Over the past two decades, Jacob Rothman built a thriving manufacturing business in China. He has also established manufacturing presences in Cambodia, Vietnam and India. Jacob has researched opening factories in points as disparate as the Philippines, Turkey, Mexico and South America.
There are advantages and disadvantages associated with manufacturing in every country. Many companies are now considering divesting from China. However, Jacob points out that one should think twice about uprooting manufacturing from China. China has first-class infrastructure, a dedicated workforce, a deep supply chain and the ability to scale. Also, when one invests in a new plant, thought should be directed to the ability to sell that factory if need be.
Don’t miss this fascinating conversation that discusses the pros and cons of manufacturing in China, Cambodia, Vietnam, India and Turkey. Issues such as addressable markets, inflation and currency controls are broached with respect to many of the aforementioned countries. As a bonus, Jacob also shares a few insights into the history of Jews in China and Shanghai’s contemporary Jewish community.
Jacob Rothman – Co-CEO, Velong Enterprises
Jacob is largely responsible for growing Velong Enterprises into a leading manufacturer of innovative and sustainable grilling and kitchen products. Velong maintains 11 factories, introduces 500 new products each year and employees 1,600 people. Velong’s products are sold to the likes of Weber (the grill maker) and Walmart.
Speaker 1 02:21
Sure, that’s what’s propped up GDP here for so long is massive building projects. So you can be on the highways outside of Shanghai or Guangzhou for days and have beautiful, you know, highways and roads. And bridges and everything else. But the reality is most of the manufacturing takes place within a a long strip from Shenzhen moving north, and everything is built up there to what anyone would need contract. You know, if you look at India or other places, the roads aren’t so good. It’s hard to get a truck from outside of Delhi into Delhi and then onto a ship or a plane or whatever you need. It’s it’s it’s harder hmm and what about the reliability of electricity and water?
Speaker 1 03:14
So forth. We used to when I first started have power outages and from time to time that happens here as well depending on what’s going on, whether and and other events in China. But for the most part it’s great and when you compare it to other countries it’s, it’s better than great. So and it’s reasonably priced. You have other countries like Mexico that energy is a significant part of the manufacturing input to figure out costs and it’s higher.
Speaker 2 03:47
What about the quality of the workforce? Are you generally very impressed with the quality of the Chinese workforce?
Speaker 1 03:56
Yeah, there’s there’s really nothing like it. I hate to make large cultural general generalizations, but Chinese factory workers are disciplined, work hard, don’t complain very much, and are great at manufactured and worked in countries around the world where that’s not the case.
Speaker 2 04:18
So I believe you speak Chinese, but for uh westerners that don’t speak Chinese, they have to interact with a supervisor or a factory manager. How easy or difficult is it to communicate with? Most you know it’s a generality, but you know how is their English speaking ability?
Speaker 1 04:38
It’s pretty good there’s missed communications obviously one of the reasons we’ve done well as a company is because we have a mixed culture and and and English speaking people on staff Native English speaking people on staff and Germans and Australians and Filipinos and and so we built an international team but it can be a barrier but if if I didn’t speak Mandarin I I would be fine doing business here hmm well, we’re still in the COVID era, especially in China. But outside of the COVID era, was it easy or difficult for you to get the necessary visas for people to go to work in China or to visit you at your factories?
Speaker 1 05:27
Yeah, I mean there was never a problem, not now. It’s a serious problem. I personally have been here for three years and haven’t gone back to California. But and people who want to visit, we haven’t seen customers from abroad in years. And I don’t know when it’s going to be something that people can, can do easily, but it’s been years.
Speaker 2 05:51
What is the risk now of 1 having their factory shut down effectively because of quarantines or COVID testing?
Speaker 1 06:01
There are high risk. You probably saw in the news in the last couple of days that there are riots. Foxcom, right? And that’s. A huge example and the best of the best of manufacturing for, you know, obviously one of the most important companies in the world, Apple. But then it filters down to smaller manufacturers and Shenzhen has been sporadically shut down Guangzhou. And then there are all the parts of China that you don’t hear about. Umm, you know, we don’t talk about Chongqing very often because it’s not, well, at least recently, politically significant, but touching, has 30 million people and it’s shut down currently it’s my wife’s home towns and yeah and many other places around China that you don’t. I hear about.
Speaker 2 06:46
Ok, what should a potential manufacturer in China know about the the work culture, taking breaks during the day, living on campus, having a cafeteria, that kind of thing that maybe an American or Israeli or Western or European wouldn’t expect?
Speaker 1 07:11
Well. Most of the factories that are doing export business, especially for retailers, are fairly strict about working times, hours, holidays. I think most people complain about Chinese holidays, they. Yeah, I, I think they feel like we take more breaks here than anywhere in the world. I I don’t know that that’s actually the case, but it’s the, it’s the assumption just because they’re so different from holidays around the world, I suppose, or international holidays, food working conditions. They’ve improved so much over the years. I I eat in our own cafeteria when I’m at our main factory and headquarters. It’s not kosher, but neither am I. That’s OK, but the food is great and we work on hydroponics, so we’re actually growing food that goes into our cafeteria. And so we have a circular sort of system going on. So it’s it’s great, actually.
Speaker 2 08:13
But isn’t it common for a Chinese factories that workers take maybe 2 hours for lunch and nap during the afternoon and? The reason why I ask is because my limited experience one afternoon I was at A at a factory and the workers had like lounge chairs and you know, with doze off for a while.