Star Prototype

The Funny Side

2012-02-08T00:04:00.001-08:00

6000 Mile Job Interview

2011-11-24T22:31:00.000-08:00

China

?” This was the first thing my friends and family said to me when I told them I was visiting Star Prototype for an extended interview. They couldn’t understand why I would want to work for a company in a developing country as they put it.

Well, that couldn’t have been further from the truth. Perhaps China is a developing country by Western standards but its developing fast!

I’m not a seasoned traveller, far from it in fact, the furthest I have been from my home town of Newcastle is to the Greek island of Zante. The prospect of flying thousands of miles, spending the better part of a day on an aircraft, was an exciting thought, yet having never travelled alone, a scary thought! The flight was uneventful and I landed safely in Hong Kong for my mad dash through the terminal to make my connecting ferry to Zhongshan. Having missed the ferry my excitement level was dialled up a notch as Gordon directed me on a high speed taxi ride through Hong Kong to the main ferry port to make the last connection.

The first thing I noticed in China was the climate, as it was November (or ‘Movember’ as top lips where beginning to bloom) it was starting to get cool, so I was told. Well, to me it was still as hot as the best a British summer has to offer, and mixed with my first ever case of jet lag, took some getting used to! The next big surprise for me was the food, REAL Chinese food, nothing close to your favourite local takeaway. Mammoth portions that just keep on coming, everything you can imagine, it was some of the nicest food I have ever eaten. Not being renowned for an adventurous palate there was a lot on offer that I turned down, “Chicken feet?” errm, no thanks! I’m sure that there have been many Chinese people who visit the UK and thought that some of our dishes are strange so I don’t feel bad about my lack of bravery!!

Zhongshan is a wonderful city that does an amazing job of balancing industry with large public parks, fantastic restaurants and a great nightlife! There is something for everyone here and Gordon couldn’t have picked a more perfect place for Star.

What I have seen has totally changed my view on how business is done in China. There are the ‘back street’ toolmakers, a small lock up with a couple of manual mills; these are dotted all over the city. Then there are small factories with 15-20 guys running machines. The further out of the city you venture, the larger the factories become. There are gigantic factories with over 200 people working in them making huge moulds, 6 feet high when stood on their side. I remember visiting one and being blown away by the sheer scale of the place and that was considered small to medium by Chinese standards!!

Gordon and his team at Star have put together an amazing manufacturing business in Zhongshan and offer a fully comprehensive range of services, where customer satisfaction is the number one priority. Star is a fantastic blend of technology, western quality systems and working practices, skill and dedication.

True to the company motto ‘The best of the West in China’ the QC department at Star would have many UK manufacturing business’s drooling at the level of technology on offer, this undoubtedly gives every customer the highest level of confidence especially those new to placing work in China. Technology is only as good as those who use it, and the staff are an amazing bunch, a very well educated and highly skilled workforce that is dedicated to the business and hungry to learn!

My time in China seemed to fly by, and I have to say a huge thank you to Gordon for giving me the opportunity and taking excellent care of me. Cheers Gordon!

Michael Hutchinson, CNC manager at STAR, who was kind enough to offer me his spare room for the duration of my stay, a fantastic host who kept me out of trouble. Cheers Mick!

And of course, thank you to all at Star who made me feel so welcome and despite their best English, putting up with my Geordie accent!!

I look forward to all the challenges working for Star puts my way and look forward to passing on my knowledge and that pride to the toolmakers at Star whenever I visit

China

Intern from America

2011-11-24T22:27:00.000-08:00

I have been working for Star for about a month, and I love it. I have to say that I could not be working for a better company than Star Prototype. The people who work here are warm and friendly. Everyone is very relaxed, but very hard working.

Star produces excellent quality of products and have a stellar reputation with their customers. It makes me very proud to have the opportunity to work here.

I expected the transition to living in China to be rough, but I have been so well taken care of that it has been really easy, and really fun!

I hope to have a bright future working at Star Prototype China Limited, in learning everything I can about the technology and the business, learning the best Mandarin that I can, and making friends.

Thickness of a Dollar Bill

2011-08-19T02:27:00.000-07:00

This was in my head when I woke up this morning. Indulge me please.

Did you know that a USD 20 dollar bill or a GBP 20 pound note are about 0.11mm thick?

The US trade deficit is USD 690,000,000,000 each year – a real financial loss to the USA.

The UK trade deficit is GBP 94,000,000,000 each year – a real financial loss to the UK.

So, if you had a pile of 20 dollar bills equaling 690 billion it would stand 2,371 miles high.

If you had a pile of 20 pound notes equaling GBP 94 billion it would stand 323 miles high, only 24 miles short of the Hubble Space Telescope. Think about that. And the British have the smaller pile.

If you then laid the American pile down onto the face of the planet it would stretch from New York to San Diego.

If you then laid the UK pile down it would go pretty much from London to Edinburgh.

Think about that the next time you get in your car or truck and drive a few miles down the road. Imagine that pile laying at the side of every road you travel. Most Americans would need about 2 months of typical car mileage to drive the entire length of their country’s loss.

And just remember this; the German ($197bn) and Chinese ($174bn) PROFIT piles combined would stretch from New Orleans in the South to the Canadian border – 1,160 miles – EVERY YEAR. I would rather need a month of typical driving mileage to survey my countries profit.

American and British politicians like to make out like the trade deficit is some kind of paper loss – that it is somehow not real. Well it is REAL. The politicians are correct about it being a loss on paper in only one way: the loss is printed on special paper that carries the picture of Andrew Jackson (or the Queen) and that REAL pile of paper money stretches from New York to San Diego or London to Edinburgh – every year.

Think about that every time you get in your car and try to not get angry with Washington or Westminster.

Gordon Styles
Star Prototype China Limited

Reprint from: http://www.star-prototype.com/blog/thickness-of-a-dollar-bill/

Rapid Product Development in China

2011-01-13T22:29:00.000-08:00

Star Prototype China Limited of Zhongshan, China is the latest Star Investment in China. Everyone knows that China is going crazy for product development; well Star-Prototype is riding that wave. What is different about Star Prototype China is the fact that it was started by, and continues to be run by, British businessman Gordon Styles. After meteoric success with a UK based company by the name of Styles Rapid Product Development, he went to invest his fortune in a start-up in China.

Star-Prototype helps a huge number of Chinese and Western product developers to realise their product dreams. Star-Prototype has experienced meteoric growth and does not see any end in sight. Managing Director Gordon Styles said - "The Chinese have no end to their appetite for developing products that can be sold at home and abroad. We help them do their prototyping and their product introduction…"

Rapid Product Development, as cited in the 2010 Wohlers Report, has become a multi Billion Dollar market sector populated by entrepreneurs like Gordon Styles. It includes technologies such as Stereolithography and Direct Metal Laser Sintering (DMLS) which allow components to be grown in a bath of liquid plastic using laser beams.

Gordon Styles - "One often sees films such as Face Off, or even programs such as CSI, that depict Stereolithography as a way of reproducing organic forms. But the future of our industry is the ability to be able to produce 'impossible' components using only lasers, photopolymers and powders. Many people are unaware that many modern airplanes have engine components that can only be produced by laser based DMLS."

The future would appear to be bright for Star-Prototype as the only western owned RPD company in China. "It is no secret that we are preparing to raise a very significant investment in the near term. Investors will have to wait and see what vehicle we choose, but given the current investment climate in China, we are expecting a significant oversubscription." - said Gordon Styles

For further information, please contact Christal Chai at christal@star-prototype-china.com

The Rise and Rise of China

2011-01-06T23:28:00.000-08:00

The following blog post is in response to an article written by MP John Redwood entitled “The Rise and Rise of China” posted in his blog: http://www.johnredwoodsdiary.com/2011/01/02/the-rise-and-rise-of-china-2/

Hi Phil, you ask a very good question about wealth creation.
Only a few know the answer. Few British politicians can even guess at the answer and this and previous British Governments had no clue. But the Chinese Government holds this as their central economic principal.

The answer is simple accounting. To become more wealthy as a country, a company, or an individual you have to increase the overall value of your complete balance sheet.

Generally there are two types of asset and one type of liability. There are physical fixed assets (buildings, machines, infrastructure etc.) and there are intangible assets (cash and equivalents). There are usually only intangible liabilities (loans of all types).

To increase the value of a balance sheet you must either increase the long-term realistic value of your physical fixed asset register or increase the long-term realistic value of all of your intangible assets, or both.

Finally, overall, your total assets must be increasing at a faster rate than your liabilities. Seems simple – right?

[On a UK national internal domestic level we can completely disregard all savings and loans denominated in GBP because all money is debt (including savings) and ultimately owed back to the banks and finally the central bank - all money nets to zero in a 'cash is debt' closed monetary system. So for financial assets and liabilities we can only look to foreign held loans and assets denominated in any currency including GBP.]

