We are finally doing a show involving Taiwan! It has been something I get quite a few requests about – and I am excited to have Daniel on the show to discuss how he is leveraging Taiwan for PCB manufacturing, then final assembly in Mainland China PRD – Dongguan specifically, and then building up sales and distribution in America. This guy has a ton of experience working with Foxconn and Apple in the past, and shares a ton of value on today’s show.
Introduce Angelica as our new Community Manager – doing a new member series. How is that going?
Angelica intro herself and give answer on how the series is going so far, working with the team
For those who applied to the E-commerce venture and couldn’t get in, we will get them in the GFAVIP members program and they can connect with each other privately – some have already asked for this so they can connect with other applicants. Angelica, maybe you can also help match them up a bit too?
Going to the beach w/ the kids – a jam packed Chinese beach – feel like I say/do this every summer, beaches are a lot better in the Philippines, would you say?
Topics Covered in this Episode
His background in manufacturing with Foxconn and Apple
His experience at Foxconn
Daniel was previously in charge of business development in North America for Foxconn, a major manufacturer
Challenges manufacturing iPhone 4
Mike remembers the strain on the supply chain iphone 4 put on the market, Daniel explains
Where You’re Based?
Let’s talk about his global operations between USA, Taiwan, and South China
Startups in Taiwan
Daniel is part of the Startup Stadium in Taiwan, and talks about that and the overall startup scene in Taiwan
Developing Software for Hardware
How is your process for making the mobile app and other software components for your product, and others?
Technical talent salary ranges
How much is a full time worker in technical side in Taiwan, and other places?
Attracting Technical Talent in Taiwan
How do you get them to be interested in a startup over a massive MNC
Manufacturing, PCBS, Assemble between China and Taiwan
Daniel discusses his manufacturing process between Taiwan and PRD, China
Shipping and logistics from Taiwan to China
How he ships PCBs from Taiwan over to China, and more logistics insights
How Others can Make This Supply Chain
What are some of the challenges in this setup?
Doing small MOQ (minimum order quantities)
How to be a small buyer and keep some leverage when discussing with a factory
Inject Mould Plastic Manufacturing
How to find a quality partner for your plastic components in China
Dividing Time between USA and Asia
How Daniel splits up his time between these 2 sides of the Earth
Pricing and Margins
General discussion about pricing your product, margins, and profits.
Contacting Daniel and Smart Pillbox
How to reach out to Daniel
People / Companies / Resources Mentioned in this Episode
Episode Length 36:29
Thank you so much Daniel, I hope you guys enjoy that one, it seems that we go back and forth, with manufacturing and internet marketing in e-commerce, i guess that’s what we do, it’s just so much amazing, I got so many interview going, I got e-commerce series, I got e-commerce gladiator, we got an amazing team. Angelica’s doing great and personally Claire left, I didn’t say that to beginning and if you’re still listening, she still have it part-time. But ahh teams evolved and she I hope you’re in the show. I miss you, Claire. You’re awesome and she’s still working with some other things she’s doing with us and I’ll see her in the E-commerce Gladiator tonight when the show is published. So everybody, I hope you guys are move working towards your dreams you know, I think it just takes a long time before you realized a dream, it’s worth getting. It’s not gonna be easy. Everybody will get it. So let’s all just keep on rockin’ keep on pushing and enjoy our lives. Life is short, do it now. Take care, guys. Enjoy your Tuesday wherever you are in the world, walking dogs, sipping coffee, drivings cars, having kids jump on top of you. Wherever you are, enjoy! Bye!
To get more info, on running international business please visit our website at www.globalfromasia.com. Also, be sure to subscribe to our itunes feed. Thanks for tuning in.
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“If you’re gonna make hardware, chances are, you’re not gonna crank out on your product every 3 months. So, it doesn’t make sense to have full time personnel.”
Welcome to the Global From Asia podcast where the daunting process of running an international business is broken down into straight up actionable advice and now your host, Michael Michelini.
Today’s podcast is brought to you by Aureliapay. I use it personally for sending money to my Chinese suppliers from Hong Kong. It’s a cross border payment solution between China, Hong Kong, and Southeast Asia. So, if I need to make a payment to a Chinese supplier, I just hop online to place the remittance, pay to the Aureliapay Hong Kong based big account and Aureliapay will settle RMB within the same business day. So, check them out online at www.aureliapay.com A U R E L I A P A Y .com or check them on their link at our show notes.
