A cautionary tale

For outsourcing CEOs!

Thousands of American companies that have moved production to China to take advantage of cheap labor might want to consider a case study that is unfolding for a U.S. manufacturing company. Fellowes Inc., one of the world’s largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.

The company’s Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.

The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.

Can you say “karma,” boys and girls? I knew you could!

6 thoughts on “A cautionary tale

  1. How thoughtful of the Chinese government to avoid getting involved in these disagreements between business partners. Otherwise the heavy hand of government would stifle the innovative business practices of these plucky entrepreneurs are using to enhance their bottom line.

  2. Whoa! The story references another small company which had a similar attack from its “partner.” In that instance, the Chinese government assisted the US company. However, that was earlier; perhaps the Chinese have decided to take a different approach to economic competition.

    I wonder how many US businesses with Chinese locations and “partners” are aware of this rather horrifying example.

    Too bad Fellowes didn’t stay in the US….

    And just why is the Obama administration facilitating moving US jobs overseas? Inquiring minds want to know.

  3. “It has pleaded with members of Congress and federal agencies, with no results.”

    Very puzzling.
    Whose side are they on?

  4. Fellowes III comes off seeming foolish and naive compared to the Chinese. Too bad unions in the US don’t take the same approach.

  5. Its what happens when you do away with all those burdensome job-killing rules and get rid of frivolous lawsuits with tort reform. When you take away the rules and regulations you don’t get freedom; you get gangsters, and there is nobody to protect you from them.

  6. it kind of tickles me to hear fellowes complain about the chinese partner trying to “extort” more profit out of the company.

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