This has been a difficult year for small business owners to manufacture their products in China.  At the end of 2006, my sales and marketing representative at Pet Product News, a large Pet Industry Magazine, gave me the heads up that there was talk of an article about overseas manufacturing.   Feeling anxious and out of sorts about my own manufacturing situation, I sent in a small write up, hoping to be interviewed or added to the larger article for a bit of free press for Oh Henry. 

The piece I sent in ended up as a letter to the editor in the January or February issue of 2007, I can’t remember and I can’t find my copy of the magazine.  However, I still have a copy of what I sent in about outsourcing, it reads: 

“Oh Henry has been in business for three years, offering travel gear for pets.  A few years before opening our doors to the retail sector, I sourced all the materials necessary for Oh Henry’s Car Coveralls (car seat covers for dogs) within the United States.  However, this would clearly not be cost effective if I would hope to compete with car seat covers already existing on the market.  So, I sourced the covers in Hong Kong.  Three years later, today, I am looking at increased prices and minimums.  China’s economy is booming and skilled factory labor is moving back to the small towns they once came from having been offered jobs at Starbucks and the like.  Unfortunately, with the loss of labor, small businesses are having a hard time competing, as the minimum order is out of reach.” 

With the start of the new year, the Year of the Pig, I had renewed hope that I would be able to pork out in excess with all the successes I planned for Oh Henry.  I spoke with my broker, a Chinese American man, who initially set me up with my contacts in Hong Kong and oversaw my shipping, quality control and offered his services if I had trouble communicating with the Chinese manufacturing team.  I told my broker all about the new products I planned to have made in 2007.  I was so excited and my broker was too.  But, I was not to bring home the bacon in 2007. 

With little help and hardly any contact with my broker throughout the year, I began to look elsewhere.  I have made contact with a new manufacturer in China.  The new manufacturing team is willing to supply smaller quantities and great quality.  It looks like Oh Henry is finally ready to move forward again.  

 I am not missing my broker.  The manufacturers and I have not had any trouble communicating so far.  I am even learning new English words like, “vexatious”.  I never meant to cause any distress.  Don’t worry, it’s all worked out.  Luckily, I have spent a good amount of time traveling in South East Asia, which helps with understanding some basic cultural differences.   

My broker also warehoused all the Oh Henry inventory.   I was paying too much for a large space to house inventory that was not growing and did not fill the space I was renting.  It took some time, but I finally found a new home, closer to myself, to warehouse my inventory.  This could not have been better timing. 

I emailed my broker to let him know that I had a new manufacturer and a new warehouse.  His response: 

“I am ready to send out an announcement that my company will no longer produce tangible products for our clients.  We will merge with another company and concentrate on servicing knowledge and education only.

It is good you move your inventory closer to you so you can control it.  Besides, we are not offering warehousing/fulfillment and closing down the warehouse shortly.

There are over 4000 factories who have closed their doors this year in the Southern region due to a new law in tax, rebate and currency appreciation.  It literally kills all the small operations throughout.  The bigger players now can demand larger volume on any projects.  Some factories say not bother if you do not have two containers a week.  That is the main reason we are shifting our business focus.  There is just no room for us to grow for our small business clients.  Everyone I approached request 100,000 units before they will even talk to us and there is no way we can cover and dig out smaller operators to accommodate our needs.”

Even my broker can be hard to understand at times.   However, small language mistakes aside, the message was clear.  My broker was dropping me and his other small business clients who has poured a LOT of money into seeing our small business dreams come true.  I am feeling very lucky and blessed to find a small factory in China to work with me.

I know the climate of China’s economy and the world’s economy is changing dramatically right now.  I am not familiar with China’s new taxes.  I do understand that their economy is becoming stronger and this is creating rapid changes. 

 I am happy to move forward into 2008 with Oh Henry hanging in there, as a small pet product player who will finally offer our Car Coveralls (car seat covers for dogs) in another color (gray).  Long live the small business!  Let all those vexatious struggles be put to rest.