So here is your answer:
To increase the national wealth of the UK you must increase the asset base at a faster rate than the liabilities. That means increasing the amount of fixed assets and external cash reserves, and/or reducing our financial national liabilities.

This can be done in only two ways:
1. Build national and private infrastructure at a faster rate than it is physically/financially depreciating (industry, manufacturing and construction).

[We are not building physical infrastructure at a rate faster than it is depreciating/crumbling. This means national wealth destruction.]

2. Sell more than we buy as a nation. The most efficient and high-volume way to do this is to sell more manufactured goods abroad than we do today or replace imports.

[Today we have a GBP 90bn trade deficit. That means that we are losing money as a nation and therefore it weakens the balance sheet - and that means national wealth destruction.]

One of the mantras of those who decry the wealth creating properties of Industry, Manufacturing and Construction say that domestically consumed services add to the economy. But let us be very clear about this. GDP is not wealth. Only the balance sheet tells you the value of the country. GDP is clearly important, but only to the degree to which it is stable and growing. It is the same insanity as the Managing Director of a company only reporting that Sales are growing without mentioning profitability or the state of the balance sheet. All we heard from Gordon Brown from 1997 to 2008 was how wonderful our Sales Turnover was.

There is no one place you can go to get the balance sheet of a Country. I did some recent calculations of my own and estimated that the balance sheet value of the UK is negative – if you want the numbers I am sure you can find my blog. We all know in our bones that the UK balance sheet is shot to pieces. I challenge anyone at the treasury to publish a UK balance sheet. I challenge anyone to officially publish anything like this. You will not find it because it is too embarrassing for the UK Government.

I hope this explains why Industry, Manufacturing and Construction are at the top of the wealth creating pyramid. For sure IM&C could not function without a well rounded economy. But services that have no remaining physical value or usefulness do not create wealth unless that service is exported. If a service is purely for domestic consumption, it does not directly create balance sheet wealth.

This is the reason why the Chinese Government is so supportive of all forms of physical asset creation and all forms of trade surplus generating activity.

Great question, hope the answer does the trick.

Thanks, Gordon Styles

Feel free to contact Gordon Styles at gordon.styles@star-prototype-china.com

Was it the right move?……….Oh yes!

2010-11-16T18:19:00.000-08:00

I have been Living and working in southern China for just 10 months , and I have got to say I have enjoyed each and every day of it. To be fair I have been very lucky, my company Star Prototype have taken great care of me. I anticipated a huge culture shock prior to moving to China , and sure things looked a lot different at first. Chinese people , I find are genuinely decent hard working people and they have a great sense of fun too. China has my admiration. Sure there are things that could be better, and things are getting better, unlike some countries ! People are not content with the government , they are delighted with the government and proud of their leaders, and rightly so. It seems everybody has real ambition in life, and believe that their dreams really can come true.
My function within Star Prototype is to teach a group of young CNC machinists the way things are done in the west and the standards that are expected in the west. I have over 25 years experience workshop experience in top tier manufacturing companies in Europe. I have learned along the way that an individual is always learning throughout his working life. I am passing on that knowledge that I have gathered to a group of very keen and bright young guys, that really do want to learn. I already have a genuine affection for them, and want to do as well for them as I possibly can. In return they are producing ever better results, and we are getting feedback from some big US customers stating the quality of the work we are producing is the best they have ever seen. I feel like a proud father sometimes!
Outside of the workplace is not what I am used to, In general, people in China don’t speak English. And so far my Chinese is not that extensive, so communication is a problem. Having said that I still manage to do all the things I want to do. You just manage somehow, with the help of friends, and sometimes strangers. Chinese people I find are very receptive to westerners and are very polite and would willingly help you if they could. Another interesting topic in China is the food. Chinese people just love food, they talk about it all the time, and there is a huge variety to choose from. The style of food in Guangdong is not every westerners idea of what Chinese food should be like. Unlike you find in a western restaurant, all the bones are served in a dish , which have gotten used to, and it does add flavor. One great thing about Zhongshan is, you can get German beer that is imported from the oldest brewery in the world, that I like! In moderation of course.
Coming from the North West of England , the weather here has been just great. In the summer we enjoyed ( and sometimes endured ) temperatures of 35C. We are now in November and it is around 25C and sunny. Things could be a whole lot worse. When eventually have a bad day, I will let you know!

Michael Hutchinson
CNC Precision Machine Shop Manager

Feel free to contact Michael Hutchinson at michael.hutchinson@star-prototype-china.com

In Response to...

2010-11-09T00:48:00.000-08:00

http://www.chinalawblog.com/2010/07/china_corruption_youd_have_to_be_blind.html

I am British with a factory in Zhongshan, China. I have lived in China more than 5 years. I have set up 2 companies, and run 3.

As a western foreigner I have never once been offered a bribe, had to give a bribe, or be involved in any corrupt activity in China whatsoever. Some chinese looking foreigners do get involved e.g. the Australian/Chinese Rio Tinto executive Stern Hu who got 10 years for corruption recently.

Clearly corruption abounds in China, but it is mostly the natives. Recently for example, the Mayor of Zhongshan, a lady, was arrested for having RMB 3,000,000,000 in unaccounted for assets.

I also want to make it absolutely clear; central Beijing Government is waging a war against corruption in China. The political centre sees corruption as the greatest single threat to the further successful development of China.

Night after night the local TV stations here pump out Public Service adverts showing public officials of all walks turning down bribes and looking very offended at the very notion that anyone would even offer a 'red packet' for doing their duty.
Corruption abounds, but it is most certainly a dieing practice in China. I predict within 15 years China will be the cleanest place on earth to do business.

Gordon Styles

Blog- Capability, Trust and Value- Hurdles to Successful Sales

2010-11-07T18:01:00.000-08:00

The following post is a guest blog from our friend and business associate, Dr. Ronald Hollis, Founder, President & CEO of Quickpart.com.

The ability to sell is a critical element in the commerce of an economy, industry, and company. Nothing happens until sales are made and the product or service is ready to be provided to the customer. The success of sales is both an art and science. The required combination is the reason there are those who are great sales people and those who are lousy. One has both the humanistic qualities, of which some are innate, as well as the technical mastery, to help the prospect understand their options. Those who are willing to study their practice and master the combination of art and science can harness a powerful combination and become a great salesperson.

This blog discusses the hurdles that are required for every prospect to make a buying decision and for you to be the successful salesperson. By developing a complete sales strategy based on three secret hurdles, the overall success of the individuals and the team will be huge for themselves, and more importantly, for their customers. The opposite of developing a sales strategy is to “hope” things work out for the best and to waste significant resources, including precious little time you have remaining in your career. In future blogs, I will share strategies that can be implemented to easily jump these hurdles and ensure success.

What are these hurdles that will ensure my success? They are simply Capability, Trust, and Value (CTV). The CTV of sales are three distinct hurdles that must be traversed for a prospect to become a customer. As you will discover, each is a combination of the art and the science, which is why a powerful sales strategy for your offering must be developed to be successful. As it turns out, these same hurdles apply to you when you put on the buyer’s hat, so you can test them out to see how they feel. These hurdles are a natural part of the process for the master salesperson, either consciously or subconsciously. They know how to cross the hurdles and help the customer. It is important to realize that these hurdles are not sales objections, which are typically more of a result of the personality of the buyer. These hurdles are like a common environment for everyone. In some cases, you apply the strategies of sales to cross these hurdles.

Every buying decision must successfully pass three assessments to make a buying decision – Capability, Trust, and Value.

The first hurdle is Capability, or “can you do what you say you can do?” Every buyer wants to be right when making a buying decision. No one, including you, wants to have regrets about the decision because they did not get what they thought they were getting. This assessment of your real capability is critical for their ability to transition from maybe to yes. If you have been in sales long enough, you have lost the big deal because the customer said they were concerned that their project may be too big, complex, small, or something that you may not be able to do for them. This all relates to their assessment of your capability. Educating the prospect of your capability is a slippery slope of sales. You want to build confidence in your customer that you can do the job, but you don’t want overdo to it and misrepresent what you can really do. Overpromising and under delivering is the fast track to failure. Also, the savvy buyer will begin to sense your own lack of confidence as you begin to push the boundaries of capability, so you must know the boundaries and sell within your limits.

The second hurdle is Trust or “will you really take care of me?” For a prospect to be able to buy anything from you, they must trust you. Of course, there are various levels of trust, but you must establish adequate trust for the type of sale you are providing. If the product is a novelty, then trust can be low but is still required. If the product is lifesaving or life threatening, the trust must be very high. Know how much trust is required for your product and realize that you must establish trust to get the order. It is a common misperception for the salesperson to think they are good guys and that everyone just trusts them, while the truth is that only a mom’s trust can be taken for granted.

