Betrayed in China: One Entrepreneur's Hard Journey East
Here's what the accountant found: The Wang brothers were keeping two sets of books, reporting fake revenue figures to the Chinese government. They were using the warehouse's cash flow like an ATM, expensing apartments, cell phones, and who knew what else (some reports were blank or just said Bob). Meanwhile, the suppliers refused to tell the accountant what they were charging. "Ask Rex," they all said.
None of this, however, was a problem from Rex's point of view. The problem was that Kasha felt entitled to audit him. And Rex made no effort to hide his resentment and scorn. Later in the summer, when Kasha and Paul Wang accompanied Rex on supplier meetings, Rex openly derided them before their vendors.
Rex's feelings were so strong that eventually, Kasha felt as if he were the one who had made a hash of things. After all, Akasha Crystals China--that is, Bai-Shi Craft--wasn't really his company, was it? Kasha didn't understand how businesses ran in China. Perhaps these sloppy cash deals and these inconsistent records were common. Perhaps Kasha had humiliated Wang over behavior that was entirely typical.
Whoever was to blame, Kasha had been in a bind ever since. If he crossed Wang, Wang might lose it and vindictively shut down the warehouse--killing his entire supply chain in the process. Wang seemed capable of that. Kasha decided that he would try to reassure Wang that he trusted him, deal with the messy operation as best he could, and urge Wang toward a speedy retirement. Once Wang was gone, Kasha would run things his way.
Now, a year and a half after that low point, Kasha instructed Albrecht to wire the second $500,000. The next day, the next week, the next month, they heard nothing.
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From: Adam Kasha
Sent: December 20, 2008
To: Joe Albrecht; Paul Wang
Subject: FW: ACI-China Payments - Urgent!Hi Joe and Paul,
I am considering a strategy to switch our production of all Wal-Mart from ACI-China to another agent/assembly....
Kasha knew that if he built a parallel supply chain, Wang would be furious. But when he walked into the Bai-Shi Craft warehouse in January 2009, he knew it was a move he must make.
All around him, heaps of unpacked products slumped against the walls. In the middle of the floor, there were seven assembly tables in motion--not the 12 that were needed to fill the Walmart order. Wang had ignored Kasha's recommendations. He had not been seen in weeks.
For a week, Kasha came to the warehouse early every morning, hoping Wang would show. Business then called him back to Shanghai, but he returned regularly to the warehouse over the next month. Surrounded by the overwhelming stacks of trinkets, listening to the sounds of clinking glass as the work crews scooped gems out of sacks and into the polypropylene pouches marked for Walmart, Kasha wondered what he would say to Wang when he finally did appear. He had once thought of Wang as a dear friend, even as his doubts cropped up and his employees expressed their concerns. Now, Kasha just wanted to survive this relationship.
On February 17, a bedraggled Rex Wang walked into the warehouse. He had bags under his eyes. A cigarette dangled from his lips. He wanted to talk.