Mike: Alright, everybody. Thank you for tuning into another Global From Asia Episode 189. Close to number 200, as coming really close. So, thank you everybody for tuning in and it is midst summer and things have been happening here and I want to introduce Angelica, she’s our new Community Manager for the Global From Asia VIP program or GFA VIP. And she’s also gonna be starting a new members series. As well as talking, featuring some members on our blogs. So, thanks for joining Angelica and how are you?
Angelica: Yeah. Mike, thank you. Thank you for the introduction. I’m doing good. So, yeah. As Mike mentioned, I’m the new Global From Asia VIP Community Manager, and umm basically what I’m doing is I’ll be helping with the new VIP members. And umm I’ll be also be helping with the website platforms and to work with the team and to make everything work. So, umm yeah we’re currently working on the new member series call ‘em on the website. And basically on that series we’ll be showcasing members, umm we’ll be sharing their stories and their business. And to learn more about the program and you know how Global From Asia VIP can help them more.
Mike: Exactly. So, it’s exciting. I mean, when we started talking, I feel like, this is perfect thing for you and I’m really excited to see this progress. We will give you an update about the new member series as it develops. Another cool development is I have had really tough time deciding our business partners for this new e-commerce venture and e-commerce gladiator TV show coming. We will wait to, wait til’ them to announce the partners. Some people calling it winners, but the partners and there’s some great applications of great people, great business owners, entrepreneurs that I couldn’t, I just couldn’t make a, make it fit this time. So, we’re talking about it next. So, some of the applicants were ahh Mike, Mike I’m gonna do my Amazon business, I’m still looking for a business partner, I wanna find a business partner for my Amazon business. I want, you know ahh one guy’s ahh, got some investment money and not so much time. Some people have time but not investment money. Or they don’t have the marketing experience so what we, decided to do is we’re gonna hook up all the applicants. There’s about 15 applicants with 1 year of GFA VIP membership. So that’s gonna plenty of time. So some of our audio are waiting to introduce themselves. I could, put their applications in their, in the private forum, so that, because they don’t want to be public for everybody, so we could put that in the forum. And ah you and me try help to connect with these guys. What do you think, Angelica?
Angelica: Yeah. Actually, we can like connect them to our private forum on the website. They can get to know each other and engage with each other first. And also to promote the websites’ forum.
Mike: Exactly. So, you will also have email. Kindly give your email phone numbers. You want to tell people about your email?
Angelica: Yeah. Uhm, they can always email us if they have questions. It’s email@example.com.
Mike: Alright and some fun stuff for everybody. I really want front updates It’s like the kids, taking to fams, Chinese fams, to Chinese beaches, I see. And feels like every summer. I joke on this podcast about going to these Chinese beaches. I don’t even get to Chinese beaches. Have you Angelica?
Mike: You haven’t seen the pictures. It’s true, you put on my video blog basically. It’s ah, it’s just insane path traffic there, it’s jam packed, there’s like those yellow doc floating things everywhere, and I have really learn to be zen and meditate to just get step on and crush so that’s I’ll be, that’s how are you, Angelica? How are beaches in the Philippines?
Angelica: Well, the beaches here in the Philippines are actually good. Especially like in, ahh, as we all know, Boracay, the most popular beach here is Boracay and also in Palawan. We also have nice ahh beaches there, a lot of good ahh umm site to visit. So, yeah.
Mike: Alright. Alright. So, let’s talk about this week show. So, this week, we have Daniel Wang. He is, I met him at the RISE conference in Hong Kong last month. And we did a podcast on the spot. There he is right in the media booth. So he reviews, walking by, and we’re doing podcast interviews. This time we’re talking about Taiwan manufacturing. He’s got a cool hard work product. That he’s a smart duty. He work with ahh you know between Foxconn and apple and mass production before. He did his own crowdfunding campaign multiple times. So he’s Taiwanese American and he’s, got tons of value here. He’s giving me insights about how to make PCP’s in Taiwan. He does assembly in Mainland China, he ships to America, he’s got distribution channel in America. He just drops tons of value. It’s gonna be a great episode 189. Also if you want guys link to show notes as always there’s at globalfromasia.com/episode189. Alright Angelica, are you ready for the show?
Mike: Alright, let’s do it.