The third hurdle is Value, or “am I getting a good deal?” No buyer wants to be a sucker when making a buying decision. While not everyone is looking for a bargain, they do want to pay what they feel is reasonable for their purchase. Helping the customer understand that you are providing them value (whether in lower cost, increased service, or better quality) is critical to help them get over this hurdle. Value is also slippery slope, particularly with long-term or repeat customers, where you may think you can raise their price and it will be okay. However, when they get the call from another great salesperson who attacks your weakness for providing low value, this erodes the trust and then game is over. Always be aware of the real value you are providing your customer and commit to always providing Value.

Capability, Trust, and Value provide the foundation of successful selling to get the great wins in your company and career. By implementing appropriate strategies in your prospecting, scripts, offerings, etc, then you are automatically overcoming the hurdles on the way to becoming a great salesperson. When in doubt, just keep an internal check for yourself. A great benefit of being in sales is that we are also customers at some time. Validate the CTV for yourself when you are making a buying decision. The next time you buy a new computer the salesperson says will give you great performance, think about what was required for you to overcome the Capability hurdle. How did you know you could Trust the company from which you bought your insurance? When you buy a new car, what did you need to know you were getting a good Value? These self-assessments will engrain the hurdles and make you aware of them when you are on the other side of the table trying to close the deal. These hurdles are real and embedded in every buying decision.

If you would like to know more, check out my blog at ronhollis.blog.quickparts.com. Or for other great topics on product development, then check out the Quickparts.com (www.quickparts.com) encyclopedia for more information or get a hot copy of Better Be Running! Tools to Drive Design Success at www.betterberunning.com.

Dr. Ronald L. Hollis

Founder, President & CEO

Quickparts.com, Inc

October 30, 2010

Learning from Each Other

2010-11-03T02:32:00.000-07:00

Two months have passed and I’m back in Germany. It’s cold here now, although my Chinese colleagues have already started to wear their jackets from one day to the other because the temperature dropped 5°C, from 30°C to 25°C. I’m sitting here with the heater on longing for those mild temperatures.

The two months that I worked at Star Prototype were a great experience. Working with young and motivated people who want to create something following Gordon Styles’ idea, had giving me the opportunity to get deeply involved in a growing and developing company with a promising future. It has been a fantastic experience to see how western knowledge and ideas bring something forward together with Chinese will and enthusiasm. The foreigners at STAR are from America, Canada, UK and Germany, professionals with a lot of experience in their field of business and a passion for China and its great opportunities.

Of course there have been differences in the way of life and in the way things can be done. But that’s why you go to China; you want to face the challenge of something never experienced before. Accepting and respecting the differences between the cultures and facing the challenges coming from these differences, helps you to learn more about the other culture and to learn more about your own. And although the number of foreigners in China grows every year, they are just a small minority compared to the Chinese. This is one reason why the Chinese are still curious about learning as much as they can about the foreign culture which most of them will never witness by first hand.

Being back in Germany one thing you recognize in just the first few seconds of arrival is that the drive is missing. It’s the drive and motivation that will lead China to be the most important power in the next few decades or maybe centuries. Considering our own future we have to get our own drive back, the drive that creates something bigger. Both cultures can learn a lot from each other when there is more respect and less suspicion. The future should not be a separated future. The future should be a combined future.

I am looking forward to my next trip to China and meeting all the friendly and open minded people from Zhongshan and especially Star Prototype again.

Thanks a lot and byebye!

Tino

Changing worker attitudes reshape management views

2010-09-13T02:23:00.001-07:00

Struggling to strike a balance between keeping expenditure and turnover low, suppliers are modifying their starkly utilitarian factory complexes, bearing employee comfort and recreational needs in mind.

The growing demands of China's new generation of workers are eroding the cost competitiveness of many export products, particularly those in labor-intensive industries such as garments, footwear and bags. Because of rising manufacturing costs and the decoupling of the yuan's peg to the US dollar, profit margins for these products are estimated to be between 2 and 5 percent.
Hong Kong Small and Medium Enterprises Association chairman Danny Lau said low costs, inexpensive labor in particular, are one of China's biggest competitive differentiators among global factories. While suppliers are still able to negotiate specifications with clients to avoid price adjustments, they may have no choice but to raise quotes if worker-related expenditure continues to climb. Should this happen, "many buyers will choose to source from Vietnam and other countries with lower production costs," Lau said.
To reduce outlay, companies are moving away from the Pearl River Delta region. Guangzhou Canttro Extension Electronics (Group) Co. Ltd built factories in Hangzhou, Zhejiang province, and Wuhan, Hubei province. General manager Zheng Haibin said manufacturing in the cities along the Pearl River Delta is no longer as cost-effective, and that moving to the Yangtze River Delta region could save the company 10 to 20 percent in labor expenses.
"Many companies in the Pearl River Delta region offer higher-than-minimum wages, which range from 1,500 to 2,000 yuan ($221 to $295) per month, but employees still feel unsatisfied," Lau said. He stressed that China's workers should not compare their salaries with those in developed countries such as the UK, where hourly wages stand at about 7 pounds ($10.50). Instead, the average rate of 10 yuan ($1.50) per hour should be set off against what workers received 10 years ago, which was roughly 1.25 yuan ($0.18) per hour.
That belief, however, is not shared outside manufacturers' circles.
The Institute for Contemporary Observation director Liu Kaiming did his own research, which showed labor-intensive industries generally have a markup of at least 10 percent. One of the factory owners he talked to in Jiangsu province even said the factory would not accept orders if the potential profit is less than 20 percent.
If the profit margin is only 2 percent, Liu opines it would be better for the supplier to let a fund manager handle its money. Investing in a savings account, for example, could result in 5 percent earnings per annum.
China Labour Bulletin editor Geoffrey Crothall agrees with Liu's findings. Crothall believes low profit is just an excuse manufacturers use to keep minimum wages from rising too fast.
Liu also debunks the claim that smaller plants are at greater risk. He said such factories can actually post higher gains as they have fewer maintenance and administration costs, and are subject to less expensive taxes.
Star Prototype China Ltd managing director Gordon Styles said labor costs generally account for 10 to 25 percent of export prices. A typical factory in China, meanwhile, can probably boost annual efficiency by an average of 5 percent.

Concessions to retain manpower

Even though labor-related expenses are eating significantly into manufacturers' margins, companies are improving working and living conditions to minimize turnover.
Many foreign-invested companies are setting a good example. At Styles' production facility, each dormitory room houses only five employees, which is lower than the usual eight to 10. Individual beds, wardrobes, desks, computers with Internet connection and chairs are provided.
Lau of the Hong Kong Small and Medium Enterprises Association, and China Center for Labor and Environment project manager David Abrahamson said some companies are building recreational facilities such as basketball courts. Others also organize regular karaoke or barbecue parties.
Availability of hot water in bathrooms is not common, but a welcome provision. Few factories currently offer this, and many of those that do limit supply to several hours per day.
More than these improvements, however, Liu believes employers should respect workers and not treat them like machines. Contracts should be honored, salaries given on time and factories kept safe and clean.
In addition, Crothall and Abrahamson think regular communication between management and staff is important. There should be a system where constant dialogue can take place.
Liu admits salaries, and the working and living environment have actually been improving in recent years. But he estimates it would take more than a decade before wages and conditions can be on a par with Western levels.
Between increasing monthly salaries and improving factory and dormitory settings, manufacturers find it more practical to address the latter. Building an outdoor basketball court, for instance, requires a one-time investment of roughly 50,000 yuan ($7,380). Raising wages, meanwhile, involves spending 10 to 20 percent more per employee each month.
Styles of Star Prototype said most foreign-owned enterprises are allocating funds to give workers a better living and working environment. Local businesses, however, are less willing to invest in such measures but are being forced to do so to minimize turnover.

New generation of workers: Better educated, mobile and ambitious

2010-09-13T02:21:00.000-07:00

Demand for higher wages and better conditions put the spotlight on China's young labor pool. Despite concessions, many believe they deserve more and move from one factory to the next.

At first blush, China's current crop of blue-collar employees seems to have it better than predecessors. Monthly salaries are being raised, the living and working environment is being improved, and some companies are even providing facilities such as Internet access.
Not so, according to the young production staff.
Migrant hands are considered to be in the lowest socioeconomic level. Although monthly salaries have been raised to as much as 2,000 yuan ($295) in recent months, factories are cutting overtime hours drastically while boosting the daily yield requirement. This is resulting in lower take home pay that is often just enough to cover day-to-day expenses.
In many cases, 10 people share one dormitory room, resulting in little or no privacy especially for couples. Hot water is available, but only for a limited period of time.
The Institute for Contemporary Observation director Liu Kaiming agrees it is not easy being a young worker today. Although conditions were worse 20 years ago, workers then were better compensated and had higher than average annual income. A university professor, for instance earned between 200 and 500 yuan ($29.50 to $73.80) per month, while a civil servant received roughly 500 yuan. The minimum wage of a factory worker in Shenzhen or Dongguan, Guangdong province, was at least 200 yuan. Including overtime, take home pay reached 500 yuan each month.
The younger set, however, is much more mobile and less willing to just bite the bullet. They quit their current positions and move as soon as they find factories offering better compensation and benefits, even if these are just free dinners, Internet access or basketball courts. Hong Kong Small and Medium Enterprises Association chairman Danny Lau said at his production facility, almost one-third or more than a hundred personnel fit the bill, a typical young worker who does not stay long at one plant and moves from one factory to another.
Not only are these employees quick to take advantage of better opportunities, they are also much more flexible in terms of where to go. They do not limit themselves to a certain city or province and relocate to wherever the higher-paying jobs are.
Many of the skilled hands at Ningbo Boda Bags Co. Ltd, for instance, came from Guangdong. They moved to Zhejiang because living expenses in the province are 10 to 25 percent lower than in the southern coast. Public security in Ningbo is said to be better than in Guangzhou or Dongguan.

