Daniel Sinclair+ Your Authors @_DanielSinclair Building for young people. Not reading @danielsunread. Lurking behind likes and thinking about social media, communication, & China Sep. 08, 2019 2 min read + Your Authors

Have to wonder where the black market vape cartridges and possibly tainted supply chain is coming from 🧐🤔

This is reminiscent of the massive counterfeit alcohol problem (like milk powder) in China. So much of the supply chain is just compromised, with arbitragers dumping actual toxic chemicals into original packaging to make a quick buck. I’m not sure if those deaths are even tracked

The timing of the National Health Commission’s focus on vaping makes you wonder if they’re tracking lung disease cases in mainland China too. Swift movement like this is only really visible when people are dying.  https://techcrunch.com/2019/07/23/china-e-cigarette-regulation/ 

Worth noting too how the vape industry, even at the high-standard level, is increasingly centralizing around China. There were 20 Chinese Juul-like companies funded in 2018 alone.

E-cigarettes at large are mostly a Chinese invention that spawned out of the tech supply chain. Juul wouldn’t be possible without it. We obviously don’t see the cannabinoids, but China is the supply epicenter. 2017 video inside a mainland vape convention:  https://www.youtube.com/watch?v=tQGZFG9Aouc 

These manufacturing & supply problems can’t just be blamed on China. The high-profile Lumber Liquidators lawsuit really highlighted how American companies look the other way. How do you fix formaldehyde flooring installed in tens of thousands of homes?  https://www.latimes.com/business/la-fi-lumber-liquidators-formaldehyde-20190312-story.html 

The only criminal prosecution against Lumber Liquidators was for ‘misleading investors’ about their products poisoning 760,000 customers — not actually for poisoning the customers. That settlement is near what they paid out to customers w/ toxic floors.  https://www.woodworkingnetwork.com/news/woodworking-industry-news/lumber-liquidators-settles-36-million-deal-saga-concludes 

This Reply All episode about Amazon is quite good. In recent years, Amazon opened up the store to Chinese companies directly. JD & Flipkart were gaining momentum — they wanted to amplify growth and absorb the market further & faster. It drove down quality.  https://gimletmedia.com/shows/reply-all/brhow4 

This single change really changed Amazon. Fraud and counterfeiting went through the roof as soon as the China floodgate opened up. It’s why we saw the ‘confirmed delivery’ review hijacking scheme grow so widespread so quickly.  https://theoutline.com/post/3324/fake-reviews-on-amazon-means-you-get-free-stuff 

How do you even solve this? Companies with strong familiarity of Chinese manufacturing get the quality they demand, and independently test. But many intentionally look the other way. Amazon is one of those — but they don’t have tools of recourse either way. A market whackamole.

Companies like Boeing are looking the other way too. We now know they’re outsourcing their software engineering to cheap, ephemeral labor pools — and 346 died in the 737 Max because of it. Oh, and many of the suppliers are unapproved or counterfeit too.  https://www.reuters.com/article/us-china-aviation-whistleblower-insight/fake-paperwork-poor-parts-challenge-chinas-aerospace-boom-idUSKBN1CL0R2 

Japan’s Kobe Steel cooked their testing books too, meaning some of those Boeing parts — even when manufactured by approved suppliers — were always compromised and deemed to fail.  https://www.nytimes.com/2017/10/10/business/kobe-steel-japan.html 

The reality is that nothing can be deemed real, & there remains few tools to stop those who arbitrage these supply chain weaknesses. Today it’s counterfeit vape cartridges, but tomorrow it will be the steel that holds up buildings & e-commerce supplements tainted w/ heavy metals.

It’s probably a good time to be a raider or short seller — or both!

You can follow @_DanielSinclair.


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