THE CHINESE CONNECTION

Lynn Fuston digs deep into the thrifty bottom line of Asian mic manufacturing.
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The heat was rising up in waves off the pavement as I hustled down the crowded city street. There I was, minding my own business, when I see a guy wearing a trench coat making a beeline for me. Before I could decide where to run, he was right in front of me, stopped dead in his tracks. I was trembling as I noticed his hand slipping into his coat and I heard him say, “Hey buddy, wanna buy a ribbon mic? Cheap?”

Then I realized I was wearing my AEA T-shirt, with the RCA-styled logo and “ribbonmics.com” on the back. I might as well have had a bright red target painted on my chest. Before I could answer, he shot back, “Two hundred bucks, no questions asked, you’re good to go. I’ll throw in this canvas mic bag for free. And just because you got an honest face, you buy it now and I’ll give you this aluminum flight case too.” He pulled out a shiny box the size of a pistol case.

“Am I dreaming?” I thought to myself. “This guy’s peddling ribbon mics off the street corner for $200? Somebody pinch me.” I don’t usually fall for tricks like this. I pass up the $50 Rolexes when I go to New York City. I don’t even buy the $30 Gucci bags for my wife. But a ribbon mic? For $200? What’s the catch?

I was so shocked I didn’t even bother trying to bargain with him. I reached in my pocket and handed him two C-notes. You see, I’ve got a weakness for ribbon mics. As I walked away with my new microphone, I thought about what a deal I had made. The other ribbon mics in my collection cost me 10–15 C-notes each. (That’s $1,000 to $1,500 if you didn’t know.) I use them all the time. The vintage RCAs that I’m hunting for can cost up to $3,000. Did I mention my ribbon mic addiction? It’s my “habit.” Those Ribbonaholics Anonymous meetings have helped, but I still couldn’t pass up an opportunity like this.

Then it occurred to me. “Not only is this guy selling these for $200, but he’s making money at that price. Who is HIS source?” That’s what I had to find out. So as soon as I got back to the studio and put my new beauty on display for all to see, I got on the Internet to do a little research.

While this fictionalized account may seem a little far-fetched, the circumstances on which it is based are very real. There is currently a flood of Chinese import microphones on the market. Some are imported under Chinese brand names, but increasingly they are being sold by companies wanting to expand both:
A) their product lines and
B) their profits.

Cable makers, mic stand makers, even individuals are getting into this seemingly lucrative business. If someone can buy a mic for under $100 and turn around and sell it for $200 with no development expense, why not? And with the prices that Chinese manufacturers are charging, there’s plenty of room for markup. This isn’t rocket science and it doesn’t take an entrepreneurial wiz to figure this one out. I’ve been getting emails for the last five years from companies that say “We can put your logo on our mics and you can sell them and make lots of money.” Obviously, I’m not the only one receiving those emails.

So I decided to give it a shot. Not because I ever dreamed of becoming a mic importer, but because I’m curious just how difficult or easy it truly is. And the Chinese ribbons got my attention because I’m the world’s biggest ribbon neo-fanatic. (I told you part of the story was real.) So here’s the play-by-play story. Names have been changed to protect the innocent.

DAY 1: I decided to try this out and see how hard or easy it is. So I go online and find a source for Chinese mics. That takes about five minutes. Next, I contact them via email. I’m not going to lie and pretend to be a big shot. I’m just a guy, a nobody. I type a letter expressing interest in their products and requesting evaluation units and send it. That takes about two minutes.

DAY 2: I expect it may take a while to hear from them but the response comes the next day. I receive a letter asking me to check out their online catalog and tell them what I want. I have already seen the catalog and know I want a ribbon mic, so I reply and wait another day. They respond with a quote for the “evaluation units,” which is about $60 each. In our correspondence, I made my intentions clear, that this was a one time order, these mics are for demo purposes and I would not be buying thousands of them. So I asked for pricing on 10 units with shipping straight to me in Nashville. Now I have to decide on how many to get.

Later that day, I get an email saying that the shipping price for the 10 mics (weighing 3 kg each) is $315. That will get them from China to my door in one week’s time. It seems like a lot for $600 worth of mics, doesn’t it? That may be a reasonable price, but I’ve never done this before so I don’t know. I do know that it adds 52% to the cost of each mic. That’s a lot. So now they will cost me $91.50 each. Since I am bringing them in as “evaluation units,” I won’t have to deal with customs or pay import duties, I remind myself. I don’t know how much that would be but it does add another layer of paperwork and cost to the deal.

DAY 13: I wonder if I’ll have trouble selling eight mics, since I’d keep two for myself. Well, that worry disappears within eight hours of mentioning it online. Even at $100, I have orders for 16 mics via email. Within another eight hours, several friends hear about it and want some too.

