James Fallows did a post today comparing Barnes & Noble’s Nook to Amazon’s Kindle (with a nod to the iPad as well), both of which had their prices greatly reduced today. Within that post Fallows had a fascinating post from an unnamed “person with deep experience in the Chinese manufacturing industry.” The quote is essentially a less is more paradox on how the less you already have by way of a manufacturing operation the better off you will be when it comes to outsourcing your manufacturing to China:
The Nook was no ordinary development. Remember, B&N is not an electronics company. They’re not Amazon nor Sony. But what they were able to do was remarkable. Sources in China are reporting that they assembled a small focused team, and brought the product from a concept sketch into production in about a year. Compare that to Amazon and Sony that took three and four years, respectively.
This is probably the best example of what’s becoming the trend for successful consumer electronics product development. Those companies with nothing have everything and those with everything have nothing. This apparent paradox simply means companies with the urge and need to develop products are often better off without an entrenched engineering organization that slows things down and is resistant to doing things in new ways. Those that are free and unencumbered can assemble the best small teams and work with the best ODMs in China and do a better, quicker job.
My immediate instinct was to call BS and recount the dozens of times my law firm’s clients have essentially told us they have been shocked at how little help they received from their Chinese factories on how to manufacture their products. But then I realize I had not heard one of those complaints for a while and that our international manufacturing lawyers are right now are working with a number of companies that really are doing nothing more than putting their US brand names on near generic products, with a few small revisions, coming out of Chinese factories. And some of these products actually are quite sophisticated consumer and even industrial devices.
So this is all causing me to do a re-think and as part of that a re-ask. Have Chinese factories improved to such an extent that they are now manufacturing partners as opposed to just manufacturing flunkies?