It seems that the auto industry is just as confused as the consumer over matters of domestic versus foreign manufacturing. The other day at work my brother noted that a couple of years ago, before car magazines became thin with the recession, a popular topic for editorials and letter submission was Chinese manufacturing. In 2009 Jay Chen wrote an editorial article in Sport Compact Car, now Modified as his swan song for the magazine, lamenting the rise in popularity of knock off parts. He noted their presence as a shift in the industry to a “Fast and Furious” trend of unloading parts on the cheap. He wrote:
“The market is flooded by cheap China-made copies sold through eBay. Knock-off parts, stingy buyers, and the shift of parts sales to the Internet have caused the demise of many manufacturers and magazines, good and bad” That was three years ago.
Only three years later the landscape has completely changed. The auto industry is expanding aggressively. US companies, nearly starved to death on the home front by their own doing, are investing billions in China. GM is building new plants there now while closing them here. For auto manufacturers like GM, China represents a new opportunity for sales as the Chinese economy opens for trade. China may feel the same as GM about the US market. Economic influences on the US dollar and trade bargains as offerings against US debt both encourage the Chinese manufacturer to sell goods on our shores. The consumer, simultaneously hit by their own bad economy is magnetically forced to these less expensive products in an effort to save money. Of course, the purpose of this article isn’t solely about China, but about copies, about knock-off parts and copyright infringement. That conversation can’t happen without first setting a groundwork for what enables such things to happen. The lack of protection trade-partner countries offer each other to protect their domestic intellectual property, the exposure that companies face when manufacturing overseas in an effort to seek lowest-cost production and then the fickle consumer who demands low prices and low unemployment on the home-front all allow for a perfect environment for copying more expensive products and reproducing them in China.
The idea of a copied product being an insult and a threat to market presence is purely western. In Russia, China and other eastern countries and continents the reproduction is not only an art but a compliment. It’s been happening for years with watches, cameras, guns, boats, cars, Warplanes, even the Space Shuttle! Nearly everything has been copied. Before the Internet, Ebay, Alibaba and other global trade sites the copying served an important role, providing products that were otherwise unavailable, providing the public with a useful product. The choice wasn’t over price, but whether to have it or not. Now that essentially all products are available all over the world at all times, we would rather see ‘our’ originals sold worldwide than have our product cannibalized and resold at a price that we could never meet. The solution is to cry foul and we can only cry foul when the law allows.
In the case of GM the Chinese-built car will be no worse than the one made here, the same way that the BMW built in North Carolina is no worse than that built in Munich. The reader is left conclude that it’s not the location of manufacture, but the opportunity and reason for choosing that location.
Back to car parts for a moment, specifically one that performance enthusiasts can appreciate, the turbocharger. The turbo represents a perfect example of the consumer’s schizophrenic relationship between their perception of quality and their reluctance to spend money. If we were to tell Jay Chen in 2009 that his magazine would be full of advertisements from companies doing exactly what he claimed to be causing the demise of the industry in 2009 he wouldn’t believe us. He would never have predicted that the parts sold on Ebay in 2007 would be the new standard of quality for the industry and ultimately save his print publication from bankruptcy in 2011 with full page ads for turbos made, designed and marketed by Chinese companies. Furthermore he never predicted that these very companies producing counterfeit parts would also be saving the name brand companies by manufacturing for them at lower cost. The term “knockoff” has been completely redefined, especially in relation to the turbo, our example part. Chinese parts now have names and without naming them specifically, we see that the differentiation between knock-off and name brand isn’t more than a full page advert.
The China-turbo conundrum started a while back and if someone did their research they’d see Mike Huml’s name from Slowboy and Built Industries and various other commercial enterprises. By his own admission Mike sent a Mitsubishi Evo III 16g turbo to China in 2005 to be replicated.
“In closing, we feel genuinely bad that we sent an MHI turbo to China over 6 months ago to see if a less expensive turbo could be made and brought to market. When we learned of the quality and issues in manufacturing, we decided to pass on bringing these to our loyal DSM customers. We could not offer such an inferior product, for any price.
