A great catch: In many ways, the Chinese-born Ma is the model American small businessman: smart, independent, and plucky.
JD Ma is not ashamed of his past. He’s not apologizing for the Flash Pen, the Fish Pen, the Snake Pen, the Boxing Pen, the Retractable Mini Pen, or the Squiggly-Wiggley Jumbo Pen. He takes full responsibility for the Grip Lite, the Phaser Lite, the LED Clip Light, the 3 in 1 LED Emergency Light, and the Robolite Pop Up Book Light. He expresses no regrets for Brain Slime (“Goooey! Worm and Rat Inside!”), Skull Glow (“Makes Eeeerie Sounds. Smash the Skull and Watch It Glow!”), or Floam (“Mash it! Mix it! Mold it! Smoosh it! Bounce it! Floam is fun you can feel!”). He doesn’t mind if you call him Mr. Flashlight, Mr. Pen, Mr. Key Chain, or even Mr. Key Chain Flashlight Pen. He has made a nice living selling this stuff and will keep on selling it as long as distributors and retail chains and mom-and-pop dollar stores want to buy.
But Ma prefers to operate on a higher plane. As he sees it, his business—the business of connecting American sellers with Chinese manufacturers—can be done on several levels. The most basic level he calls “I pick.” He tours the industrial boomtowns of China in search of key chains and flashlights and novelty pens that will sell on the American market. Maybe he develops the packaging or asks the manufacturer to change the color. Another level is “You pick.” He works with American distributors of gifts, toys, and promotional items, finding factories that can make pens and clocks and coffee mugs to his clients’ specifications. He supervises production, buys from the factory, and sells upstream to his customers. The level he likes best is “Create something.” He employs his experience and skills and connections to help a client conceive, design, and/or market a product that he makes in China.
Lately Ma has been creating something, possibly his biggest item ever. One of his two Darien-based companies, Really Useful Products, owns the exclusive worldwide right to manufacture this item, and it’s something that could sell in the billions, a patented improvement on an object found by the dozens or even hundreds in almost every home in the United States, let alone the rest of the industrialized world. It was invented in the Chicago area and it came to Ma via a fortuitous chain of personal connections. If the pieces continue to fall into place, he and his impromptu band of partners could be on the brink of making the Big Score.
With a slightly bent version of the common clothes hanger.
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JD Ma (the initials are short for Jiadong) will never be mistaken for a native-born American. English is definitely his second language: clipped down to essentials, thickly accented, and idiomatically challenged. Combined with his loud laugh and ready smile, it’s quite sufficient for doing business, but he will not have a second career as a public speaker.
In many ways, though, he is the model American small businessman—smart, industrious, independent, enterprising, and guided by values and attitudes right out of the chamber of commerce textbook: Every business is a people business. Play by the rules and don’t cut corners. A good deal is one in which everyone benefits. In the United States, you can choose your life and work from your own heart.
Now 49, he grew up in Shanghai, the only child of middle-class office workers, in the midst of Deng Xiaoping’s economic and social reforms: right place, right time, as Ma would say. His college class, which entered in 1978, was the first in more than a decade to be selected not by the Communist Party but by means of a national aptitude test.
He was admitted to Fudan University in Shanghai, one of China’s elite schools, and majored in economics. In China’s new meritocracy, his degree earned him a job in the Shanghai government, overseeing state-owned factories that made light consumer items ranging from key chains to cameras and small appliances. It was a good job, especially for one who had never shown much interest in the party, but after seven years Ma was restless and looking to the West. “In China, you could not pick your life at that time. They want you to do this, then you do it. You get a job; it’s not the one you want.”
He came to the United States on a student visa in 1989. He had a friend who was studying at North Central College in Naperville, so he applied there and enrolled in pre-degree English classes. Again, right place, right time: By pure luck, he arrived shortly after Tiananmen Square. A few years later, Congress enacted a law, sponsored by Nancy Pelosi, giving permanent resident status to Chinese students who had entered the United States in the ten months following that uprising.