Less savory reasons

Bad pay and conditions are not the only factors driving workers away from their posts. Sometimes, personality issues come into play. Unlike the older generation, the new breed is not as even-tempered and is more prone to engage in fights and raise objections.
"You do not know when you will hear about premarital pregnancies and then you have to deal with that," said David Wang, sales manager of Topkin Intl Enterprises Co. Ltd. Wang used to run a factory for tiffany lamps and bronze sculptures, but found it tiresome and energy consuming. He has since sold the plant and now focuses on trading.
Lau said some workers quit their jobs because their boyfriends and girlfriends did so.
In addition, China Center for Labor and Environment project manager David Abrahamson believes the younger set is impatient. Although most render overtime, it is hard for many to focus on assembly work all the time. Boredom alone may be sufficient reason for some to look for newer opportunities. For others, being constantly monitored and reprimanded for mistakes can send them packing.
"I could not stand being watched by the QC inspector and yelled at for a small mistake," said Huang Yemei, a former factory worker in Dongguan.
It is now common for a plant to be 10 to 30 percent short of hands all the time because of the constant high turnover of young employees.

Desire for growth

Ding Zhihing, a lecturer at the Central University of Finance and Economics' sociology department, did his own research on China's rural migrant workers. Published in the Lanzhou Academic Journal in 2009, the study revealed that more than 70 percent of the country's 229 million migrants have at least finished junior high school. More than two-thirds of the labor pool is between the ages of 16 and 30 years old.
Because the majority has a higher educational attainment, they are often deemed more knowledgeable than the previous generation. Lau of Hong Kong Small and Medium Enterprises Association said such employees also learn faster, need much less time to master required skills, understand training manuals easily and can learn new technologies on their own.
Moreover, they are better-versed in obtaining information via mobile phones and the Internet.
These strengths make them more attractive to companies. "The older guys come with too many bad practices and they refuse to change," said Gordon Styles, managing director of Star Prototype China Ltd. "Also, their techniques are poor."
The reverse is true, however, for some mature industries such as garments and crafts, where older workers are much more appreciated for their time-honed skills.
But better educational attainment comes with a caveat. Now, the younger set is pursuing opportunities and responsibilities that can help in achieving long-term goals, which go beyond sending money back to their families. An e-commerce student, Huang left her assembly line job in Dongguan to look for sales-related positions in Shenzhen.
Abrahamson said these talented younger workers have greater ambitions. They usually will not work in the same factory for more than two years. Instead, they will try to take advantage of the skills and experience they have gained to look for other promising occupations, including secretarial and sales positions. Some even open their own business.
Moreover, China Labour Bulletin editor Geoffrey Crothall believes the new generation of migrants wants to settle down in the cities where they hold jobs and not in their hometowns. Many are hoping to earn enough money to be able to afford a house, send their children to school and have a comfortable life.
Unlike in previous years, career-oriented workers can find factory jobs that offer internal and external training. Although there is a slim chance those that undergo training will be promoted to a management position, giving employees hope that they can climb up the career ladder is important.
But such opportunities are not as widespread. "Employers see no value in training people only to lose them," Styles said. He does not subscribe to this view though, and gives English lessons to his personnel twice a week. Star Prototype also has foreign specialists providing technical training and supervision on site.

A young worker's perspective

Born in 1988 in the city of Yangjiang in southwest Guangdong province, Huang Yemei is but one of the many young denizens at the Luohu Job Market in Shenzhen. Despite the heat, she braved the crowded hall in the hopes of finding work from the roughly 100 booths, a position that would at least match her credentials. Huang is, after all, an e-commerce graduate from the Yangjiang Technical School.
Wearing a light yellow T-shirt, she sat with a couple of young women of similar age, chatting with them, a PVC file containing a few copies of her CV on the table.
"Unless I have to, I think I will not work as an assembler again," Huang said, having held similar jobs in Huizhou, Dongguan and Shenzhen in the past. She found working in the factories depressing and did not like being berated by the line leaders even for small mistakes.
Living and hanging out with coworkers of the same age, however, proved to be an enjoyable experience. "We chatted, played poker, went shopping and surfed the Internet in our spare time," Huang said. She was not thinking too much about the future then, quitting her first job assembling TV sets in a Huizhou factory simply because of friction with some colleagues.
Now, Huang feels being an assembly-line worker is not something she can do on a long-term basis, especially since doing so would not secure for her a good and comfortable life.
"Most employers are more or less the same," she said. Some factories might offer higher wages but no board and lodging. Those that provide food and dormitories usually pay less. Others deduct the cost of meals from monthly salaries.
Huang has some friends in Shenzhen, which is why she decided to try her luck finding suitable work in the city. But Huang really has not decided where to settle down, as this depends on whether she can land a proper job.
For her, the ideal position would not require too much overtime work, and pay her enough to cover her daily expenses and still have enough to spend on other things such as clothes or travel.
But competition is tight in the job market. She believes younger workers such as herself have an edge over the older ones, as they are better educated and more eager to learn new things. Since there are a lot of them, however, her age is not necessarily an advantage.

Industrial and Construction Bank UK

2010-08-15T23:53:00.000-07:00

A Letter to a Leading Economist in the UK

ICBUK

Dear Sir

I have a manufacturing company in China. This is due to the fact that Manufacturing in the UK has been systematically destroyed by successive UK Governments.

A few days ago you said that Quantitative Easing would not, and has not worked. In the current form you are correct.

Currently QE money is given to the banks. Banks are only seeking to make money. Lending money to Industry and Manufacturing is high risk and gives poor returns.

Industry, Manufacturing and Construction are the only parts of the economy that create balance sheet wealth and ultimately drive the economy.

If the UK wants to improve its Balance Sheet it needs to be MAKING STUFF again.

Therefore I propose that the Bank of England sets up a subsidiary bank called the Industrial and Construction Bank of the United Kingdom (ICBUK).

If the Bank of England or the Government believe that new money is put into the economy then it should be lent out through the ICBUK only to Manufacturing, Industrial, and Construction companies.

The money that is lent out must be put into UK banks, but the lenders get to choose which bank.

So, the Bank of England and the Government get to print the money; the wealth creating businesses get all the money they need; and the money ends up in the UK banking sector.

Also, if any of the lenders default on the ICBUK loans, the Bank of England simply writes off the money which it had ‘printed’ in the first place. The money still remains in the system. Historically the Bank of England has not withdrawn substantial amounts from the economy therefore this is not a problem.

Imagine if the GBP 830,000,000,000 QE that was distributed to the Banks in 2008/2009 had gone into Manufacturing, Industry, and Construction through the ICBUK?

Recession Over.

Predicting the Economic Crash

2010-07-02T03:47:00.000-07:00

Below is an email written by Gordon Styles , Managing Director of Star Prototype China, to Peter Marsh, Industry Editor for the Financial Times, on September 21, 2007.

From: Gordon Styles [gordon.styles@star-prototype-china.com]

Sent: 21 September 2007 09:29

To: 'PETER MARSH'

Subject: Recession

Hi Peter,

Am I alone in having been able to see all of this UK & US economic trouble coming for over 5 years now?

(The stock-markets though are somewhat irrelevant – it is a symptom not a cause of anything.)

Credit has gone mad. The UK economy is propped up only by massive personal borrowing. The banks have been allowed by Brown to lend-lend-lend, there has been no attempt to cool the housing market. Industry and Manufacturing has been destroyed by a mass ignorance of its role as the 'main' wealth creating activity in the UK. Our trade deficit is the second largest in Global history, second only to the US. You can paper the entire M25 with 'fivers' 19 times with the UK's trading loss. Why doesn't anyone realize that the trade deficit is precisely equal to a corporation losing money?

It's like living in 'Alice's Wonderland' watching the television news and UK papers.

The UK is in a massive recession and the only thing that is stopping the elastic from snapping is that people keep on borrowing money inadvisably and propping up the economy and funding the trade deficit (trading losses).