Alright. Thank you, everybody. Live from the RISE Conference here 2017. We have with us, Daniel Wang.
Daniel: Wang. Yes.
Mike: Usually is, isn’t Wong?
Daniel: It’s actually W A N G, which is ahh in Mandarin, it’s Wong. Then in Cantonese, it’s actually be Yang.
Mike: I see.
Daniel: Yong in Cantonese.
Mike: My wife’s name is Wang and ahh it’s Ping.
Daniel: Okay. Yeah, yeah.
Mike: Yeah. So, well great! Thanks so much for coming on the show today Global From Asia and you, you’re definitely a hustler. I met you up at the startup Taiwan booth. You’re kinda like ahh umbrella of products and startups there. So, can you ahh introduce your product to our listeners?
Daniel: Well, thank you for having me. Once again my name is Daniel. I am the founder of Tricella. And what we first created was smart pillbox to pretty much solve the adherence problem in the US market alone, the adherence from about 200 billion dollar problem that’s avoidable to health care system. Because when people don’t take their pills. Ahh their disease progressive and they have to, become re-hospitalized or their treatments need to be up a little bit, depending on which disease they have. So, about 70% of all patients do not take their prescriptions as prescribed so we created a pill box with sensors that is in their compartments that can detect a person open it or not. So, let’s say today is 8 o’clock and ahh the user will get a reminder. For every 15 minutes, the user themselves get a reminder and that the 1 hour mark. Let’s say my mom didn’t take her pills at 9, I will get a notification as well. So, we really design this to illustrates.
Daniel: By leveraging the user’s most intimate social network which are their friends and families. Usually, very close family members.
Mike: Yeah, like it’s a mix of hardware software.
Mike: Umm also, I’m interested in your background in work in Foxconn before.
Daniel: Yes, I was the former North America business development had for the mobile group where I secure headed new commercial channels. So, one of them was, most people know the Foxconn building, the Apple products, Nokia, Motorola. That we wanted to expand our portfolio to a broader market. So i spearheaded the Blackberry account which I was expats water loop about year and a half. And umm following my success in extending that account, I was relocated back to California where I’m from, to spearhead Amazon, Google, Microsoft. Ahh Cisco, and also look and source deals for the venture of Foxconn in new technologies.
Mike: Very cool. So, yeah. You’re definitely a networker huh. That’s great.
Mike: Yeah, hustler. I like it. So, then about the, yeah Foxconn had a lot of people, some people still don’t know that, the Apple is, you know ahh all their products are made by you know ahh by Foxconn. I remember I was in, the iPhone 4 was really crazy times, there was like ahh sold out all the time. In 2010, 2011 or something like that.
Daniel: That was a very challenging phone to manufacture. Ahh so, ZNZ’s are, they work very well, when you want a machine softer material like, aluminum, but Iphone 4 has a stainless steel frame. And not only is the heart of machine, stainless steel tend to have high end internal strength. So, once you get the shape, cut from the ZNZ machine, it can potentially it worked 2 days later. So, a lot of times when we ship the material to the assembly site. We might actually be shipping something out of spec and we don’t know until 2 days later. So, there’s a lot of trial there. Foxconn and Apple all hands were on deck to increase your grade on that. That’s why from time to time there’s shortage. Also, it was pretty much the first phone in the industry to use front and back blast.
Mike: Yeah. That was I remember those days and then also I was in China and people were smuggling back into China to sell it because there was such a price difference and supply difference.
Daniel: Yes. It was definitely a status symbol, too. It is you know, the have’s or have not and if you didn’t have iPhone back then, you know. Definitely had iPhone with me.
Mike: Exactly. Well, back to your product, I was also chatting earlier before the interview. So, maybe your relationship with startups stadium with the Taiwan and the, you go between San Francisco and Taiwan?
Daniel: Yes. So, we’re headquartered in Mountain View California with your design ahh marketing and business strategies there. We do our software development in Taiwan because there’s such an immense amount of engineering resources in Taiwan, as a matter of fact that Taiwanese people, a lot of them have college degrees or capital. It’s much better ratio than other countries and in Taiwan is known for manufacturing excellence. However, a lot of people don’t or aren’t aware that the software engineer talent was pretty significant and ahh so that’s why I want to be part of talent startups stadium efforts to drive that awareness to the global market. What we’re really trying to do is to bring more international startups to incorporate in Taiwan and kinda infect the talent pool there in a very positive way, to teach them different methodology, how to do software, how do you think about it, the logic behind it, architecture of software to drive innovation in Taiwan beyond manufacturing.
