Small Business

When Honesty Gets Shanghaied


By Lisa Bergson "When I first arrived, I was pretty green. It took a while for me to figure out what was going on," recounts a young friend who relocated to China to further his career. "Now I look at all the angles. If you pay $1,000 to secure an $80,000 order, what's the harm?"

"You've become corrupt," I say, only half joking. Looking him directly in the eyes, I point out the harm to shareholders and consumers when the best bribe beats the best value. He shrugs. Some imagine we're bringing capitalism to China, but here I'm finding that business operates according to its own rules.

ONE BIG MESS. Take my recent visit to the mainland. For 56 years, my company has made highly regarded equipment used to detect contaminants in process gas. (Purity is critical for gases used to ventilate the delicate lungs of premature babies or to manufacture the minuscule transistors on a semiconductor chip.) With such proven scientific equipment you wouldn't expect much in the way of controversy.

Yet for weeks we've been caught up in a dispute with a big multinational gas supplier for a semiconductor foundry expanding into China. We've sent replacement parts, performed remote diagnostics, and still the gas company insists our analyzer isn't working. Meanwhile, the foundry is withholding payment to the supplier based on our equipment's readings.

Dr. Wen-Bin Yan, director of research, and I visit to check it out. Our local independent sales representative, along with a gas company employee, join us at the site. Pulling me aside, a foundry engineer confides, "We need your help." He's an earnest fellow I have met before.

We don the requisite blue booties and surprisingly grimy lab coats before entering the clean room housing our equipment. Next to our new unit, a local "quality assurance" consultant has installed an obsolete version of one of our instruments. The out-dated analyzer displays a number well within the specified requirements for the gas supply.

PAST DUE. I'm beginning to see the problem. Like any mother, I can tell when one of my children is ailing. "That unit is broken," I exclaim. "When was it last serviced? These older instruments fail if they are not serviced at least every 18 months." It saddens me to see our instrument so neglected.

"No, it has been calibrated. I have proof," the gas engineer retorts. "It's up to you to show this new unit is working," he continues. "Otherwise, we will take it out and never use MEECO equipment again." (Many fabs worldwide expect the gas company to select and purchase the equipment used to monitor their gas supply -- a potential conflict of interest.)

"I want to see the 'calibration' on the old unit," I insist, expecting to call his bluff.

Later, however, we receive a lengthy, official-looking faxed document signed and sealed by the quality assurance consultant, the Asian arm of a leading company in our field. "It's a fake," I tell Wen-Bin, who can hardly believe his eyes. We fax it to our production manager, Bill Kelly, in Pennsylvania.

"This stinks. The serial number shows that unit hasn't been serviced since January, 2001," Bill fumes over the phone. "China's such a big market, but you gotta wonder if it's worth it."

"I keep thinking the same thing," I tell him. "But we're in it now. I have an idea, but it's risky." For years, I've known and respected the American head of the errant quality assurance firm. I ask Bill to contact him. As a back-up, I call my husband and tell him I may need to extend my stay.

"Absolutely," he agrees. "Your reputation is at stake."

Early the following morning, I'm still in bed when I hear an envelope swoosh under my hotel room door. I call and wake up Wen-Bin to read him an unequivocal statement from the quality-assurance outfit's president. "Our Asian facility is not a trained and/or authorized MEECO service facility," he states. "I would recommend that you use only the authorized service centers to maintain MEECO's quality and good standing." We fax it to our reps.

UNTAPPED WISDOM. Wen-Bin and I spend the day in the field, calling on other customers. The whole time, I worry about whether the letter will make a difference. Finally our rep calls. "The gas company says they believe the new unit works," he reports. Thanks to what my husband calls "big face," my company won the latest round.

But I soon learn that in China fake certifications for our and probably other companies' equipment are commonplace. "You see, they can't tell the difference," sniffs my young ex-pat friend, when I fill him in on the latest. "They don't care if it's working or not. They just want to see the right number."

"We might as well sell them a box with the numbers painted on," I joke. It's easy to be cynical. Still, I think of the foundry engineer who sensed that something was wrong and looked to us for help. I'm sure that there are others like him, folks who value honesty and want to produce quality products. I have to believe that one day the realization will take hold in China that, with all the fraud and double-dealing that goes on, those doing the cheating are mainly cheating themselves. Lisa Bergson is President and CEO of both MEECO and Tiger Optics. Before joining MEECO in 1983, Lisa Bergson worked as a business journalist at BusinessWeek and freelanced for many business publications. You can visit her companies' Web sites at www.meeco.com and www.tigeroptics.com, or contact her at lbergson@meeco.com


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