The 'run' on the Northern Rock is without doubt the beginning of the end for the UK.

Next, other banks will 'give'.

Then people will be realise that borrowing is bad.

Then the housing market will start to slide – www.housepricecrash.co.uk

People will stop spending.

Economy will crash. (The UK is already in a bad recession – remember one must adjust GDP growth 3% by RPI 4.1% – do that and you can see we are declining at a rate in excess of 1% per annum in real terms, and yet Brown still preaches the UK economic miracle.)

Government will blame everyone but themselves and manufacturing and industry will continue to die.

This time though Peter, in contrast to the crash of the early nineties, we don't have Industry and Manufacturing to fall back on to pull the UK out of the recession. Also, the UK faces China. Previous 'Tiger' economies matured fast – they 'came and went'. But China has a good 15 years of low-cost manufacturing left.

I believe that the UK is now finished and I voted with my feet.

The US is in even greater trouble that the UK.

In the case of the US they will now try desperately to divert attention away from the staggering gross incompetence of the Bush administration and go full steam into a war with Iran. This will allow the US to feed what is left of their financial 'fat' into the US economy by way of armaments purchases within the US.

At what point is a USD 700 billion trade deficit anything other than the worst financial loss in history. If Bush and Blair had been CEO's of companies they would have been fired within a couple of years of taking office.

To be frank Peter, I am very angry that no one in the UK appears to see or understand any of the above.

Industry and Manufacturing is 'wealth creation': nothing else matters for the UK. All the rest is merely there to support it. If you are not making or creating physical assets you have nothing to stack the currency against. It's the first rule of modern economics. Without manufacturing the UK has practically nothing else to export/replace-imports with and your deficit keeps on growing.

Gordon Styles

Click here to email Gordon.

Why the rising Chinese Yuan will not benefit the USA or UK.

2010-06-30T01:45:00.001-07:00

For this blog I will use a new acronym – USAK. This is to represent the two countries that find themselves in a similar predicament at the same time regarding China – the USA and the UK.

[I figured USUK was not such a good acronym]

Timothy Geithner et al have of recent months been screaming at the Chinese to revalue the Yuan upwards. Some say as much as 40%. This blog seeks to destroy the myth that this will benefit the USAK and even show that a 50% increase in the value of the Yuan will worsen the US trade deficit by USD 76bn.

How big is the Problem Really?

The total value of imports into the USA in 2008 was USD 2,117 billion (2,117bn). Total exports were USD 1,277bn. Therefore the total trade deficit was USD 840bn. The percentage from China was 16.4% followed closely by Canada with 15.7%. Total Chinese imports to the USA were USD 347bn. Total exports to China from the USA were 5.5% at USD 70bn. USA's trade deficit attributable to China is USD 277bn. For sure that is a big number, but compared to a total trade deficit of USD 840bn, it is only 33% of the problem. [Data provided by CIA World Factbook]

[Graph: US Trade Census]

Solution: Revalue the Yuan Upward by 50%?

As an extreme example, let's assume that the Chinese Yuan was indeed revalued upwards by 50%. The total value of imports would go up from USD 347bn to 520bn (2008 numbers). Clearly if the price of all Chinese goods went up 50%, there would indeed be a significant drop in the volume of product being imported from China, but the question is – by how much? Let's assume a drop of 40% from the new USD 520bn – that would result in a revised value of imports of USD 312bn. But that is a mere 10% drop in the value of goods being imported. Add to that the fact that most Chinese imports, especially the lower value added more price sensitive products, cannot be replaced by US manufacturers. I therefore propose that the 40% of volume lost by China will simply be sourced elsewhere instead – maybe Vietnam, Indonesia, Malaysia, Africa, South America, Eastern Europe, Mexico etc.

So Geithner has a big problem: if the Yuan strengthened by 50% the total value of imports from China and other new sources will increase from USD 347bn (China alone) to USD 423bn (China & other new sources).

I suggest that the Yuan rising by 50% would lead to the total value of imports in the USA rising by USD 76bn. Even if the USA managed to replace 25% of the goods being imported from China with domestic manufacture, and I think that is doubtful, the best case scenario would be a status quo i.e. Chinese imports in 2008 USD 347bn to 2013 USD 347bn. STATUS QUO.

Obama: double exports in 5 years

I had a lot of hope for Obama. The World had a lot of hope. But to think that exports can be doubled in 5 years is completely unrealistic. Firstly, the World is not out of recession. In recent months the World has seen a small uplift in the global economy, but to assume that we are out of the worst of it is false hope. Large recessions of this nature run for 7 to 10 years. The 1929 crash ran through to the Second World War. The early 90's recession ran for some 7 years. There is all the evidence to suggest that the 2008 recession will run for at least another 4 or 5 years. So the chances of increasing exports at this time are slim for USAK.

Now I might agree that the US could double exports to China if the Yuan strengthened by 50%. But even so, that would only take USD 70bn off the trade deficit. Still far from being enough to make any meaningful difference.

So why might China want the Yuan to Rise – the Question nobody is asking?

There is an assumption that China does not want the Yuan to rise. There is much talk of China wanting to keep the Yuan deliberately low to give an advantage to its exporters. This argument is fundamentally flawed. Between July 2005 and July 2008 the Yuan revalued steadily from 8.27 to 6.83, a total of 17%. It only stopped because of the economic crisis and in that time its exports surged. China is not afraid of raising the value of the Yuan.

I would propose that China actively wants the Yuan to Rise.

China: the rising High-Tech, High-Value-Added global factory

I believe that the Chinese Government wants China to become a high-value-added, high-tech nation over the next 15 to 25 years. And it will: look at Japan; look at Korea; look at Taiwan. Why would China be any different? To become that High-Tech nation it needs its industries to buy the very latest technologies to be ever more efficient. Right now the latest equipment from Germany, Switzerland, Austria, Japan, Korea, Taiwan etc. costs a fortune in China. With the Chinese Yuan rising steadily over the next 5 years it will lower the cost of high-tech imports, and therefore China will become more and more competitive in the High-Tech industries.

We all remember in person or from the news reports of the day, Detroit Auto workers in the 1970's smashing up rubbish Japanese cars with baseball bats. No one can deny that in the last third-of-a-century Japanese manufacturing has come a long way. Why would we think that China would be any different? The Chinese Government fully expects China to become a high-tech, high-value added manufacturing source in the future – and to do that it needs to strengthen its currency to make today's foreign technology lower in cost for its manufacturers. But it will do so in a controlled manner. (link to Currency Trader Article)

So why are the complaints so loud?

Given that there is no great logical benefit to USAK; why are Washington and London pressing so hard for the upwards revaluation of the Yuan? I have had to think somewhat cynically about this question and believe that there may be a number of reasons.

USAK wish to turn their citizens away from Chinese products. A simple negative PR campaign against the Chinese. All this noise may just be political grand-standing by Politicians in London and Washington aimed at the domestic audience in USAK.

Knowing that the Chinese want to increase the value of the Yuan anyway, USAK seeks to embarrass the Chinese into not revaluing it. Sometimes people are very stubborn: if you shout at someone to do something hard enough, maybe they will dig-their-heels-in and do the opposite. I cannot see a sufficient benefit to USAK of having a stronger Yuan that would justify upsetting your largest global trading partner so by insulting them so readily.

Maybe USAK just wants to embarrass the Chinese to seek concessions elsewhere. For example, it was recently reported by United States Magnetic Materials Association that 97% of all Rare Earths are refined and controlled by China. It is now considered a serious National Security threat in the USA. http://www.usmagnetmaterials.com/wp-content/uploads/2010/04/GAO-report-pr-4-10.pdf. Maybe they want some concessions on larger supplies of Rare Earths when they go to the G20. (Rare Earths are the Elephant in the room for sure.)

Conclusion: Yuan on the Rise! China on the Rise!

One week ago on the 21^st June 2010, the Chinese let the Yuan trade more freely. Now we will see if USAK benefits. I personally cannot see any benefit to anyone except the Great Exporters of the World, the main one being Germany. Germany is the number one place from which the Chinese buy their very high-tech machines. In my industry everyone wants either DMG machines from Germany or Mazak from Japan. I never hear Chinese businesspeople craving USAK equipment. If I was a big German engineering exporter I would be delighted to see the Yuan rise, just as the recent collapse of the Euro would have put a smile on my face.

The USA alone only exports USD 70bn to China, which ironically is almost the same amount Germany exported to China in 2008, except that the USA has a GDP 4.4 times larger than Germany. Even if the USA were to double its Chinese exports over the coming years, it is but a drop in the Ocean compared to the 2008 trade deficit of 840bn or an estimated annualized 2010 deficit of USD 480bn.

The Plan for USAK

I always like to finish on a positive note.