Mike: Very cool. Yeah. Like I’ve been talking with Holly, I’ve seen in the last few RISE conferences as well and it seems start to on developing growths getting bigger every year, so that’s awesome and I’m trying also this podcast interview with more Taiwanese startups and see more excited to hear about the software there. I still have yet to go to Taiwan ahh but I, I think it’s also reasonable cost, right?
Daniel: It is, the cost of living there is extremely manageable and I think uhm one of the media outlets listed Taiwan as the second safest place in the world. When you go there, it’s amazing. You go to the restaurant and leave your iPhone on the table, go and use the restrooms and I think twice about it. You see a lot of women, ahh young women and children walking around late at night by themselves sometimes and there’s no sense of threat. It’s a very safe place. It’s a place where people are responsible for for themselves. Some says it’s social governance yeah but very warm.
Mike: Nice. Uhmm so, let’s talk about the software side, I’m interested to hear, so you have your software, your apps made in Taiwan?
Mike: Okay, through the, through your founding team, or is it full time staff, freelancers?
Daniel: So, it’s a full time staff. In Tricella, I’m actually founder startups.
Mike: Oh, yeah. Okay. And ahh, I’m curious about range of salaries for somebody like a developer in Taiwan.
Daniel: Ah, yes. So, the salary rate there is actually economically lower than Silicon Valley. And for startups that are trying to scale makes a lot of sense to start building our team in Taiwan. Because the quality of engineers are great. Yeah it provides you much longer runway.
Mike: Agreed. So, then the cost are ahh are less when you say than Silicon Valley, Hong Kong or other markets.
Daniel: I’m not familiar with the Hong Kong market. Umm but I imagine there are probably more developers in Taiwan. Because Taiwan is a very engineered driven country whereas Hong Kong tends to be more, financially driven.
Mike: Okay, yeah I think I will agree, I’ve been there. Yes. Definitely hard to find talent and developer, technical talent in Hong Kong. I know it’s been a pain point. We’re here quite sometime. The other, probably, correct me if I’m wrong, but the cool thing I’ve heard, you know, especially in China, this big company are just hiring all developers from other, each other. Is there a competition for people there. What do you think, are they more stable, the developers?
Daniel: The competition is definitely fierce in Taiwan as well.
Mike: Oh, really? Okay.
Daniel : But umm, you know a lot of people are more mission driven. They have their personal mission. They might wanna join a conglomerate. Because they wanna have either work on something that resonates more with themselves. Or they want more responsibilities instead of working for conglomerate were there a pigeon hole in ahh very specific task. They want to be able to take on more, so they could grow professionally and a large of sense of accomplishment. So, that’s also very unique ahh part of the Taiwanese culture.
Mike: Nice. That’s cool. Yes, some other markets, part of the technical guys, jump into startups or for a new take the bigger risk so that’s pretty awesome. Would you ahh when going to hardware side, ahh so you’re PCPs made for your product as made in Taiwan.
Daniel: Yeah. So, for PCP, we have it done Hsinchu Taiwan and the ODM support there, it’s just phenomenal. Also, I decide to keep the PCPA done in Taiwan ‘coz that’s the more technical aspect. The injection molding, final assembly and pack out is done in Dongguan China which we feel it’s abundant in resources in that regards as well as the, a lot more competitive with cost.
Mike: Very cool. Yeah. I mean, I know we just met. But we dive deep, we put the show, I think listeners, many manufacturing, in China, I think, we’ll talk, the focus of today’s show is about Taiwan importing it to China. Final assembly. You, you, I forgot the name of the city. Origin in Taiwan. You’re getting your PCPA but you have it made there, ahh an order? And then.
Daniel: Yeah. Yes. So, I have it made it there and order in Hsinchu, which is about ahh 20 minutes. South of Batalion International Airport. Looks like extremely efficient and because of Taiwan’s national geography it’s an island so to get it, to the docs, is a challenge either. So, we can ship by sea to lower cost if we have more accurate forecast and a larger batch. But for ahh just in time manufacturing is right next to the airport, you can’t get any better than that. In Tao Yuan city itself, which is where the airport is located, it has a lot of PCPs supplier. So, the supply chain in Taiwan is already risk. There’s multiple suppliers for each component.