Regards,
Mike Huml “
What Mike said was somewhat confusing as it suggested he decided to forgo the opportunity to buy from China. He later was sued by turbochargers.com David Rafes for defamation after Mike accused him in an online article of selling inferior, cheap turbos made in China. That was 4 years after Mike himself introduced manufacturers to the opportunity. He perhaps showed them that there was a demand from enthusiasts by sending this turbo to be replicated. Many reputable performance outlets sell turbos made in China. They’re named and numbered with the latest fashions and people buy them every day. Does this mean that they’re knockoffs? If the product cycle goes on and the knockoffs are refined and re designed are they still knockoffs? This is happening.
The latest comparative analysis over quality versus location is to state that mainland China doesn’t produce a product comparable to that of Taiwan. All of this is really not important though. It’s the cycle that’s important. The idea that we get comfortable with a topic, or an idea that at first is really difficult to accept and it soon becomes the new normal.
Many, or can I write all turbos (or all types!) are now made in China. Name a brand and it’s been made in China. Even turbos that come on cars as OEM equipment. At some point the consumer needs to remove the “where” and insert a “why?” to derive information with which to make a decision over a purchase. If a seller is looking simply for inexpensive, low cost product like Mike was in 2005 in hiring a firm to literally copy Mitsubishi’s work then that would define a “why?” The spread between cost and retail was a huge profit. There were no development costs. If a company like Garrett is to develop it’s own proprietary designs on a yearly basis, testing and refining them over and over then it’s sensible to seek a low-cost manufacturing model to defer the high costs of development. In the case of copying there is no development. There is also no law against such copying in China apparently. That’s the “why” when the intentions of the seller dictate the quality of a product more than the factory location.
Imagine living for a moment in the 70s when the first production turbo cars were rolling off the plant floors. The notion of a knock off then could be the second turbo 4 cylinder car to be manufactured. In the case of most parts we enjoy today the lineage of sales and manufacture suggest that everything is a knockoff. Turbos that bolt on in factory locations, standard fuel injectors that are modified, ECU ROMs changed to suit those parts. All the work of engineers who developed the technology for the manufacturer.
For a less controversial angle on the topic consider a semi-fictional company in China hired to do a run of 5000 turbochargers for a US company. The contract ends and the company is still tooled to produce. There’s no law to force them to stop. They are doing this on their own accord. Months later they appear here on Ebay. Are those knockoffs? The company who hired the manufacturer is essentially taking a calculated risk in choosing the potential of this outcome combined with huge profits over legally protected US based manufacturing.
The politics of counterfeiting are nearly impossible to skirt. Using Mike K’s recent post about the Cusco Catch can on Moto IQ- If the catch can is remade (albeit poorly) and sold on Ebay for ¼ the cost, does the lower cost reflect the lower quality? Is it ethical for Cusco to sell a nicer part, still made by the same people for 4x the amount? Does the consumer seek fair pricing based on production cost or ultimate quality? A famous Subaru tuning company was selling a “high flow” waterpump for over $200 that was simply a Japanese OEM replacement. They made no changes. The pump probably worked better as tested by the company but they make no changes to it. It’s also being branded as theirs. Is this a counterfeit or a misleading label?
It’s all very confusing. Companies subject themselves to being copied while trying to pull every penny from a product by manufacturing in China, resellers circumvent the development process by sending products to be reverse-engineered, the consumer continues to buy from Ebay sellers who are guilty of remaking known designs, Ebay continues to allow listings that display copied items. The consumer is never told the truth about what is made where. Things are carefully labeled “designed” or “assembled” or perhaps “built” in USA or Japan. Sometimes there is simply false labeling and the consumer is fooled outright. My recommendation is to choose on quality. Learn for yourself why the product is better. Learn about who is selling it and why they make something in one country over another. Ask questions. If they don’t get answered assume the worst. Also, if you’re sick and need cheap medicine be sure to pay the most money for the brand name. No one likes a knockoff.
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