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2010-04-06 09:25:13 (4220 views) CABLE TROUBLE
The day started out not so well with Sonia saying that even the second cable sample wasn't good enough (without testing it) and authorizing the cable maker to create tooling to make our sample for a hefty fee. Took half an hour to rectify the situation, another half to convince the rubber master Mr Tang to give it a shot, and the whole afternoon to email 190 (kid you not - 38 * 5 pages) manufacturers on the web. Finally after a day of emails, filling out captchas, cut and pasting the email, re-cut and pasting it when the vendors replied with their own cut and paste stuff and catalogues, phone calls and what not - we got two people to send samples. It will take a couple of days (started out at 5, then we negotiated it down). Confirmed many times and in both english and chinese the thickness, outside material, INSIDE material (yeah now we have requirements for both inside and outsite - total headache!), number of cores, core composition, blah blah - bottom line problem solved but what a fight!!
Ok now that's the easy stuff let's get to the hard stuff.
PAYMENT PROCESSING
Payment processor tells us no go, FIRST make the company and apply THEN we'll tell you if we accept the product. This is the only serious payment processor who hasn't totally turned us down. We need to get some questions answered at this point but the incorporation helper is in Thailand and today it's Wan Chakkri or whatever so they're offline. Yesterday it was tomb sweeping day in China so everyone else was offline... weird asian holidays are slowing down operations...
DUTIES
The very unreliable assembly people who had agreed to make our boards made a 180 degree turn today. When asked about import duties, a month ago, they reassured us that everything would be taken care of and there was absolutely nothing to pay. Now, because we were about to order a large quantity of pieces from the US, we wanted to confirm and called them. Turns out they have no idea what duty fees are, have never received components from abroad, have no clue how to get a refund on duty fees. When pressed they took a couple hours and came back saying we have to pay 17% *but* as an alternative they can smuggle (illegally!) the components in from Hong Kong for a fee. Huh? What if they get stopped then we lose all the components? Our components are very expensive due to the RF modules and the low quantities (comparatively speaking) we're ordering. No way we want to lose a shipment! This is ridiculous, we're just assembling a product in the far east should be the easiest thing to do - why do we have to smuggle stuff?
So the rest of the afternoon + evening was spent trying to find out how to not pay duty fees since the components are re-exported in a finished product it seems obvious that there should be some sort of refund of duties. Called hong kong customs, chinese customs, pcb assembly houses, their partners in Canada, inventory b2b firms. Their english level is absolutely not high enough to discuss duty fees. Tried 20 phone calls then decided - screw it, where's the dictionary and looked up all the relevant terms until the conversation could be carried out in semi-fluent mandarin.
We eventually found out everything about how this process works - but everyone (except customs of course) still suggested the smuggling method :)
Unfortunately according to the law our cheap guys cannot obtain the refund because they don't have such and such qualification. We've found a place that can get a refund on the import fees and has the right qualifications, but they haven't given us a quote yet and it will most likely be prohibitive. Well, at least we know what the landscape is like. We know more about the pcba business than most pcba companies in China now :)
Very stupid to not use chinese components to begin with. Had we been in China during design phase we could have used cheaper components and not worry about import fees. Well now's not the time for a redesign... and anyway the RF modules need to be FCC/EU compliant so it's unlikely we'll find something here - so ... carry on, get a quote and if it's too high, beg (as usual) and if that doesn't work as well as we hope then back to sending bulk emails to assembly houses. When things look real dark, sending 200 messages out many times solves the problem.
IMPORT
Motivated by this refreshing experience in the world of government regulations, why not dive into US harmonized tariffs? A few more hours were spent trying to figure out if we belong to the "other apparatus for the transmission or reception of voice, images or other data" category or the "Other machines and apparatus for electrical nerve stimulation" category or the "Electrical machines and apparatus, having individual functions, not specified or included elsewhere" category or none of the above. Can you imagine someone sitting down all day making up fees for paperclips and scissors? And based on what do they decide paperclips have higher duties than scissors?
In the end we discovered a nice link allowing us to request a ruling (basically US customs and border control tells us how much we'll need to pay and they can't change their mind).
EU
EU certification is like a bazooka sized 220V electric butt plug. Hundreds and hundreds of pages of directives. Low voltage directive, high voltage directive, directive of directives, radio and telecomm directive, amendment to the directive, directive about the amendments to the directive, exclusion lists... unreal. They need to keep pumping out directives to keep their job and justify their living at the expense of the productive sectors of the economy.
The rant could go on but to make it short -- we're waiting for some pointers from the RF module makers and have an appointment with an EMC testing house tomorrow. Probably have to at least do testing for the Low Voltage Directive and Electromagnetic Compatibility - these guys use equipment that costs hundreds of thousands of dollars and they charge thousands to do the testing... it would be nice to be able to get this done and start selling world-wide for our grand opening and the fact that we can use labs in China is very good... but realistically unless miss Kim can hypnotize the dude tomorrow we'll have to postpone our CE mark until we get some cash flow from the good old USA. By the way it's worth going there just to look at the rep's face when we explain what this is. In China most vanilla type adult toys are prohibited. So you can pretty much bet they haven't certified a 2.4GHz trans-penile aversive pulse inducer before.
The good thing about that other government racket on the other side of the ocean (the FCC) is that they've got some minimum level of common sense in the form of "exceptions". Stuff like "if you're operating at 0.1 microvolts you don't need to do testing for electrocution". The EU has no such common sense. Everyone must certify. It's a tax under the pretext of consumer safety.
CONCLUSIONS
Well... with all these expenses and duties and taxes and processing charges we're wondering if we will get to keep any money at all. No wonder nobody targets small niches with electronic products - especially startups!
It also makes a lot of sense now, that most of the big electronics brands actually do very little creative work. That's because their main market function is to package the functionality of existing monolithic integrated circuits into a plastic shell and do all necessary legal work, then hand the product off to distributors. For instance most mp3 players today use a single chip that decodes the files and sends the output to an audio jack. You think you are buying a USB to serial cable by such and such company - but it's always FTDI making the microcontrollers.
So making the electronics is something any hardware engineer can do. But where the rubber hits the road is right here folks. This is where the dream dimension meets reality. The junction is like a boring metallic pipe... through which wonderful things will flow... So let's keep our eyes on the goal. We're acquiring more and more valuable expertise.
By the way, remember when you were a child and you had all of these really cool ideas of things you wanted to do or build? Most weren't impossible or super-expensive... but you couldn't do them by yourself because you were too young. Like building a tree house or making your own fireworks or doing some complicated prank... And have you ever stopped to reflect hey, wouldn't it have been cool at that time to have a participating adult, to shell out the little money required, or even just be present to allow certain things to get done, before you grew too old to enjoy them? Well the feeling we're getting here is that... we're building the adult! Yeah, we're building the infrastructure, the facade, the good standing...
We are trying to overcome feeling a bit awkward about being listed among other companies. Like in a meeting of adults where we're the only 7 year olds with an adult's costume and afraid we'll be found out. Ha, ha. Everyone's so serious in this sector... the RF module guys with 100 FCC certifications... the EMC testing center with 3 offices... Government regulations that try to prevent people from getting electrocuted by wind turbines...
Now can you imagine the border control dude in uniform reading our super official ruling request for a male management and boyfriend training device? Hopefully it's a woman and we'll have the first .gov email address on our notify list :)
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To be more serious, maybe yon could talk with http://www.emotion-paris.fr/ which is using remote control. I don't know where the products are made. But could be interesting four you.