The dream for many entrepreneurs is to see their product go from design to market. Yet many get overwhelmed with how to start and never take those steps to make a new concept a reality.
A Bit of Background on Mike
Mike is an American internet entrepreneur in China since 2007. Passionate about cross-border e-commerce and bridging China and the International markets, he has a host of business experience from e-commerce to mobile apps. Currently a partner at Enterchina.co as well as co-host of the podcast GlobalFromAsia.com
Over the close to 10 years in China, I have made my own set of new products as well as helped see through the process with over eight other startups – a mix of success and heartaches. #Thestruggleisreal and as my friends at Haxlr8r would say, “Hardware is a bitch”. But there are strategies and steps you can generally follow to reduce the pain.
I did my own product, Electrapour LED pour spout, before crowdfunding existed – learning from expats I met at bars in Shenzhen, China back in 2008! Today I’ll take what I learned doing it myself, as well as experiences from others.
But, if you are looking for a simple way to get rich quick – DO NOT design your own product. This is a long process and you have to be in it because you love it.
So, don’t hate the player, hate the game. Realize that we are in a global economy now where as soon as you post on Kickstarter a Chinese entrepreneur can swipe it and beat you to market.
Today I will share tips and recommended steps to maximize your chances of making the product a reality.
Note – My Experience Is While Living inside China
It is worth mentioning – I did this while living inside China. I wanted to make my own products while based in America, but one major reason I relocated to China was to develop my own products. While you can do this process remotely (from outside of China / away from your factory) it will add a lot of delays and miscommunications.
If you’re reading this from your cubicle in America right now, don’t lose hope. Your product validation (earlier steps) will be much easier to do in your home market. The tradeoff I would make is validate your product, get your handmade sample, CAD, and 3D printed models in your home country. But after that, I strongly recommend budgeting some time in China for “making it real”. You’ll see many crowdfunding campaigns say they will come to China once they get funding, that is because they did the steps to the sample, and now want to work next to the factory to ensure it is communicated correctly.
I’d love to hear tactics from readers who have done a new product development with a Chinese factory completely remote. Please leave comments below and share!
Step 1: Crowdfunding is NOT Step 1
Step 1 is, not a real step, but a big note. Launching on Kickstarter or Indiegogo is NOT your first step. So many of our Enter China members have come to us with their new idea and working on their crowdfunding campaign.
Step 1 is still the traditional product valuation, lean startup methodology. Have focus groups, find groups of your target users, find pain points. Today’s article is not going to dig into product validation – but I want to be clear you need to do this BEFORE you start to develop your hardware project.
Make a Sales Sheet BEFORE you Manufacture
Step 2: Gather Similar Products in the Market
Own this market. Get all the goodies you can in the market. This will be helpful for your product validation (see step 1) – but also for your product manufacturing.
For my Electrapour LED spout, we took a clear LED bottle pourer, an LED light with a wire and jammed it into the spout and connected a battery to demonstrate the product.
This will help you gather feedback from people in the marketplace, as well as engineers on the feasibility.
Step 3: Draw it Out and Get a CAD
Once you have a better idea of how the product will function, and the feasibility feedback from geeky engineers.
Note: Engineers are your friends! Get as many engineer friends as possible leading up to this process. Dig them up from your college contacts, local bars, or online dating posing as an attractive female.
As a bootstrapped entrepreneur in this process, I feel your pain. If you really can’t find an engineer friend to help you, hop onto upwork.com and find one to work with. But it is critical they give you feedback on the feasibility of the product – not just draw up what you give them into CAD format.
A good engineer will give you feedback and suggestions on your concept and save you tons of money in making a more SIMPLE product that is easier to get into mass production.
In my Electrapour experience, we had a CAD engineer sit with us over beers and watch him make it real time. To see your product go from a “back of the envelope” (coffee stains and all) to 3D CAD is like watching magic. If you can’t sit with them in person, try using teamviewer.com software to see their screen while doing a Skype call.
Set expectations with your engineer, this will be a back and forth process. Prepare them to have at least one or two rounds of revisions. You may realize it is better to change the angle of the housing, or positioning of the LED lamp. In our case, we had to revise the spout to put the LED further down so that it would shine better when pouring the liquid.
