I have worked with many manufacturing companies in china. One of my vendors grew from 1 container a day to over 5 right now in thr course of 3 years. I know this because i have seen the US port data.
He is perhaps the most cutt throat person i have ever met in my life. When i read this article about Mr Ding, he reminds me of him
One time i had a meeting with him at a covention. We talked about different specs for products for an 40 foot container order. As we started talking, another one of his clients who did 2xs or more business we did stopped by at the booth.
I kid you not but he told me to go fuck off right then and there in mandarin. There was only one extra seat and I occupied it. He had the most dead pan serial killer eye expression i have ever seen. We were just having a nice light casual conversation in english talking about spec clarifications one second before.
We still did business with him because you cant argue with the quality of goods he brought. His trade records were impeccable and spoke for themselves.
I've worked with high level execs before in the states. But I have never seen someone stab me in the back right in front of me so fast before.
The mentality in China on the exec level is so different.
Mandarin is a very direct and unsubtle language. Even between family, direct translations into English of simple requests and conversation seem very brusque on the verge of rudeness, so the threshold of expectations for politeness are at a completely different level. It's also a very status conscious culture.
So to get to the point, not you wouldn't expect that in Western business culture, partly because if the bigger customer got wind of it they would think he was being an a-hole too, while in China they'd be flattered. Source - my wife is Chinese and I've been over many times.
Everyone has the same mentality, some have diplomatic skills and can gently brush you off without risking his relationship with you. That's not admirable what he did, not even for his own benefit.
> We still did business with him because you cant argue with the quality of goods he brought.
True but for a sec there my mind was arguing with lack of morals on your part. Since your whole post is somewhat American doing business with Chinese individual, I felt disgust how low some of us (like Obama bowing to Chinese President to almost clean the floor) will fell just to grab ONE MORE buck :(
I know its off grammatically because I didn't know how to properly explain the facial expression he gave me. I have never seen it before. I was in shock. It looked like he wanted to kill me. Normally you can read someone by staring into their eyes, looking at their body language, and facial expressions.
The shift between the light conversation we had before and when he told me off it was done so casually and efficiently. There was NO change in body language. Only someone who is a complete psychopath or sociopath does this. Its as if he does this often to his factory workers.
But this wasn't the case when I visited his factory though.
A few months later he stopped by our warehouse. I took him around town. He didn't care about any of the cool things my city had to offer or its history. All he wanted to know was insider knowledge I had about the industry as a whole. Everything was strictly only about business only.
.....didn't realize grammatical comment was not at me but I expanded on it anyhow
I wish we could stick him in an fMRI machine and have his brain scanned at that very moment to see what areas of the brain lit up. More psychopath than sociopath?
What I'm reading is a monopolist is immune from scrutiny because everyone is afraid of the monopolist bankrupting them by cutting them out of supply from the monopoly. Further through a network of shell corporations, we learn the truth of the monopoly is obfuscated.
There's no game theory here. People need to stop calling everything game theory in order to sound smart. It's a government granted monopoly. Because it involves a mysterious Chinese man and fireworks, it sounds more interesting for the media.
>On Feb. 14, 2008, in Foshan, a city in southern China, 15,000 cartons of fireworks spread across 20 warehouses mysteriously exploded in the middle of the night, creating a tremendous blast that damaged windows and doors a half-mile away. Surprisingly, no one was seriously hurt.
>Before the explosion, companies could ship fireworks out of numerous ports, fireworks industry executives said. But after the explosion, Chinese authorities quickly cracked down, requiring almost all of the pyrotechnics to be moved out of Shanghai. And, perhaps most significant, to ship fireworks, companies now needed to obtain special permits, the executives said.
>Only three were initially given out by Shanghai’s Maritime Safety Administration to transfer fireworks onto container ships there, several fireworks and shipping executives said. Of those three, Ding was the only recipient who could move his vessels through the Shanghai port for export to the United States, according to Liu Jihua, owner of Hunan Hongguang Logistics, a Liuyang company that specializes in shipping to Southeast Asia.
Stuff like this is all over China, and they were even more extreme during the time of mandatory export licensing and "export tariffs"
> On Feb. 14, 2008, in Foshan, a city in southern China, 15,000 cartons of fireworks spread across 20 warehouses mysteriously exploded in the middle of the night, creating a tremendous blast that damaged windows and doors a half-mile away. Surprisingly, no one was seriously hurt.
i find this extraordinarily unlikely. i'm reminded of intelsat 708.
This could be a story about Google and Facebook rigging the digital advertising industry, and everyone would say, “great business tactics, it’s not a monopoly for XYZ reasons. It enables free service for users.” etc etc.
As a story about a Chinese businessman, this starts to get the scrutiny it deserves. I’d love to see journalists shed some light on monopolistic behaviors in the US. Frankly, we’d all benefit from the review.
