Alibaba And The Curse Of Chinese Manufacturing

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A fairly unnoticed story percolated through the interwebs this weekend about Alibaba’s CEO and hundreds of employees being implicated in what amounts to a payola scandal. Alibaba is a site that allows you to buy the worst junk imaginable. They represent over 500,000 factories in China. It is a sourcing site full of fake laptops, poorly made clothing, and potentially life-threatening auto parts. And, best of all, it was acting as a middleman to actual criminals.

I’m reporting this as a warning. CE makers have drilled it into our heads that you can make low-priced, high quality electronics. You cannot. It is, on the aggregate, impossible. That $500 laptop bears an unseen price.

I’ve always been very wary of Alibaba and, to a certain extent, sites like Brando and Harbor Freight. Many decry the sad state of American manufacturing but these companies still sell billions in janky garbage that washes up here in huge containers and is sold throughout our 50 great states and, more important, the rest of the developed and developing world. All of those cheap tools you find at lower-end stores? Alibaba. All of those cheap laptops you see on eBay? Alibaba. All of those cheap clothes you see at souvenir shops? Alibaba. All of Odd Lots? Alibaba. And someone – namely us in the form of OEM and quasi-OEM hardware like the Notion Ink tablet – is buying that stuff. There is a value in having high placement on the site because there are plenty of rubes to buy the garbage they sell. In short, Alibaba is the Chinese-run inflamed sphincter of a vast manufacturing gullet that sprays sub-par and toxic gear, textiles, and parts on almost every other nation in the world.

So now you know how I feel about Alibaba.

I was not surprised to hear that the CEO and those Alibaba employees were taking cash from criminal gangs to receive “gold ratings” on their products. This only makes sense. In an unfettered market, the unfettered will push their way to the top.

Companies like Foxconn are, at best, repellent to our western standards of work/life balance and wage equality but at least they feed and shelter and pay their employees a living wage. They have escaped China’a dark manufacturing past, abandoning in the process the practice of pillorying poor employees by making them stand in front of the factory with a sign declaring their incompetence and violently breaking up strikes – and pushed Asian manufacturing into an ISO-compliant golden age. Companies like Foxconn are at least forced to offer acceptable working conditions out of economic necessity. The companies that Alibaba represents are so small and immaterial that none of this economic gain is possible. The result is akin to SEO at gunpoint with criminals paying for top placement without being vetted by the company at all.

The companies that Alibaba represents are the other, old China. They thrive on cronyism and dubious, if not dangerous, business practices. These companies produce products destined for the landfill and, in their process of manufacture, they poison and destroy the earth.

So my recommended takeaway here is that while Chinese manufacturers and suppliers can be very good – and I’ve met a few who are truly trying to do the right thing and in the right way – there is a dark army of producers who care not a whit for anything other than saving a few cents on a wheel bolt. This race to the bottom mentality then poisons our own expectations, showing us that items that are wildly cheap are actually a better value than something built with some care and craftsmanship.

So keep your eye on Alibaba, friends, because they and their ilk act as middleman to the products you and your family consumes on a daily basis. A little payola is nothing in comparison to the damage they will be able to spread as their garbage engulfs the planet.

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