At North Central, Ma planned to study management information systems, but once again he wandered off the path of least resistance. “Most Chinese students of my age, or people who came here at the same time, [a large percentage] took computers. Because why? It’s easy to make a living.” Ma was a big fan of opera and classical music, and he wanted a job in the arts. He found the arts management program at Columbia College and, through that, a brief internship with the Chicago Sinfonietta. By this time his wife, Xiaosu, had joined him in the United States. Like many other Chinese immigrants, they were living in Bridgeport. Xiaosu was working as a waitress while JD studied at Columbia and delivered pizzas for Connie’s. He liked that job—good people, good money—but he hadn’t come to the United States to be a pizza delivery guy.
On one of his trips back to China, Ma bought a few hundred clocks to use as party favors at a Chicago Sinfonietta fundraising gala. Working on their living room floor, he and Xiaosu took the clocks apart one by one so they could have the orchestra’s logo printed on the faces. A career was born. “I made like a dollar for each clock. So, couple hundred dollars. A week to do that. But it was fun! The concert was at Orchestra Hall. They set the clocks in the lobby; the big donors come in; they see the clocks. Nice clock! I still have one at home. Still running! So that’s my first business. That is 1994, I think.”
His next item was a Chicago skyline pen, a project that established principles and working habits Ma follows to this day: First, study the market, which usually means visiting stores to see what they’re selling and for how much, looking for items he knows from experience he can provide at a competitive price. Next, buy cheap and sell cheap and be sure everyone makes money. Don’t think only about this deal; think about all of the future deals to be done with these people. Third, do it the right way. Make sure the quality is good, the product is safe, the rules have been followed. Finally, take the risk yourself. Ma didn’t ask anyone to preorder his skyline pens. He bought some nice metal pens in China, drew a skyline design, had it engraved on the pens, then walked into a gift store in the Sears Tower and said, How do you like this pen? You want to buy it?
Before long he was poring through business directories to find local companies that sold promotional items. He giggles at the memory of his deviousness. He would call a company cold and ask if it could sell him, say, a nice metal pen with a logo on it. If the answer was yes, then he knew this company was also buying nice metal pens with logos on them. I can make you some in China, he would say, quoting an attractive price. Let me show you. No order necessary. If you like them, I’ll make you more.
At a McCormick Place trade show he met Brian Russell, a buyer for Giftco, a major supplier of school fundraising items. They collaborated on a set of pens inscribed with “Grandma,” “Grandpa,” “Mom,” and “Dad,” and that was the beginning of a long relationship that went from business to personal to close friendship. At the time, companies like Giftco bought most of their Chinese-made goods through Hong Kong agents who charged a hefty commission. Ma was dealing directly with factory managers in China, some of whom he knew from his work with the Shanghai government. Soon he was taking Russell to China with him.
“He could find people, find friends, all throughout China,” Russell recalls. “We were going places where other people in the industry hadn’t even thought about going. He took me into an area where they make nothing but flashlights. One factory makes the spring, one factory makes the bulb, one factory injection-molds the casing, somebody polishes that little glass. It was unbelievable. I used to go to hotels and I’d be the only American in the place.”
Over a period of about 12 years, Russell estimates, he and Ma collaborated on as many as 2,000 different items, from lights and toys to table games and fashion jewelry. Russell thought Ma was some kind of engineer: “He has a really unique ability to study, sniff out, understand, go through every detail of a product. He can do almost any item. And he’s a terrific redesigner. I could say, ‘Hey, JD, this clock can’t be more than $8 retail,’ and he would go out and study and review it, and he’d think, Well, if we did this and we did that and we did this . . . And, son of a gun, he would figure out how to get it at that price and still have a quality product.”
So last spring when Russell set eyes on the Z-Hanger, he knew exactly who to call.
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Photography: Jimmy Fishbein
Clothes encounters: In order to bring his latest product, the Z-Hanger, as well as his previous efforts to fruition, Ma capitalized on an extensive network of connections in the U.S. and overseas. “He could find people, find friends, all throughout China,” says Brian Russell, a frequent collaborator.
The Z-Hanger is the purest sort of invention—and potentially the most profitable sort: an improvement on a common, easy-to-make item that sells by the billions every year. It has no moving parts, uses no new technology, requires no special skill, and—this is huge—costs about the same to make as its common counterpart. It’s 100 percent human imagination.