And like everything in life, hindsight is 20/20 – so be patient and get it right before moving to the next step.
Step 4: Get a 3D Printed Sample
Once you have a CAD sample you are happy with, you can have it 3D printed. Now, as an “old man” in this space, I can say how lucky you guys are nowadays – 3D printing is more and more accessible and therefore cheaper.
But be careful on who you give access to your CAD files and concept. I know all the Startup Weekends I helped organize would get upset at me now, but while you want to be open about your product to get feedback – you don’t want to be open about your design files and IP. This is like the source code of a mobile app, people with this CAD file can mass produce it.
This is where it may be more beneficial to work with a 3D printing company you trust – even better one you can visit in person. Order a few of them to be printed out, and be proud of how far you have come.
Now that you have a physical piece in your hand, your new product design is so close! But it isn’t time to celebrate.
While I am making this sound much easier than real life, I’ll add some of the hiccups that often come. For example, my Electrapour product, had LED lights, PCB board, and various plastic materials. Sourcing all those components took ages! Spreadsheets of different factory quotations for each component, ordering samples from each of them, confirming the quality of the materials, the cost.
Step 5 – Look at Your Materials & Think About Mass Production
Mass production should always be on your mind, but it will especially become true at this phase. By now, you have a physical sample of your product (well, 90% close, a hand made 3D printed sample isn’t the same as mass production), various component factory pieces, different choices for materials, CAD design (s), drawings, and probably some new white hair.
There are a few options from here. Will you work with 1 factory, or many? Many people end up finding a factory off Alibaba that makes “bar products” if the product is a “bar product” (in my case). Here’s the thought process
Positive: They Have Experience in Your Product Line
Working with a factory that has experience in your product line will make things much easier. They will know the common pitfalls in the new product development stage dealing with the materials and requirements. They may have an engineering team who can help you in the process of tweaking your current CAD file and other design files. It will speed up the process and make things go smooth.
Negative: They Can Become Your Biggest Competitor
On the other side of the coin is – they can most easily become your competitor. They are getting regular inquiries on Alibaba for products similar to yours. They may get tempted to show off your newly designed product at an upcoming Canton Fair or Global Sources show. They may get even more tempted when a new Alibaba lead comes in asking for your exact product.
To be fair, it is easy to blame the Chinese factory for copying. While often they are at fault, also consider American or other country competitors who are sending your new product sample back to Chinese factories asking to “copy” or “can you make this product” without ever mentioning it is a new design.
So with this in mind, let’s talk IP.
Patents and Trademarks, and China – Oh my!
Now, please don’t read this article and then email me questions first asking for an NDA. An NDA to me shows you are a rookie and that you don’t know what you are doing. I would instead suggest, anyone that you share your idea with can copy you. Just accept the fact! Take that mindset and instead put it on TAKING ACTION faster than anyone else. Knowing your target market, your customer better than anyone else.
I say forget about the word patent. It is just not worth it – unless you’re a massive conglomerate with a legal team to back you up and sue entrepreneurs and other conglomerates, I say screw it.
But – I do recommend trademarks. There are a few different choices – but I’d recommend a Chinese trademark and a US trademark (or your major market). This will cost you a thousand or two, but will let you sleep a bit better.
Why a Chinese trademark? Do your own research on this one, but short story is – even if you don’t plan to sell in China, a Chinese trademark gives rights to someone to manufacture the product in China. So if you want to block competitors from using your BRAND when manufacturing in China, you need this.
And BRAND is really the main value you are building. Patent is for the design, but it is so hard to protect a design and enforce it – you just gotta go all in with your marketing and branding of the product.
And brand is about community. Use your crowdfunding campaign, your blog, social media, to build a loyal fan base who will buy yours, and only yours, brand.
If you are successful, you will be copied. That is a sign you have “made it”, so while it is painful (yes, I’ve been copied), try to stay ahead of the game and keep innovating.
Another Option – Use Multiple Factories
Again, this is best used if you will remain in China. Or, you can find trusted “black box” service providers like my friend Mike Bellamy at Passage Maker China 9999. This is a practice of buying the components from various subcontractors and then shipping them to be assembled by a third party.
