that should be highlighted

Spoiled, Keeping Tainted Food Off America’s Tables (PDF Here) is written by Jessica Milano for the Progressive Policy Institute. She actually works for Competition Policy Associates (COMPASS)

Written from the perspective of an American looking for ways to protect consumers from imported products, Milano focuses primarily on the government agency infrastructure in her report and offers up the following 5 “simple ideas to improve food safety”

1. Improve and simplify the regulatory process by creating a single food inspection agency.
2. Double resources for food safety by cutting waste.
3. Shift to a risk-based allocation of resources.
4. Create a stronger recall authority.
5. Use the Container Security Initiative (CSI) program to strengthen pointof-entry food inspections.

In coming to these conclusions, she lays out some very compeling evidence and arguments:

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Heidrick & Struggles and Fudan University have just put out what is one of the best pieces I have seen on corporate governance and boards of directors in China. Part of its Asia Pacific Thought Leadership Collection the Benchmarking Corporate Governance in China report (PDF Here) highlights findings of more than 100 companies in China (State-owned, private, and foreign invested)…

The motivation for the study:

Corporate governance is a hot topic in China. As the nation opens to foreign investment and privatizes industries that used to be solely under state control, investors around the world are placing large bets on the country’s future. As the influx of capital grows, so does the pressure on Chinese corporate boards to make sure those investments pay off.

And like other markets worldwide, China has had its fair share of corporate scandal in recent years. Despite the growing importance of corporate governance, so far there has been little investigation into how Chinese corporate boards are formed and operated. A review of existing studies on Chinese corporate governance revealed little about the actual makeup of company boards among state-owned, private and foreign-invested companies.

So we decided to find out for ourselves.

and what they have found is very interesting.

One of the first things that caught my eye (see from the above image) is the underlying criteria by which boards are evaluated have some big differences. for SOEs, the primary measure of performance is return on assets/ equity where as both private and FIE are judged on profitability and market penetration… . More interesting than that though is the fact that while 50% of private enterprises are evaluated on public comments, SPE and FIE are in the 20s.

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The last 3 months have been a nightmare for anyone with a Made in China sticker on their goods, and for China as a whole.

Through this process, one of the things I keep coming back to is “what level of product failure is acceptable”. For consumers, the first response is none. No product failures should be accepted. that 1 is too many…. but is that reasonable? Is it economical?

or have consumers gone a bit overboard?

In debating this, there are three examples that have particularly bothered me, or at least have led me to ask this question:

1) FTS/ Hongce Tires - One of the first cases to hit the press, this story received a lot of attentention early on.

Through press accounts, of the 450,000 or so tires imported, 2 tires failed. a failure rate of .0004%.

2) Mattel - Probably the most covered of all the recalls, Mattel has announced 3 recalls this year of more than 20 million toys across multiple categories. 20 million toys is a lot of toys, and according to a WSJ article today 2.2 million of the toys were recalled for led paint and 17.4 million pieces for magnets being too small
So, 19.6 million toys were recalled… of the more than 800 million Mattel produces on an annual basis. That is a 2.45% failure rate (manufacturing failure rate was .275% vs. product design failure rate 2.18%) assuming all the toys were made this year…..

3) Baby Cribs - The most recent recall, this is the one that really makes me scratch my head. Following the death of 3 babies/ toddlers, a recall of more than 1 million baby cribs has been initiated.

That is a failure rate of .0003%

But according to reports

in all three deaths, consumers had installed the drop-rail side of the crib upside down, the agency said. This creates a gap in the crib that children can slide into and suffocate.

so… 999,997 put the cribs together properly?

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It is funny how 6 weeks can make all the difference, and how villains today can be vindicated through time.

Well, China… take your victory lap!

Maybe I am going making too much of it, but the fact that the COO of Mattel recently apologized to senior leaders of China for the recent recalls (and their failure to properly assess the responsibility) must be a huge boost to Beijing who has contended all along that the majority of recalls were design related.

Now.. if only FTS would come out and take responsibility for their products….

Business or Social Responsibility has come out with an excellent 20 page brief entitled Beyond Monitoring (PDF download here).

A very timely piece, the article does an excellent job of showing the reader the various angles and approaches that a company must take in building a sustainable supply chain… something Mattel Toys did years ago, something RC2 wished they had done, and something you should be looking at as you assess your supply chain risks

“Beyond Monitoring” presents a four-part approach that is designed to address the root causes of social and environmental shortcomings in global
supply chains. Our objective in producing this paper is to encourage companies to remake strategies, redeploy resources and consider new partnerships in pursuit of a model that has the potential to achieve more lasting change. The approach we are advocating integrates labor and environmental considerations more fully into companies’ procurement efforts. It also seeks to re-emphasize the roles of two often overlooked constituencies, workers and governments, who should be more fully at the center of sustainable supply chain management.

Now, before readers dismiss me as a Treehugger (you wouldn’t be wrong), I believe that it is in the long term best interest of every firm manufacturing or sourcing in China to read this.

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