Everybody I mention it to wants one or two. So now I could sell 24 mics, even though I am only ordering 10. Nice problem to have. Of course everyone is excited because it seems like a deal. Well, it is. See, I’m doing all the work and they’re reaping the rewards. Selling them at $100, I’m not making anything for my trouble. How much is my time worth? And what about warranties? What form of technical support do I provide? And branding? Do I just import them “as is,” or do I put a logo on them and make a website and advertise? How do I let people know about them? Remember that these mics are virtually (maybe precisely) identical to four other branded mics on the market now. Those mics range in price from $199 to $399. Street price is typically $199. Should I do anything to make mine different, to set them apart from the others? Sure I could sell hundreds at $100 each, but what would I have to show for my efforts? Having the appreciation of my customers with no way to support myself is not my idea of good business.

After several Internet searches I realize that other people are doing the same thing. Some groups or forums are doing group buys, and subsequently receiving “cease and desist” letters from lawyers of more established importers who consider the product line their property. Some individuals have even brought in hundreds of them, rebadging them with their own brand and selling them. I spoke to one of these individuals who is selling quite a few mics. Interestingly enough, he is having the same thoughts I was having. “If all I’m doing is rebadging the same mics as everyone else and people are buying mine because they’re cheaper and I’m not making any money, how long can I keep doing this?” His plan is to branch out and offer different units, built on recommendations he has given to the Chinese manufacturers. “So how will you keep them from taking your ideas and selling those mics to other people?” I ask, thinking that he is reaping from what other people have sown and the same will be true of the seeds he is sowing. He answers “That’s just a risk you take.”

We talk at length about our dealing with the Chinese and how they do things. We have both had very good experiences. But it’s a double-edged sword. On one hand, you can get manufacturing done for less than half of what it costs in other parts of the world, which is very good. On the other hand, your designs may possibly show up in other products that may be sold to your competition at the same price you are paying, except they don’t have to recoup the R&D time and money you spent. That’s bad. So you have to balance the good with the bad and decide whether you can take the risk of possibly giving away your investment. It’s a tough call.

DAY 33: After several weeks of debating about how many mics to order and whether to sell them, I place my order. I decide to purchase eight mics, only for myself and friends. I get a final pro forma invoice and arrange to have the funds transferred from my bank to the Chinese bank.

The trip to the bank goes successfully with only minor confusion over account numbers. After paying a $35 fee for the wire transfer (didn’t know about that one), I have my receipt proving funds are on the way. My contact in China assures me that as soon as they have received the funds, they will begin building my mics. They anticipate 15 days before shipment and another four days before they arrive at my address. I have decided against any customization. Just quick and easy this time.

DAY 41: The payment has arrived in their bank, minus an additional $28 transaction fee that was charged on their end.

DAY 45: The package has shipped from China and is on its way. I am given a tracking number.

DAY 47: I am given a new tracking number since the forwarder has changed shippers for safety purposes. I am contacted by UPS since they need additional information. The package is stateside but it seems there is a catalog that was attached to the declaration but not assigned a value. You can’t bring in something without a value assigned, so I tell them that it’s worth $1. They assure me it will be delivered within two business days.

DAY 50: Still no microphones.

DAY 52: The microphones arrive. All are in good shape and as I expected.

DAY 69: I receive an invoice for $23.76 from UPS for import duties. So after I total my expenses and divide by eight mics, I spent about $98 per mic. And probably eight to 10 hours of my time. All went well and as expected.

So what did I learn?

1) These mics look different but sound the same as the other “rebadged” ribbon mics being imported.

2) They are a very good deal, considering the price of other ribbon mics.

3) Comparing these mics to the other ribbon mics in my collection, my AEAs and Royers have nothing to worry about.

4) If you order mics that you have not seen or heard, it may work out or you may get burned. Who eats the cost when you get what you ordered and it’s not what you expected? You.

5) These are indeed useful mics and sound like ribbons. They would make a good “ribbon primer” for people who have never owned one. Likely, they will make you want better ribbons.

6) Although ordering mics from China is not as easy as walking into a dealer, it is relatively painless and I didn’t have any trouble with the language barrier or them being honest in their responses. It was a good transaction (A++ in Ebay speak).

7) When I factor in my time, and the amount of time I gave up working on billable projects to pursue this, it is no bargain. If I charged my normal rate for my time (which is valid because I took time away from my schedule to do this), the cost per mic jumps up to almost $260. Considering that the street value of these mics is $199, these were no bargains.

8) Would I do it again? As a learning experience, yes. As a bargain hunter, no. The other issues of warranty, ribbon replacement, and local support all factor into my decision. It was a valuable experience, but there’s a reason you pay a little bit more for a company to handle import, QC, service, and other things. In my opinion, their prices are fair. So, if you are willing to work for free, then it might be worth your while. If you are planning on making money doing it, by the time you have an outlet for selling them, advertising, shipping, and warehousing facility, you would probably have to charge the same as everyone else to make any money.

My advice? If you want an adventure, go for it. If you just want a ribbon microphone or two, go buy them and leave the headaches to someone else. If you want to go into business doing this, realize that you’ll be just another face in the crowd unless you do something to differentiate your product from the others who are selling the same thing.