Mike: Nice. Okay. So, is that a choice you did? Is it economical choice or like quality choice? Is it like common industry choice of having, I mean I think a lot of people, you know, Taiwan, Japan, as like making the internal parts of the electronic, is that something common in the indstructy?
Daniel: That’s actually common for more complex types of products or new categories, they would do what we call in NPI which is new product introduction in Taiwan. Because that’s where a lot more talented ahh product development team is, large manufacturing plants are located. So even a lot of Taiwan customer’s, unfortunately I can’t name who, they would do the first few NPI in Taiwan and then copy the line in China when they are ready to go full scale production.
Mike: Ahh, so that’s, that seems like make sense,. Ahmm I did a product with PCP design and I had a design in China, ahh I forget the name of the software. But yeah, they had to get the PCP designs, so you have it custom, you also have design. How do you go about, I mean, you have so much experienced, maybe you give listeners an ideas. Little bit about it.
Daniel: So, what I would recommend is, you know, try to leverage external resources as much as possible so you can control your fix cost, bearable cost. It doesn’t last forever, right. If you’re gonna make hardware, chances are you’re not gonna crank out on your products every 3 months. So it doesn’t make sense to have full time personnel, on board just for that 3 months you know worth of development for PCP, because to do PCP layout probably be, I’ll say about 3 months back and forth. And makes better sense to where with the manufacture that has the product development team. And you know, whatever they design will mostly like be manufacturable in any internal team. You know, even the Tier 1 customers, in the world, they, rely heavily on the factories to validate the designs and also to provide feedback to see if it is manufacturable or if the cost manufacture something like that based on that design is too high.
Mike: Yeah. Okay, yeah. I agree. I mean, would you use a third place, a third party, would you have the factory made the design, some people are you know, little paranoid to give their rather than factories control too much of the IP would you rather done that it factory thing. Or should it be done by the third party, like expert or firm?
Daniel: So, I generally recommend for startups, especially if it’s a low volume runs that should just go with the factory that has a development capability in-house, because if you use the third party then you’re adding another, a lot of finger pointing, you know, how do you know the design, that knows what they’re doing unless you work with them before, right. And that is just, unnecessary stress and takes away from the poor competence of the startups. I mean, startups should focus innovation and also driving business.
Mike: Yup, agreed. Alright. So, let’s talk some more about this leveraging Taiwan PCP. and then you shipped it by air, 20 minutes from the airport through ahh you know freight company. Ahh courier or you can put it by ocean, the price is pretty lightweight.
Daniel: It’s extremely lightweight and that’s why we decide to ship the PCP instead of the plastics and the packaging. Yeah it would cost astronomically more if we did pack out in Taiwan.
Mike: And then you’re importing it into China through customs and there’s price and tax. Export if get them back?
Daniel : Yes. Sometimes, we get some a portion of it back.
Mike: Alright. So, then you ship it into Dongguan, which a lot of listeners are in south in China. Pretty close to Shenzhen and Pearl River Delta and then you have it this PCP put into final assembly, are you doing that all, is it same injection molding facility or final assembly.
Daniel: Yes, we have an amazing partner that has an injection molding and assembly and they actually helps source packaging suppliers for us.
Mike: Great! Yes, we have some nice packaging, I’ll put some pictures on our link to the video. We’ll do some more videos, too.
Daniel: The packaging in the US, we got quoted about 60 bucks. And they can’t do large production runs and they do it by hand and umm it’s just a demo, in Taiwan we got quoted roughly around 13 dollars, in china we have it, under 3. yeah.
Mike: Nice. Yeah, I mean, that’s, even the name of the show Global From Asia, it’s just the way the world is gone. All the, the knowledge in the, the volume in china, it’s possible and, and the yeah you get to visit Taiwan and you have pretty much everything done in Dongguan facility or any other packaging, ship in there, you have PCP ship in there, you have injection mold done there, and final assembly done there.
Daniel: Yes. The packaging supplier which is about an hour 15 minutes from the Dongguan factory. So, it’s relatively close.
Mike: Cool. And then for you as a founder, you’re, you spend most of your time in the San Francisco or Mountain View side?
Daniel: I’d say, it’s roughly around 60/40 split, 60 time in the Valley and 40% in Taiwan but umm things are about ahh pick up a little bit more it might be ahh 45% in Taiwan, 35% in Taiwan, I’m sorry 45% in San Francisco, 35% in Taiwan probably the rest of the world the other global market.
