Personal Appliances
In an age when many American companies are outsourcing their manufacturing jobs to China, Farouk Shami, creator of a $1 billion company that creates hair irons, is doing just the opposite. Shami, inventor of the popular Chi hair iron, decided to move his production of personal appliances from China to Houston after struggling to fight countless counterfeits of his product — most of them pirated in China.
Farouk Shami believes the move back to the States will help his company, Farouk Systems Inc. — which spends about $500,000 a month battling the fake products — better control production and distribution. “We’ll make more money this way,” stated Mr. Shami, a Houston resident, “because we’ll have better quality and a better image.” A swell of counterfeit Chis has dragged down prices and posed difficult questions for Shami, who in early 2008 sent 16 engineers to the Fenda Electrical Company, his company’s Chinese supplier, only to learn that the company representatives were suspiciously denied access to parts of the factory. Shami says most personal appliance irons returned to his company for refunds are defective fakes. But, thanks to the move, Shami will have production right on his doorstep — a shift that will render any imported irons suspect.
Surprisingly, his move is not as unconventional as it might seem. As Daniel Meckstroth, economist at the Manufacturers Alliance/MAPI pointed out, “I think you’re starting to see more manufacturers rethinking outsourcing,” in reference to a speech made by the CEO of General Electric, Jeffrey Immelt, stating that U.S. companies needed to increase domestic manufacturing as outsourcing is out of control.
