China Product Outsourcing: Be Like Anker

Anker is not a client of our law firm, so my gushing is not any sort of payback. But here goes.

I am a huge fan of Anker. Whenever I would talk about how I was not aware of any Chinese consumer goods company with a super high end stellar reputation in the United States, I would always qualify it by saying, except Anker. I would then usually say, “and that is who other Chinese consumer goods companies need to follow.” Then I learned that Anker is not really a Chinese company. Oh well.

But Anker still very much deserves to be followed (read “follow” and “followed” as a euphemism for “copy” and “copied”). So how convenient that Nick Statt just came out with an article for the Verge setting out the roadmap for doing exactly that, with How Anker is Beating Apple and Samsung at Their Own Accessory Game.

But first, please allow me to gush a bit about Anker. I’m not sure for how long I’ve been buying Anker products, but I know my first buy was many years ago and I know the first product was a predecessor to the PowerCore Mini, a phone charger. I remember how my research revealed that product to be the best product like it on the market and one of the cheapest. It came, I loved it, and within weeks I had bought the same thing for everyone else in my family. In my house (or in my eldest daughter’s apartment or my youngest daughter’s dorm room) we now own and love the following Anker products:

• Pretty much every PowerCore size and shape possible. The Anker PowerCore 20100 sits on our treadmill so we can charge our iPhones and iPad for weeks without having to recharge–it’s in the middle of the room, far from an outlet.
• I never leave town without my trusty PowerCore Fusion 5000 2-in-1 Portable Charger and Wall Charger, which cuts down on the number of moving parts I need to bring.
• A ton of Anker car chargers and cables.
• And when Anker expanded into home products with its Eufy line, we snared a vacuum, a scale and night lights at great prices, and — no surprise — all work exactly as advertised.

I buy Anker/Eufy products because they work well and forever, look good, and because they virtually always cost less than anything comparable. There are few brands that combine all this and those that do win my admiration.

But of more relevance (probably) to most of our readers is how Anker managed to pull all of this off, which is where the Verge article comes in. Two things struck me from the Verge article. One is how Anker has set up shop in Shenzhen. The interview with Anker’s founder, Steven Yang, took place with Yang “from his office in Shenzhen.” The article explains how Yang and “his core team” set up shop in Shenzhen to find its manufacturers:

It was a long and painful process. After he quit his job at Google in July 2011, Anker took 12 months just to prototype its first laptop battery. That was even after Yang and the core team moved to Shenzhen to find reliable manufacturing partners. “I knew that if I stayed in California and had people FedEx me prototypes in a week, it was just not going to work,” he says.

Many hardware companies, especially crowdfunded ones in the US, learn that lesson the hard way, missing deadlines and hitting snags that lead to months-long delays. A solid supply chain is so crucial to a hardware company’s survival that there’s an entire consulting industry around helping startups find suppliers and set expectations.

Amen. If you want to get connected with the best Chinese manufacturers and you want those manufacturers to do their best work for you, the fastest and best way to accomplish this is to get on an airplane yourself and spend massive time meeting in person (multiple times) with a ton of Chinese manufacturers and then meet even more times in person with those you like the best. There is no substitute for you or someone important from your company having these in person meetings in China. And this is true pretty much no matter what you are looking to have made in China.

I am always saying the following to clients, potential clients, and even start-up companies that ask me for quick advice via email:

• “A day on the ground in China is worth a month in your office in ____________, USA/Canada/Latin America/Europe/Australia.”
• “Just going and meeting with potential factories or with your existing factory will do wonders in terms of product quality and timeliness.” I cannot back this up with hard facts, but I truly believe that those companies that meet with their Chinese suppliers in person in China at least once have 80 percent fewer problems than those who never do, and those who meet regularly with their Chinese suppliers have 95 percent fewer problems. Going to China for live meetings humanizes you, says that you care, and that you will be watching what the Chinese factory does and holding them accountable. This is hugely powerful.

And number two, be relentless yet patient with product quality:

“The challenge wasn’t selling products,” Yang says. “It was making products and making sure they were high-quality as well. That’s why we spent a majority of our effort on R&D and product development.” The company does a majority of its sales directly to consumers over Amazon Marketplace, where a combination of strong reviews, low prices, and prominent placement in search rankings can turn a single product into a lucrative line.

I cannot tell you how many companies my firm has represented that never recovered from having rushed their first product to market (oftentimes to meet or even come close to meeting shipping dates they had promised on Kickstarter). These companies shipped a defective product and then could never recover from the expenses they had to incur in fixing or replacing or providing refunds for their one bad product. Not to mention the damage they suffered to their new brand.

Follow Anker. For further ensuring your China product success and for ensuring that once you get it, it will not be seized from you, be sure to check out Having Your Product Made In China: The Basics on Protecting It and You.

Oh, and one more plug/gush. If you are working on developing a hardware product you should be aware of a hardware accelerator in Shenzhen called HAX. Our China lawyers speak frequently there and our law firm has represented a good number of its participants. Its slogan is “When building hardware all roads lead to Shenzhen” and its pitch is “Come and plug yourself up to our ecosystem, leverage our curriculum and build meaningful products.” Very briefly, if you are working on a great product, HAX will help fund you and plug you into their ecosystem and by doing so, give you a chance to spend three months with them in Shenzhen and better learn the lay of that land. It is worthwhile. HAX cannot make your company into the next Anker, but it certainly can help.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.