On a side note, if you are ever near the national convention for The Pyrotechnics Guild International, Inc.[1] and like fireworks, then it is an event that does a pretty impressive show to demonstrate their wares during their convention.
The author and somebody he quotes are both awfully hung up on how "insiders call him Mr. Ding." Since that's his name, that is not remarkable whatsoever. In China the family name comes first, from Lee Jun-Fan (Bruce Lee / Mr. Lee) right on down to Chan Kong-Sang (Jackie Chan / Mr. Chan).
Imagine: "Mr. Smith -- that's what those of us in the know tend to have this wacky idiosyncratic habit of calling him -- controls all the mayonnaise distribution on the West Coast."
Hmm, I don't think Mainland Chinese call other people with Mr as honorific. We are more used to use titles or positions held by the person, like Manager, President, or the like. If it's some stranger you met on the street, master (师傅) is most likely used.
I've only seen people in Hong Kong movies or TV shows calling their boss Mr (生 rather than 先生). I think they actually do that in real life.
The immense power of being the only one to have the required license in a corrupt and bureaucratic system.
This sort of situation also has a tendency to perpetuate itself over there. The guy with the license can make monopolistic profits, which means he has greater financial resources to influence the licensing authority, which means unfortunately his rivals seem to have unexpected problems getting licenses of their own.
I think I don't understand this article. The container share graphic shows that Huayang market share is 2/3rds of traffic, but the numbers in all the rest of indicate that Huayang is a monopoly. 2/3rd is a lot but doesn't seem monopolistic to me.
It's also interesting that the article goes in depth with detail (because of data availability perhaps?) from the US side of the trade, but very light on detail (and full of implications) about stuff going on in the China side.
The first line of the article is: "Roughly 70 percent of all Chinese fireworks entering the United States come here under the control of a Chinese businessman who has used his influence to raise prices and block competitors, leaving many U.S. executives fearful of losing access to their most important Fourth of July inventories."
The word "monopoly" doesn't appear anywhere in the article. The article's claim is that Mr. Ding is anticompetitive, not that he operates a monopoly.
I used panjvia before so i can shed some light on this. Im fairly well versed in international trade as well.
US customs data is very reliable and standardized, however china export data is not. The public data by itself is useless though - theres 4 or 5 companies in america that process it in a usable BI type format. Panjvia is one of those companies.
His price will most likely just come under what it would cost to produce somewhere else. Anyone else in China has to deal with laws and regulations. If the news article is correct he's essentially fixed the rules so that he has the best position out of anyone who could otherwise compete.
- He has a permit
- He has economies of scale
- He owns the logistics and shipping
- He is the defacto controller of the port considering how scared people are of him
- He's cutting his costs of operation to a minimum by moving everything under his control since there are no middlemen siphoning of money for their own profit.
The nature of other markets like the US means the cost of production is prohibitive in most cases. This is literally the playbook on doing business from time immemorial.
If they start in China, it doesn't change the shipping problem.
If they start elsewhere... I guess the 18k per container that Mr. Ding gets from each sale is less than the price difference between Chinese-made and non-Chinese-made fireworks...
Does this explain why every vendor seems to have exactly the same stuff? I feel like when I was a kid, there was a lot more variety, and going to different stands you'd see different stuff. In my town of ~8000, there are going to be four or five firework stands, all with exactly the same stuff for exactly the same prices.
A question that is somewhat on topic: does anyone have any articles or books on the vertical integration of some car manufacturers in the past where they had raw iron ore come in one side and cars roll out the other? I would be interested in other industries as well.
Robinson Helicopter in SoCal basically does that today for safety QA reasons. They start with billets though and CNC every little part in a mile-long factory.
I believe that's when there aren't too many middlemen in the way or too many people driving up the cost of your materials when you can source them better at a different stage in the processing route. Logistics companies are middlemen. Vendors are middlemen.
Space X for example has a high degree of vertical integration, maybe not to the point of smelting their own raw materials but much higher than ULA. In the past it may have made sense given the environment.
I'm surprised this is a surprise to anyone that does business with Asian, African or South American companies. Anyplace that has high levels of corruption has businesses and Govt hand-in-hand. Isn't this the whole point of accumulating Govt power. If there was no way to extract value from it, no one would care about running for office.
He is perhaps the most cutt throat person i have ever met in my life. When i read this article about Mr Ding, he reminds me of him
One time i had a meeting with him at a covention. We talked about different specs for products for an 40 foot container order. As we started talking, another one of his clients who did 2xs or more business we did stopped by at the booth.
I kid you not but he told me to go fuck off right then and there in mandarin. There was only one extra seat and I occupied it. He had the most dead pan serial killer eye expression i have ever seen. We were just having a nice light casual conversation in english talking about spec clarifications one second before.
We still did business with him because you cant argue with the quality of goods he brought. His trade records were impeccable and spoke for themselves.
I've worked with high level execs before in the states. But I have never seen someone stab me in the back right in front of me so fast before.
The mentality in China on the exec level is so different.