We must never forget that it was USAK buyers and engineers that went to China in the last 30 years and dragged the product out of Chinese factories. Even today most Chinese companies are very difficult to deal with and almost impossible to get consistent quality and service. Most foreigners I know here in China are here as full-time QC engineers. It is a full-time job 'extracting' product from China. If China is a problem for USAK it is because WE DID IT TO OURSELVES. In a way, I guess I am part of USAK's problem. Disaffected and dejected by my own Country, I find myself with no alternative but to go to China to seek my living. If we want to change how China affects USAK, we need to change the way we buy product. In a way I am advocating myself out of a job – but I'm an honest guy.

Washington and London should stop insulting other Countries and just focus on the home front. What Britain and America needs is a massive push to regenerate its own Engineering, Manufacturing, and Construction. We need massive investment in apprenticeships; staggering investment in infrastructure; and some serious leadership that gets USAK ASSETS (people) back working again. We need to be making more and better products that people want to buy around the World. We need to be replacing the old infrastructure such as the crumbling railways and dirty power generation.

Our problems are not in China. Our problems are in Washington and London. We need strong competent leadership now. Let's get out there and rebuild our broken nations and stop worrying about the guy next door that got the big house and the new Porsche. (There're plenty of guys like that where I live in Zhongshan, China)

Gordon Styles

Click here to email Gordon.

[Gordon Styles is a passionate British Engineer and an amateur economist who left the UK in 2005 to build a rapid prototyping business in China. Star Prototype China Limited now employs 80 people with sales of USD 5m.]

Speculative Currency Traders: stripping them of their skin; painting them with jam; and hanging them next to a large bees nest would be too kind

2010-06-13T19:23:00.000-07:00

Speculative currency trading should be made illegal world-wide. It is ironic that the man who kicked over the money changers’ tables in the temple two thousand years ago was nailed to a cross.

Again my company has lost USD 100,000 or more on currency movements in just a few months. The last time it happened at the beginning of the economic crisis, we only made back about 30% of our losses on the upturn. I lose my money in the Receivables/Debtors account. I give credit to people and I cannot swap around the currencies that my outstanding invoices are denominated in – therefore I am powerless to protect myself.

The currency traders are having a field day stealing from hard working business people who only seek to make an honest profit. Some say I should hedge my currencies – but why should I have to? I am not a pin-striped thief, and therefore I should not have to understand that kind of unnecessary trickery.

There is much criticism of China for controlling its currency exchange rate, and yet, frankly that is the only way to bring stability to the World of international trade. Between July 2005 and July 2008, China revalued its currency upwards on a monthly incremental rate from 8.28 to 6.83. China only stopped this controlled process of revaluation when ‘all-hell-broke-loose’ and the USD rose dramatically as people sold shares and ran to the dollar just prior to the collapse of late 2008.

Exchange rates should be set by broad political and economic consensus, gently sloping lines should be carefully drawn on graphs and broadly approved by all; and the rates should incrementally move in the directions that all parties agree are correct.

Does this sound like some kind of feverish dream? Surely the ability for Governments to decide their currency exchange rate is “Currency Manipulation” and quite Socialist? The USA has been threatening to label China as a “Currency Manipulator”. Well in fact, what most people don’t know is that between 1945 and 1973 that is exactly how currency exchange rates were set in the World. At the behest of the USA, in 1944 a conference was held at Bretton Woods in New Hampshire which led to the major currencies of the World being pegged to each other for nearly 30 years. Currency rates moved according to global political consensus and the system became known as the Bretton Woods System http://en.wikipedia.org/wiki/BrettonWoodssystem. This system brought global peace and was the birthplace of the IMF and the World Bank. It was a truly successful system of CURRENCY MANIPULATION put in place by the USA.

For sure there will always be those who wish to flout the consensus, but this has to be far better than the Roller Coaster Ride that is global currency trading today where only the super greedy and super ignorant set the rates – and the super incompetent politicians allow them.

Gordon Styles

Contact Gordon Styles at: gordon.styles@star-prototype-china.com

A Perspective on China 2010

2010-05-05T03:07:00.001-07:00

A Perspective on China

加大技术改造力度, 全面提升产品质量
jiā dà jì shù gǎi zào lì dù, quán miàn tí shēng chǎn pǐn zhì liàng

Increase the strength of technological innovation;
Improve overall product quality [in China] – WEN Jia-Bao – Chinese Premier 2010

I Love my Country

I am British. I love my Country. I detest most British politicians. I hated the STATE of my Country so much I voted with my feet and went to China in 2005. Now I have an 80 person RP company in Zhongshan which I started with less than USD 10,000. I hope one day to go back and help fix the UK.

I am so upset about Britain’s decrepit state I wanted to find out why and what could be done to fix the systemic problems. Maybe my journey to China has taught me a few lessons.

I recently did a balance sheet calculation for the major countries of the World. I wanted to create a meaningful measure for a country. The reliance on GDP as an indicator of wealth creation is ridiculous. No sane businessman would measure his business based on sales alone. Sales is vanity; profit is sanity.

Who’s Broke?

I approached the calculation in the same way as I would calculate the balance sheet of a company. These were my rough guesstimates:

The UK is bankrupt having a balance sheet of approximately minus USD 0.8 trillion. The UK is bankrupt because of complete systemic collapse.

China approximately + USD 11 trillion [increasing fast]
Germany approximately + USD 6.5 trillion [increasing]
USA approx + USD 27 trillion (ignoring the CDS fiasco that could burst at any time)

[The USA’s value is decreasing mainly due to the trade deficit/reduction of domestic manufacturing]

The UK is bankrupt along with Portugal, Iceland, Greece, Spain, Ireland and Italy.

Why so many bankrupt countries?

How to Increase the Wealth of Nations

To increase the worth of your balance sheet as a company you have to make a profit and pay down net debt. In National terms that is called a trade surplus and paying down external debt. Alternatively it is having a trade surplus and putting the cash in the bank. In this case the bank is the United States Government if you are Japan or China. You may also buy equipment from outside your company/country and put it on the fixed asset register and depreciate it over time. That is simply swapping cash for a useful asset.

Companies and Countries can also increase the worth of the balance sheet another way. They can use their internal resources to create a useful physical asset that can also be put in the fixed asset register – thereby increasing the value of the balance sheet. This would be like a family deciding to build a house in the woods using only the materials they can personally find and process. Assuming a bank thinks that the outcome is a bankable asset, the family has created wealth without having to leave the forest or work with any other family. So it is true for countries.

Contrary to the popular myth that international trading is essential to create wealth, a country can close its borders completely and set its people to work to build assets without external help.

The proof of that statement is that Humans on Planet Earth have created huge wealth without having to trade with the Martians or the Venusians. We simply combined brain and brawn and got into the fields and built STUFF!

So in simple terms here is the check list for any aspiring country that wants to become extremely wealthy:

1. Build lots of buildings; roads; infrastructure; factories; machines; products; ships; ports; airplanes; computers; USEFUL STUFF; STUFF; STUFF; STUFF

2. Sell it at home and abroad

3. Maintain a healthy trade surplus

4. Be friends with everyone that wants to be your friend and help them to make wealth

There is one other very important issue. You need to maintain financial stability for the country to be successful.

1. Don’t let your banks do casino banking

2. Control currency flows tightly

3. Ensure all financial institutions maintain 14% or more as a reserve

4. Do not let the money markets mess about with your exchange rates for personal gain – it destabilises international trade.

You also need to maintain social stability and raise the educational level of your people:

1. Everyone gets free education up to a standard that is useful to industry

2. Everyone gets free health care up to a basic standard – you can’t have useful workers of the future dying off for no good reason. Why educate a child for 10 years and let him/her die.

3. Never, ever, ever, ever allow riots to begin, and if they do get going, stop them instantly

4. Deal with the underlying reasons for social instability such as poverty and inequality

5. Do not let your people become corrupted by those that wish to make a profit at any cost

6. Do not allow hateful ignorant minorities spread their views widely – the British Nazi Party a.k.a. British National Party would be a good example.

7. Stop access to filth on the internet – bye bye Google CN

Anyone who has got this far will have realised what I have done. I have just written down the way that the Chinese Government runs China. Basic universal health care comes in 2011.

RP&M to the Rescue!

What has all this got to do with Rapid Prototyping & Rapid Manufacturing???

I started with a quotation by WEN Jia-Bao, China’s Premier. WEN is the top operational man in China. President HU Jin-Tao is the one all the foreigners know, but he really only deals with foreign politics.

WEN reports to a 25 person Polit Bureau and executes their collective will. The PB executes the collective will of the Government as a whole – and the Government executes the collective will of the people. Yes, it really does work like that.

The whole of China knows that the best way to make money for themselves or for their country is to SELL more than they BUY a.k.a. a trade surplus. The whole country knows that building STUFF creates wealth. The better the STUFF is, the faster you make wealth.

So, WEN urges China to – “Increase the strength of technical innovation and improve overall product quality [in China].”

That sounds like Rapid Prototyping and Rapid Manufacturing to the Rescue!