Mike: Nice, it seems you’re adding more time on sale side, distribution side.
Mike: Of course, it makes sense, right? You’re beginning is your product development, validation. So how is, how is sales, how is the business developing?
Daniel: Oh, it’s going great. So, we launch our product with the strategic partner in the US which is Target.
Mike: Awesome! Congrats!
Daniel: In April, it’s doing phenomenal and we’re also direct vendor on amazon.com as well.
Daniel: So, we’re getting ready to relaunch fresh new design of our app in the global market, so we’re gonna work with a lot of premium Apple resellers and in the JAPAC region. And we’re also getting ready to move in Australia as well.
Mike: JAPAC? I’m thinking Japan Pacific Asian Countries. I was thinking APAC or it is the same?
Daniel: I don’t, I think it would be APAC but because I work so much with Apple in the past and they call it JAPAC, it just got stuck in my head. But I guess the right term should be APAC.
Mike: I see. Great! So, it sound so, you’re making it sound so easy. I know some listeners will. We also have people from the show who have a lot of struggles. Well I think you also have advantage to work in Foxconn, you have some ideas of the supply chain. So listeners, we have a lot of people doing crowdfunding campaign coz a lot of people annual FBA. They’re trying to make their own brands and products. What are some of your tips? Like for some newbies, you know custom manufacturing.
Daniel: So, ahh you know, you had just mentioned kickstarter, I actually had 2 successful kickstarter campaign for Startup 1, actually Tricella is startup 2, my recommendation is, if you think you can raise the funds to create a consumer electronic device, strictly to kickstarter, umm, you’re in first prize, unless you have the internal capabilities, the NRE which is non-requiring engineering charges it’s extremely high, whatever you raise on kickstarter would probably just barely cover that, that which includes tooling. So, I think kickstarter is a great platform to, pump the gas on, marketing and to driver awareness but if you need that kickstarter fund to start, you might wanna think twice.
Mike: Got it. What if you just path of your margins to put ahh, you know a lot of times sounds strange but I was in ahh I think it was. I can’t remember what session I was in, to be honest but, you know, I think, there’s a different product cycles, so a lot of times people will say, all the price is like, I don’t know retailers, of course in a new earlier stage in a new product is a really high margin, don’t think you can margin that.
Daniel: Actually it’s quite offset, uhm when you first launch a product, you’re volume is not that great and you’re working with a new supplier, they don’t know exactly how many units you’re gonna sell, and you will order through them to manufacture. So, your cost is naturally gonna be higher for the first few batches, so inherently your margins is significantly less.
Mike: Well, you wouldn’t be able, what I mean is, your retail price could be higher, at the beginning, and then you like lower your retail price SRP.
Daniel: It depends on what type of product you’re making, and what kind of audience you’re trying to sell to, because just because your cost is 30 dollars and general rule of thumb is, if you’re doing consumer electronic, you’re retail price should be 5 times your building material price, and just because your cost is 30 dollars doesn’t mean, this product could really be sold for 150.
Mike: It is true. So then, some people are little confused, a lot of people were like, I actually know, i agree with you about this kick start, I have lots of friends that have ahh raise money and not delivered unfortunately.
Daniel: That’s about 70% of the market.
Mike: Wow! Is that high? Which is bad for the buyer. I have some product that not still. But ahh is there a way, so then what is your solution, raise money, or have friends and families, funds or savings on top of the kickstarter.
Daniel: I’m a huge advocate of go for broke. So, I dump all my savings to do startup and have outside funding umm, and ahh if you don’t have quite ahh funding to do it. Either think, you know maybe just think twice or start working on developing that no working connection, and try to sell manufacture your vision and if they but into that vision enough maybe they will help you to further cost.
Mike: Got it.
Daniel: And you can negotiate your terms or advertise the development cost, willing fees, over x amount of units, so get really good in negotiating.
Mike: Yeah. We have some others talk about it, we have some meetups as well but of course, I need to speak Mandarin.
Daniel: Yes. That is a must. That is, essentially it’s a requirement.
Mike: Yes, so I think ahh, an English shows, so I think a lot of listeners, don’t have that skill so might be harder for them to talk the factory, got this kickstarter, and lower this product. Can I pay you or give us an idea on amortization, or how people could negotiate?
