Another company has learned the lesson of Americans doing business in China. The declaration of bankruptcy by Feng Ping Tooling & Plastics Mfg. Co. Ltd., and the narrow escape of the two brothers who owned the huge, fast-growing mold manufacturing company in Dongguan, Guangdong Province, provides another lesson of doing business in China.
But don't expect U.S. moldmakers to get out the hankies and the sympathy cards. While no one would wish physical harm on the Fiocchi brothers, James and John, who founded the company in 2008, there won't be any tears shed over the fate of Feng Ping. According to an article in Plastics News, the brothers, who were held for nearly two weeks, made their getaway in the trunk of a car. [Ed. note, Click here to read Clare's interview with Jim regarding the company's struggle with liquidating its moldmaking, molding facility].
SPI Industries, a South Bend, IN, custom molder, had molds built in China in the past. A person reached by telephone said that while the company had a couple of molds built by Feng Ping about two years ago, they didn't pursue a relationship because "things didn't look right."
This isn't the first time a company owner has been held captive by employees. Last summer, I wrote about Chip Starnes, co-owner of Specialty Medical Supplies, who was taken hostage by employees fearful of losing their jobs in the plastics division's closure and move to Mumbai, India. Starnes was freed after several days.
According to a Bloomberg report (by Megan Shank, June 7, 2011), the brothers founded the company after their Chinese mold supplier, Golden Bright - which had been bought by Highway Holdings - failed to ship parts. Golden Bright was holding the Fiocchi's molds hostage to force payment of $200,000 owed by the brothers, said the Bloomberg article.
After that, the Fiocchis founded their own company not far from Golden Bright. They moved the molds from the former parts supplier and purchased new molding equipment and moldmaking machinery. Interestingly, the Bloomberg article noted that the brothers hired staff "mostly poached from Golden Bright."
The company became a very high-profile moldmaker, and made a big splash at the NPE2012 in Orlando with a king-sized booth. [Ed. note, Injection Molding Magazine covered Feng Ping Tooling in a three-part 2011 series].
According to the Bloomberg article, Feng Ping had sales of $300,000 in 2008, its first year in business. By the end of 2009, the company did more than $1 million sales, and in 2010, they sold 258 molds for about $3 million. Bloomberg said that in 2011, the company expected to sell 700 molds to some big-name U.S. OEMs, with a staff of nearly 300 employees.
With news reports of embezzling by Feng Ping employees who set up a competing company with attempts to lure customers away from Feng Ping, and many molds-in-progress locked in Feng Ping's facility, the entire situation appears to be out of control.
Neighboring mold manufacturer, Jade Molds, is making an offer through a spokesperson of helping any of Feng Ping's customers who need molds completed and shipped, to contact them provided the molds can be accessed and moved to Jade's facility. "The whole goal of Jade is to help American companies get low-cost tooling with American expertise, and bring American quality molds back to America for molding," said Jade's spokesperson.
This is just one more lesson with regard to doing business in China, in which the business culture and the rules are often very different than those of North America. The fact that we hear so much about reshoring - whether it's a true trend or an anomaly - is still proof that companies are learning their lessons.
Sure, there will always be successes no matter where companies manufacture. And there will always be failures - North America has seen its share of mold company failures over the past decade. But we're also hearing of more OEMs strategically buying molds from regional suppliers to mitigate the risk involved, particularly with large, highly complex tooling which is the heart of so much manufacturing.
The old caveat "buyer beware" has never been truer than in today's globalized manufacturing world.
[Ed. note: The following Public Service Announcement is written by or on behalf of Jade Molds and not by the PlasticsToday editorial staff.
If you are affected by the Feng Ping bankruptcy, we have very important information to help you.
Knowing that many American molding companies could be hurt by the bankruptcy of one of our competitors, our President Pat Smith who lives in China and is fluent in Mandarin has personally taken the time to travel to the Feng Ping factory and has met with individuals there, including the China government officials in charge of the bankruptcy proceedings as well as the factory landlord and other key people. He was able to find our very important information that can help those affected. He also received some very specific information from the judge himself about specific steps that customers can take to try to secure their molds. This is very time critical. Please call our Vice President Tony Stewart directly at 585-310-3072 or email him at [email protected]]