Imagine living in a country where the Top Guy is screaming out for your help. And he means it. My reading of the situation is that Obama is making similar noises. Brown and Cameron in the UK are NOT. They remain completely ignorant of how to run a country and are not calling out for help from anyone except the IMF!

State of RP&M in China

To be frank, RP&M in China has barely moved in recent years. CNC machining of prototypes is still cheaper than SL, SLS etc. Few wish to buy the super-expensive foreign RP equipment (except for hundreds of small Envisiontec machines that are going into the jewellery industry). The domestic manufacturers are ticking along, but not booming.

RP technologies will not flourish in China until the factory gate price of a basic RP model is less than that of a typical CNC model. For that to happen, the technology needs a step-change. Envisiontec is probably the only company currently poised to facilitate that.

The Envisiontec Xede machine makes models much faster than the usual SL/SLS offerings. My money is on the Xede. The only problem is, for that to happen; someone has to teach the Chinese market about RP technologies. The typical designer remains ignorant or reluctant to try RP at a higher price.

In September this year my company Star-Prototype launches for the first time to the Chinese market. Almost all good RP companies in China deal internationally not domestically. This is about to change. To be sure the mists are clearing.

Once China embraces RP&M as the Americans and Europeans did in the early 90’s, there will be breakneck growth in that industry for at least 15 years in the domestic Chinese market. It is certainly my aim to hold on to the Tiger’s tail for as long as I can…

To the Rescue

Not to disappoint Premier WEN, I am sliding down the Fireman’s Pole as I sign off for yet another year. China knows how to make wealth. I only wish that my beloved Countrymen could stop blindly criticising China and open their eyes and relearn a lesson they forgot.

Industry, Manufacturing, Construction, Science, and Engineering IS WEALTH CREATION.

Gong Cheng Shi Wan Sui – Long Live the Engineers! Gordon Styles – 2010

Workings

1. Balance Sheet. You would normally measure a company by the following calculation:
Fixed Assets + Intagible Assets (cash etc) – Borrowings = Balance Sheet Value (Company Value)

But, when it comes to measure the value of a closed loop system such as the value of Planet Earth, you can ignore all cash/equivalents (shares, bonds, derivatives etc.) and just measure the total value of all of the stuff. Cash/equivalents are merely an alternative bartering system for all of the STUFF within that closed loop system. It doesn’t matter if the Cash/Equivalents are overvalued or undervalued at the time of measurement, because in the long run they will eventually balance out to the value of all of the stuff in the system. That is why the World has cycles – boom-then-bust-then-boom-then-bust.

So, to measure the value of a country it is quite simple: 1. Ignore all of the internal cash/equivalents and consider the value of all of the assets as measured by their long-term average value. That is all physical infrastructure. For example the UK has a physical asset value of about USD 8 trillion; USA about USD 40 trillion; China about USD 10 trillion; Germany about USD 10 trillion.

EXTERNAL VALUE

Foreign Investment Abroad + Foreign Reserves – Foreign Investment at Home – Foreign Debt = External Value

UK is + 1.57 trillion + 0.05 trillion – 1.45 trillion – 9.04 trillion = minus – (8.87) trillion External Value

USA is +3.16 trillion + 0.08 trillion – 2.37 trillion – 13.75 trillion = minus – (12.88) trillion External Value

China is + 0.15 trillion + 1.96 trillion – 0.76 trillion – 0.4 trillion = plus + 0.95 trillion External Value

Germany is + 1.41 trillion + 0.14 trillion – 1.03 trillion – 5.16 trillion = minus – (4.64) trillion External Value

TOTAL BALANCE SHEET VALUE

So, the total value of the UK would be USD 8 trillion – 8.87 trillion = minus – (0.87) trillion Total Balance Sheet Value

So, the total value of the USA would be USD 40 trillion – 12.88 trillion = plus + 27.12 trillion Total Balance Sheet Value

So, the total value of China would be USD 10 trillion + 0.95 trillion = plus + 10.95 trillion Total Balance Sheet Value

So, the total value of German would be USD 10 trillion – 4.64 trillion = plus + 6.46 trillion Total Balance Sheet Value

TOTAL BALANCE SHEET VALUE PER PERSON in USD

USA = plus 90,400 per person
Germany = plus 80,000 per person
China = plus 8,111 per person – Not surprising given they are emerging
UK = minus (14,500) per person – No Surprise either – given the incompetence of the UK Government

Contact Gordon at: gordon.styles@star-prototype-china.com

A Bit of San Diego, California in Zhongshan, China

2010-04-20T01:26:00.000-07:00

A bit of San Diego, California in Southern China? Yes, you read that correctly. There truly is a hint of San Diego in Zhongshan.

But I have been fortunate enough to travel to our corporate headquarters in Zhongshan, China five times over the past two years. In total, I have spent about 4 months in Zhongshan. I will never forget the first time I arrived in Zhongshan. I was like a bright-eyed kid going to Disneyland for the first time. Everything was so new; the sights, sounds, and smells were so different, yet oddly familiar.

Before I get ahead of myself, let me tell you a bit about San Diego. San Diego is known as America’s Finest City. This term was a marketing ploy by a San Diego politician that has stuck over the years. There is a reason why it is known as America’s Finest City. San Diego has some of the most ideal climate in the U.S., it rarely rains, there is an abundance of tourist attractions, it has some of the cleanest and most beautiful beaches in the world, people are extremely polite and there is very little crime. San Diego is always a top tourist destination during the summer for people all over the world.

Zhongshan may not be a top tourist attraction for vacationers (yet), however, it does share many of the same attributes as San Diego. I have never encountered such friendly people as I have in Zhongshan. The pace of life in Zhongshan is similar to that of San Diego. As I was prepping for my first trip to Zhongshan, I had it built up in my head that it would be a crowded, fast paced city like Beijing. I imagined a fast paced city full of people going about their day unwilling to help a foreigner with a simple thing like directions. Boy, was I wrong.

The people of Zhongshan are friendly, welcoming and glad to lend a hand to foreigners such as myself.

The weather in Zhongshan tends to be a bit warmer with a lot more humidity, but it is very tolerable.

Zhongshan has its downtown area similar to the Gaslamp of San Diego. This is my favorite spot of town. There are 5 star hotels here, American fast food joints, shopping malls, night clubs and my favorite restaurant, Bella Vista. Bella Vista is where all the foreigners that live and work in Zhongshan tend to meet up. German and English are the most common languages spoken here.

Star’s factory is located in the Torch Development Zone which is roughly equivalent to Carlsbad, Rancho Bernardo and Sorrento Valley here in San Diego. These areas are home to corporate giants (and existing clients of Star) such as Hewlett Packard, Qualcomm, Agilent, Novatel Wireless, and Callaway Golf.

Our CEO (Gordon Styles) lives in a nice community that is the equivalent of Poway, California. It is in the suburbs with tasteful and beautiful architecture.

As far as safety, I have never feared for my personal safety in Zhongshan. After a long work week in the office (cough, cough), I like to toss back a few cold ones and visit the local bars and night clubs. I have stumbled back to my hotel on a few occasions at 2 in the morning feeling just as safe as I do here in San Diego.

There truly is a hint of San Diego in Zhongshan. I truly look forward to each trip to our corporate office. It brings out the kid in me.

Next time you happen to find yourself in Hong Kong or China, consider adding Zhongshan and Star Prototype to your itinerary. I love Zhongshan so much, that my CEO and I have unofficially named San Diego and Zhongshan as Sister Cities.

by: Pete Vigil Jr – North American Business Development Manager – Star Prototype China

Feel free to contact Pete at: pete.vigil@star-prototype-china.com

An Invisible Minority

2010-03-21T04:57:00.000-07:00

As a Canadian-born Chinese working in China, I am presented with a unique set of challenges that other foreigners don't experience. Whereas the other foreigners stand out in a crowd, I blend in perfectly -- that is -- until I open my mouth to speak...and then I get confused stares. The locals can't understand why I don't communicate like the natives. When I explain that I am from Canada they become even more confused. I was asked on several occasions why I didn't have blond hair and blue eyes -- which is their vision of a "foreigner". It is common for my other foreign colleagues (who happen to be "foreign-looking")to receive stares and extra attention from strangers. In fact, they often encounter friendly locals (often in droves) who want to have their pictures taken with them. My colleagues have admitted to feeling like rock stars here in China.

Appearance-wise, I look like any other local here in China but on the inside lies a different cultural mindset than what appears to be, a vastly different background, education, and language. Being born and raised in Toronto gave me early exposure to multiculturalism unlike those who were brought up in the uniform culture of China. I consider English to be my mother tongue but I am also fluent in Mandarin Chinese. I was raised in the West with both Eastern and Western influences because my parents were originally from mainland China. You can take people out of China but you can't take the China out of them. Growing up, we spoke a strange mixture of English, Chinese and even the occasional French. We celebrated Chinese festivals, ate Chinese food (although I preferred pizza, KFC and other "western" fare), plus my sister and I were forced to attend Chinese school on the weekends. I feel as if I am both "Eastern" and "Western" at the same time -- a hybrid of sorts. I have been referred to as a "banana" before -- yellow on the outside but white on the inside. But I'm not really white on the inside either...it's more off-white.