Where a common clothes hanger has a hook shaped like a question mark, the Z-Hanger’s hook takes a detour, essentially continuing the slope of one of the arms. This allows the hanger to be slipped into a narrow opening—a buttoned-up shirt or a turtleneck sweater—without unbuttoning, pulling, or stretching the garment. It may seem mysterious until you see it done, but once you have, you wonder why hangers weren’t always made this way.
It was invented by Marshall Joseph, a retired mechanical engineer who lived in Northbrook. He died just a few months before a patent was issued, in 1996, but his son Mark had helped him with the patent process and was eager to take the hanger to market. Father and son had fantasized about the potential: “We knew that two to three billion hangers were sold every year just in the United States,” Mark says. “So we always would say 1 percent of the market at a penny apiece, we’d have $200,000. Then what if we get 10 percent of the market and make three cents apiece? . . .”
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It didn’t turn out to be so easy. Twelve years and many thousands of dollars after the patent was granted, Mark Joseph had nothing to show but a couple of prototypes and a long trail of false starts and broken promises. By the time I interviewed him last fall, Ralph Waldo Emerson’s adage was twisted backward in his head. “What do they say? You can build the best mousetrap, but the world’s not gonna come running to you to buy it.”
In the spring of 2008, Joseph exhibited the Z-Hanger in the Inventor’s Corner of the International Home & Housewares Show at McCormick Place, and it surprised him by winning the prize for invention of the year. Finally, he thought, he was on his way. And he was—but not before a few more vexing setbacks. One major household name expressed interest—and then disappeared. A TV shopping channel was on the line—but they wanted Joseph to front $30,000 for an initial order. A big hanger manufacturer inquired about licensing the design—and then a tornado destroyed its Arkansas factory. Joseph decided the shopping channel was the best way to start, and he took its offer to David Najarian, an attorney who had done a few real-estate closings for him. Sitting in the lawyer’s Wilmette office, Joseph mentioned that his hanger had won invention of the year at the Housewares Show. Really? said Najarian. Let me make a phone call. Within a few minutes another of his clients was in the office with them: Brian Russell. He had left Giftco and was now working on his own. “We showed the hanger to Brian,” Joseph recalls, “and the light bulb went on in his head. He mentioned JD, and then within a day or two my whole world had changed.”
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Photography: Jimmy Fishbein
What did Ma think of the hanger when he first saw it? “Good item. I like it.” Which is his second-language shorthand for: Consumers will like this thing. I can see ways of improving it and cutting the cost. I know some Chinese factories that can make it and some American distributors who might be interested. We can make money with this. It will be fun.
He “studied”: showed the hanger to friends and family, went to stores and checked what they were selling. He photocopied the plastic prototype and scribbled in Chinese all over the copies, specifying modifications and improvements. He changed the cross section of the hanger’s arms from a circle to an H, scooping out enough plastic to reduce the hanger from 75 to 60 grams without affecting its strength. He clipped the hooks off other hangers—velvet covered, wood, metal, padded—and photocopied them with Z-Hangers behind them to make “drawings” of a whole line of hangers from basic to deluxe. “Some people are laughing at that,” he said when he showed me his photocopies. “Because the formal way is to pay big, big money for an engineer to draw something. But I cannot afford that. So this works, right? At the factory, they use my lousy drawing, they have an engineer, they do the formal drawing to get the mold designed. So for me, I save cost. And I can do it much, much faster than other people.”
When we first met in the summer of 2008, Ma’s plan was to license the hanger to a telemarketing company he has worked with in the past, an East Coast outfit that sells toys and tools and miracle kitchen gadgets on TV, with operators standing by. That would have been a low-risk, low-fuss approach, but in the end the company wanted exclusive rights to the hanger and a lower price point than Ma thought he could provide. A couple of months later, he and Russell, who had secured exclusive marketing rights from Mark Joseph, had moved on to Plan B, which made the Z-Hanger the most ambitious and wide-reaching project either had ever attempted: They would market it themselves, globally. Instead of working with or for an established housewares or marketing company, they would become one.