Daniel: Generally, a lot of factories, they umm, and, oh well a lot of startup founders, that do hard work don’t understand maybe they came or something like that, they will naturally gravitate towards tier 1 type of supply chain, which are use to running 100,000 a week, you know, not 5,000 units a year, so going to them definitely not gonna get the level support that you need to grow as a startup so you have to go with the second or third tier supplier, it doesn’t mean that their quality is worst, it’s just means their maximum capacity might be a lot smaller.
Daniel: Umm so, with their MLQ and construction, being lower, you could probably, negotiate, hey, how about for the first 10,000 units or 20,000 units we advertise the cost of tooling into ahh those unit cost. So I get spread it out over to 20,000 units in 1 year whichever comes sooner. And if I don’t hit 20,000 units within a year , I will pay you the balance for tooling or.
Mike: Great. That’s nice to know, I know, well some people so unaware that they actually have the mold the built in price is forever.
Mike: Ahh, have you heard of that? There are some people that don’t wanna pay for the mold, so the price will go up forever. And they never stop paying the higher price.
Daniel: Yeah. And that’s why it’s very important to always develop a second source and do should cost modelling which is you just get a lot of quotes for the same part of if you’re away. If you’re worry about confidentiality then you can do like ahh cost exercise model using a different design of, kinda similar part that would require this maybe similar amount of materials whether plastic or metal. And just benchmark it and see roughly how much should this part cost.
Mike: Okay, this is great man, It’s very helpful I think it will help a lot of the entrepreneurs today and getting towards the end of the year. I, what are the next steps for you, ohh, actually B O M, BOM, so they probably know your product cost by part or they, have you done that?
Mike: I think, a lot of people don’t even know that they should do that they just send the factory the product sample and say how much but I think there’s under negotiating, right? Understanding the pieces of your product.
Daniel: You should actually know how much the plastic palette cost the raw material and then umm think about how much weight your product should weigh and then, and then add about maybe 15 to 20% because there’s materials that goes into injection runner it’s the path way for the material to flow than your actual part that you have to pay for as well that’s part of the materials way when you do this construction. So, you break it down by material as well as cycle time, how long will it take each part to come out of the mold.and is there any post processing, do I need to pay this thing, does it need to be sanded, Is there any machining, figure out the machine rates are and base on minimum wage China labor cost? So, things of that sort.
Mike: Great! I hope we’re not scaring listeners too much. I mean, I don’t, I guess still learning as go, I work for, kinda make the jump, I mean. There’s one side where is, we tell entrepreneurs just do it and there’s the other side how much is the engineering experience should someday have when trying to do it.
Daniel: I feel that umm sometimes cost should not be the main factor of starting a project as long as you price it to you’re not gonna lose too much money or umm you can make a small profit then go for it because you can continue find the design or find the better supplier that can offer more competitive pricing over time and you can increase your margin over time, but the most important thing is to get your products to the market, so you know, especially if you’re first mover type of product.
Mike: Great! Also, man, we’ll link up the video, we’ll do some videos of your packaging, and your products, and the second, so people can listening will watch how can people find you online and your product.
Daniel: Yeah, so they could find us to target in the US market as well as our website is www.tricella.com
Mike: Great! Man, thanks so much, Daniel.
Daniel: Thank you for having me.
Mike: Thank you so much, Daniel. I hope you guys enjoy that one, it seems that we go back and forth, with manufacturing and internet marketing in e-commerce, i guess that’s what we do, it’s just so much amazing, I got so many interview going, I got e-commerce series, I got e-commerce gladiator, we got an amazing team, Angelica’s doing great and personally Claire left, I didn’t say that to beginning and if you’re still listening, she still have it part-time. But ahh teams evolved and she i hope you’re in the show. I miss you claire. You’re awesome and she’s still working with some other things she’s doing with us and I’ll see her te e-commerce gladiator tonight when the show is published. So everybody I hope you guys are move working towards your dreams you know, I think it just takes a long time before you realized a dream, it’s worth getting. It’s not gonna be easy. Everybody will get it. So let’s all just keep on rockin keep on pushing and enjoy our lives, life is short do it now I actually have that all evening. Take care guys enjoy your Tuesday wherever you are in the world walking dogs, sipping coffee, drivings cars, having kids jump on top of you, wherever you are, enjoy, bye bye.
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