I believe my unique position helps me to bridge the communication and cultural gap between the foreigners and the domestic staff in our company, Star Prototype China. Our boss, Gordon Styles, is from the UK and manages his business in a western style. We tout that our company is the "Best of the West in China" which means we must uphold western standards of quality, customer service and expertise. Gordon has employed several key foreigners from Britain, the United States, Germany and Canada to contribute their knowledge, experience and skills to help our young company achieve its goals. We position ourselves to be the market leader in our industry operating in China. I have confidence that Gordon possesses the vision, the drive, the resources, and the insight to take our company to great heights.

I may not get rock star treatment here but I feel that I have access to something more important. I possess the knowledge and experience to promote cross-cultural understanding within the company. My goal is to improve the communication and harmony amongst the English speakers and the Chinese speakers to promote a happier, more constructive, and peaceful work environment for all.

Posted by Christal Chai, Marketing Coordinator and in-house PPC Campaign Guru.
You can reach Christal at:

Email: christal@star-prototype-china.com

Foreigners Flock to China!

2010-03-17T20:45:00.000-07:00

My goal in China is to combine the best skills of the so-called WEST, with the hard working dedication of my Chinese colleagues. Therefore, I intend to put one highly skilled Foreigner into each of my key departments. I'm currently in Hong Kong having just picked up a 50 year old American Pressure Die Casting expert. Really cool guy called Joe. He's totally in awe of Hong Kong. Wow, wait until he sees mainland China!

Hope it works out. He certainly knows his stuff. Just 30 minutes in the taxi last night made me realize how much I don't know yet about Pressure Die Casting. We do a good job now; but that's not enough. I want my company to do an AMAZING job.

Already we have an American called Bradlee running the rapid prototyping shop; a BRIT called Michael running the precision engineering shop; a German called Marcel covering German sales; and a Canadian called Christal running our marketing department. My area of expertise is the Vacuum Casting shop.

I love watching the "Newbies" arrive in China and start to see China for the first time. One thing is for sure; the China that is presented by the western Governments and Journalists is not the China I know and see every day. The developed parts of China are pretty much like most developed countries. At this point I would normally refer to the bad driving, but frankly it is no worse than Paris or Rome.

Sure the food is very Chinese; but not what you get in a Chinese restaurant in Middlesbrough or San Diego!! Personally, I love it. We even have our own team of Chefs to prepare the food in our canteen. I always insist on my table getting a few Western niceties such as pan fried fish and curried potatoes.

The one thing that always strikes the Newbies most is how incredibly friendly and innocent the young Chinese locals are. They are a very sweet bunch. That is the one notion that gets me up every morning. Going to work is like going to see your friends and family every day.

Bradlee had only been with us about one month when he realized that the guys were hanging off him whilst he gave his trainings. They are very touchy feeling. Ain't no personal space in China. NEVER.

China is so demonized abroad. Sure they've got some big hills to climb, but China has never struck me as the kind of place that's going to invade anywhere soon! They're just too busy eating; chatting; working; singing; toasting; and making love! They just don't have time for fighting. But don't get me wrong; when it comes to the fight, you wouldn't want to get in the way!

China ain't that China...

Gordon Styles

For more information on Star Prototype, visit http://www.star-prototype-china.com
Follow us on Twitter: http://twitter.com/StarPrototypeCN
E-Mail: gordon.styles@star-prototype-china.com

Myth: Cheap Rubbish from China

2010-03-09T00:56:00.000-08:00

David Mantey from PD&D Magazine recently sat down with the CEO of Star Prototype China for a Fire Side Chat.

Star Prototype China is owned and run by Gordon Styles, British businessman and engineer.

In 1993, Styles began building what became the U.K.’s largest rapid prototyping technology (RPT) company, which he later sold.

Styles then founded Star Prototype — a full service RPT bureau that specializes in rapid prototyping, urethanes, CNC machining, rapid tooling and molding — in 2005 with the intention of offering western clients the opportunity to use a reliable and high-quality rapid prototyping and rapid manufacturing supplier in China.

PD&D: What is the biggest myth regarding manufacturing in China?

Gordon Styles : The biggest myth is “Cheap Rubbish from China.” There is no correlation between the price and quality in China.

I have spent top dollar for rubbish; and equally I have received some of the world’s best quality for prices so low they make your eyes water. In terms of quality I would say that the 80/20 rule applies, inversely.

In developed countries, 80 percent of suppliers are good-to-excellent quality; whereas in China it is only 20 percent. This is changing fast though. Sometimes the price is double the U.S. or Europe — this is usually driven by inefficiencies in a particular niche.

PD&D: Why do companies choose to move to China instead of continuing work in the U.S.?

Styles: For the last 40 years in the U.K., and to a similar degree in the U.S., industry and manufacturing have been ignored by the government, and allowed to wither on the vine.

In the U.K., manufacturing went below critical mass in the last 10 years, and is now gasping its last breaths; U.S. manufacturing is in danger of doing the same.

The blame for this can be laid at the feet of successive governments of all persuasions. Many companies go to China now because they simply can’t get the capacity anymore at home. It is a vicious cycle that will need some serious political leadership to reverse. I believe that as the U.S. and U.K. emerge from recession the move to China will actually accelerate. This is because of the “Last Man Standing” effect — the guys who survived get to feast as the economy starts to grow again — lead times go out and prices go up — ipso facto, more business goes abroad.

PD&D: In your opinion, how would you describe Chinese working conditions?

Styles: In China, you have the whole spectrum. Generally the foreign owned enterprises offer better working conditions. That includes Hong Kongers; Taiwanese; Japanese and, of course, the “Westerners.”

My own business partner James Li Xue Zhong previously worked building ships. He could go a whole month without emerging from the inside of the hull of a ship — breathing welding fumes; no masks; minimal ventilation; a bowl of rice twice a day (much less common nowadays) — and at the end of three months the company refused to pay him.

When we recently installed a new paint booth, we were required by the government to insist that our workers wore active carbon masks and that we fit an active carbon exhaust filter. All the factories in the area were forced to do this. Health and safety at work in China is certainly improving at a pace that I would put it on par with the U.S. and U.K. of the 1980s.

PD&D: To what do you attribute the rapid expansion of the Chinese manufacturing industry?

Styles: Here come two completely unexpected and extremely controversial answers:

1) The entire Politbureau [The executive committee and chief policymaking body of Communist China] including President Hu [Jintao] are Engineers. In the case of Premier Wen [Jiabao], he is a geologist — earth Engineering, same thing.

China is run by Engineers that understand the importance of manufacturing and construction as the major wealth creating sector of a modern society.

2) The Chinese Government does not have to answer to the masses and can therefore make bold and very long-term decisions that benefit the country long-term. Deng Xiaoping laid out a long-term plan for China in the 1970s, and the government of today continues to be true to his original goals. In my opinion, Western-style democracy in China would have led to a much less potent manufacturing sector.

PD&D: Why is Star Prototype based out of China? You state that you’re “western owned, and managed in China.”

Styles: I couldn’t make money as an engineer in the U.K. anymore. I also love the feeling of working in a country where the top guys are also engineers. I feel special in China. I felt professionally worthless and unwanted in the U.K.

PD&D: How did you get into the business?

Styles: I started out in precision engineering in 1983, and in 1993 I started what became the U.K.’s largest RPT Bureau. We were up to 80 guys, and in 2000 I sold STYLES RPD to ARRK. After a number of years out of the industry, I decided to go the China to seek some opportunity.

PD&D: How has your life changed since you relocated from Britain?

Styles: I am a very proud and patriotic Briton. I love my country; I love my Queen; I love the great spirit of the British worker. I hate what the career politicians have done to my country.

The greatest change for me after relocation was to regain my self-respect as a businessman and as an engineer. Not to mention I took up playing blues guitar again after a 14-year break.

I miss my kids, but they love to holiday here in Zhongshan. Great beer! Great music! And the nightlife is great. Not as good as the Gas Lamp in San Diego – but not far off.

PD&D: In the current economic climate, what keeps you up at night?

Styles: I did my personal recession between 2002 and 2006. I was running on financial fumes at that time.

In that period, I used to hate guys telling me how much money they made each week from the increase in the house price. Putting food on the table and keeping a roof over my family’s head kept me awake back then.

I sleep pretty well nowadays as we were almost untouched by the recent economic recession and have continued to double sales each year.

For more information on Star Prototype, visit http://www.star-prototype-china.com

E-Mail: gordon.styles@star-prototype-china.com