Last October, Ma spent about two weeks in Ningbo, which is near Shanghai on the Pacific Coast, and Guilin, around 900 miles inland. Between them, he says, the two cities are home to about 500 hanger factories. Carrying his prototypes and his photocopies from one plant to another, looking for people who could understand what he wanted and connect with him on a personal level, talking with Russell by telephone every night, he gradually assembled a consortium of hanger manufacturers, including some of the biggest in China—one factory to do the basic plastic hangers, another for metal, another for wood and plush. He didn’t know this was what he wanted when he started, but as it took shape, he and Russell realized it had enormous potential. In effect he structured the pricing and the finances so that the factories were not just his suppliers but his partners—and partners with each other. Each could sell the others’ hangers and stood to profit by doing so. Since each had its own salespeople and its own customers—one was strong in Japan, another in Europe; a third had an established relationship with IKEA—Ma was creating an international, interlocking sales force out of thin air. And suddenly each salesperson had command of an entire product line.
This spring the Z-Hanger started a circuit of trade shows including Las Vegas and Hong Kong, as well as the International Home & Housewares Show at McCormick Place, where it received a design award. According to Brian Russell, it will soon start showing up in Meijer, Bed Bath & Beyond, The Container Store, and the Walter Drake catalog, among other outlets. Meanwhile, Russell continues to work on a deal with the shopping channel and on what he calls the display market: big clothing chains that he hopes will find the Z-Hanger easier for salesclerks to use and less likely to damage the stock. A little farther down the road is a wire Z-Hanger that might have the same appeal for dry cleaners and laundries.
“I don’t dream big,” Ma has told me more than once. “I do one step at a time.” But on one of those late-night phone calls from Ningbo, Russell heard him say they might be able to capture 20 percent of the global market. And why shouldn’t they, if they have a better hanger and it’s no more expensive? Have they neglected something big? Is there a disaster waiting around the next corner? If not, Russell and Ma and Mark Joseph and even the lawyer David Najarian will be hanger magnates.
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For Ma, it’s not all about the money. He thinks his business will be fine whether or not the Z-Hanger catches on. Those friends of his who went into computers, who made good money while he was delivering pizzas, are now senior info people earning more than $100,000 a year. Ma has surpassed them, he says. He drives a Lexus and lives in a nice subdevelopment close to his office. He and Xiaosu have two children in the public schools and became U.S. citizens in 2001. They’re an American success story.
But if the Z-Hanger allows Ma to rely less on Mr. Key Chain Flashlight Pen, so much the better. The made-cheap-in-China thing is already winding down, he says, and the lower orbits of his business—importing, copying, making things cheaper—are getting harder all the time. Transportation and material costs have increased with the price of oil. Western investors and customers are insisting on better conditions and benefits for workers. Before the economic downturn, Chinese manufacturing had grown so fast that some areas had begun to see labor shortages and rising wages. In short, China’s cost advantage is starting to shrink, and manufacturers are already lighting out toward cheaper labor. India and Vietnam are the new China.
And all that was true even before the safety scandals of recent years—lead paint in toys, melamine in infant formula—and before the arrival of a worldwide recession. In this environment, Ma feels, it’s not enough to be a China connection. He aims to be value added—a product-development specialist whose manufacturing connections just happen to be in China. Last August, for example, stringent new testing standards were established for toys sold in the United States; Ma has made it part of his portfolio to teach American companies how to buy Chinese safely and legally.
“Before, this business was too easy,” he says. “Everybody could do it, no problem. They buy a ticket, they go to China, they go to the factory, they point: I want this, I want this. But now the situation is tough. And if you don’t have knowledge, you don’t have experience, you don’t have the energy to do this, people are gonna fail.
“But also there is opportunity. Who is smarter is who’s gonna win. If you do the right thing in the right way, then no people can compete with you.”
I once remarked to Ma that despite his desire for a job in arts management, he wound up pretty much where he had started: in Chinese manufacturing. But there’s one big difference, he said. “In China, at that time, you’re just like a machine. You have no right to create something. The thing I did here is totally different. Here, you work from your own—your heart. So then, you control yourself.”
A lot has changed in China over the past 20 years. Today, Ma says, the country is wide open and there’s plenty of opportunity. One of his classmates has made a fortune there as a real-estate developer; another is the president of a major university, another a high government official. If Ma had stayed, perhaps he would have become one of them. But when he was young and wanted a chance, as he would call it, he had to come to the United States. The life he wanted was one thing that couldn’t be made in China.
Photography: Jimmy Fishbein