The benefit here is your factory is less likely to be your competitor. I say LESS likely, because of course anyone can buy the actual product (Amazon USA ships to China now, FYI!) and break it down and reverse engineer it.
The value here becomes in the quality of your materials, components, and your assembly team. Even if other factories copy you – they may have trouble finding the PCB factory, that LED factory, that exact plastic mould factory. And on top of that, they may not take the “tender loving care” you and your assembly plant will in putting it all together and doing final product testing.
Yes, this will cost more. You’ll pay more in shipping various components around. You’ll pay higher fee for more people to learn your product, your process, your inner workings. But you will have a more protected product.
I have to admit, for Electrapour, I didn’t go this way. I instead went with my Chinese factory who I was currently buying “generic” bar products from and gave him my design. It was a constant battle to ask him to remove my new product design from his Alibaba account and other use cases.
A Hybrid Model – Sending Components to Your Industry Specialized Factory
So maybe you’re still thinking to use the “industry expert” factory. They know your product line really well, after all. So let’s use Electrapour as an example. The factory was based near Ningbo and had trouble finding good LED lights. I was down in Shenzhen, and there are thousands of LED factories. I was at the marketplace testing them with some wires and batteries until I found the best ones.
I’d order the LEDs from a Shenzhen supplier, have them sent to my Shenzhen office, remove the invoice and other details of where the LED came from, and ship it up to the Ningbo factory.
Later, when I found out other competitors were ordering from this factory, I saw the LED lights weren’t as bright. They didn’t know our supplier of LED and were using their local source that I didn’t accept.
While this isn’t too strong of protection, it is a deterrent. Many Chinese factories don’t understand why foreigners buy such expensive materials and components and often cut corners to save on final product pricing. This is why you need to know your product inside out.
Main Takeaway – BOM (Bill of Materials)
What you hopefully are getting here is – it is YOUR job to know your product. Often new products, or even slightly modified current products, change the internal components and materials significantly. Don’t just expect your factory to know what the best components and materials are.
It is your job as the “inventor” or “product designer” to know what goes inside your product. It is called in the industry BOM: Bill of Materials. And start this from day 1.
Back to the earlier stages of this process, when checking out current products in the industry – pay attention to the material and components. Often times you can use the same pieces for your own product. Or, if it is bad quality, it’s most of the time because of a bad component. Think of Samsung’s batteries exploding. The rest of the phone was probably great, they just got a bad supplier of batteries. Each piece of your product YOU need to know, inside and out.
Make an excel spreadsheet of your product. List out each and every piece. Know how much plastic is required, what type of plastic you want. When you sit down with the factory, show them this BOM. Show them you know how much each component costs, and that you have already sourced those component factories.
You will blow the factory owner away. And they will know you are on top of your game. Sure, they need to make money, on top of the BOM is the labor for assembly and management, as well as their profit margin and room for error or currency exposure.
Business is business, and knowledge is power. Too many foreign entrepreneurs come to China ready to get ripped off because they have no clue what they even want. Take responsibility and know the parts of your product in full detail.
RIP: Andrew Grilli
Before we go, I want to thank Andrew Grilli. He is a friend and worked closely with me on Electrapour. He passed away in 2009 of cancer. Many of these tactics I learned from intense sessions with him in bars and Shekou Old Street in Shenzhen, China. Rest in peace brother.
Want To Hear My Bloody Story? Read Destination China
Today’s blog post is just a piece of the ins and outs I went through on my first year in China. If you’re interested in learning on how you can move to China and do sourcing, you should check out my book on Amazon – Destination China. It’s a small investment that could save you a ton of money. And if you’re too cheap to pay a few bucks for it, email me and I will send you a copy!
So- manufacturing is a bitch. It is never easy, but especially hard when dealing with a foreign culture away from your home market. The best way to prevent miscommunication and poor quality is a solid product design and component list.
But, that means a lot of upfront work and research. If you’re willing to go longer and harder than most entrepreneurs out there, you will be rewarded long term with a solid product that gets repeat orders.
It’s not easy, and I hope today’s article made it a little bit easier. Comments and feedback is appreciated -let’s help each other!
Also – if you’re serious about being an entrepreneur and making a product in China – seriously consider our Enterchina.co/join program – its something I wish existed when I was going through the process the first time.