Episode 53 – Amazon Story Time – Double-Crossing Chinese Mafia Manufacturers

Introducing the Amazon Story Time series, where some of the craziest and most insightful seller stories will be shared. Bradley discusses the time when his business partner double-crossed the Chinese mafia by “borrowing” their product manager to create his own supply chain. There are quite a few takeaways from the whole ordeal.

Episode 53 covers:

• 00:30 – Introducing Amazon Story Time with Bradley
• 00:56 – Bradley’s Amazon Journey Begins
• 01:30 – First, “Fast and Furious” Spawns Aftermarket Car Part Sales
• 03:15 – A Great Amazon Private Label Idea – Drum Roll – Cell Phone Cases???
• 04:00 – A US Citizen (With His Own Warehouse) Everything was in Bradley’s Name
• 05:40 – Scaling Up – His Partner Moves the Factory to China
• 06:35 – Stealing Production Manager and Ghosting the Chinese Mafia is a Very Bad Idea
• 08:14 – Bradley Receives an Offer He Can’t Refuse
• 09:56 – The Partner’s Dangerous Missteps Mean He’s Now the Packing and Shipping Guy
• 11:34 – Takeaway # 1 – Really Know Your Partners
• 12:27 – Takeaway # 2 – Pay Close Attention to Your Potential Liability
• 13:13 – A Call Out to Listeners to Send in Their Own Interesting Amazon Stories

Enjoy this episode? Be sure to check out our previous episodes for even more content to propel you to Amazon FBA Seller success! And don’t forget to “Like” our Facebook page and subscribe to the podcast on iTunes, Google Play or wherever you listen to our podcast.

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• Freedom Ticket: Taught by Amazon thought leader Kevin King, get A-Z Amazon strategies and techniques for establishing and solidifying your business.
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Transcript

Bradley Sutton: Today, guys, you’re going to hear a true-life life story from me about how one of my former business partners got kidnapped, and I actually had to pay a ransom of over $100,000 from an Amazon business just to get them out. Say whaaaaat?

Bradley Sutton: How’s it going, everybody? Welcome to another episode of the Serious Sellers Podcast. I’m your host, Bradley Sutton, and we’re going to do something a little bit different today. It’s going to be a Story Time with Bradley episode. I want to give you guys one of my craziest experiences as far as working with any Amazon-related company. I’m probably going to have a few of these, but this is a pretty crazy one. I might need to sell the rights to the movies one of these days. Well, it might not be that interesting, but I think you guys will find it kind of crazy. As some of you may or may not know, my journey with Amazon actually started maybe five years ago or so. One of my old partners came to me, and he was like, “Hey, I’m going to start a cell phone case company. I would like you to join.”

Bradley Sutton: These were in the days; it’s not like today that’s it’s kind a joke. Like, “Hey, let’s get into cell phone cases.” Yeah, that’s a joke, because we all know cell phone cases are so saturated. But this is way before then. This is in the Galaxy S3, S4 days. Galaxy S4 had just come out.  I’m not sure what year that was, but you guys can look that up. This was somebody who I had been working with for years. It was a Korean gentleman I had partnered with way back in like 1998.  In 1999, around there, we had started a company for aftermarket car parts. This is when The Fast and the Furious (movie) came out, and I had started a company where we were selling aftermarket parts like body kits and exhaust systems and intakes for Korean cars.

Bradley Sutton: I had a Korean car at the time, and I was like, “Hey, I would love to make parts for my car,” and I saw that there’s a big need. Everybody was making stuff for Japanese cars. I was like, “Hey, I want to be able to be the source for Korean cars.” I was 19 years old, and the business was doing like $1 million a year in the United States. So it was pretty successful. But that was my first entry into hooking up with these Korean gentlemen who are great guys. One of my friends, Sam, still does that business actually on his own. But then, partway through that business, another partner had come in, and he seemed like a good guy. He was like a money guy. He invested in the company and had a lot of good contacts. And then, we just started doing business together and then after I got out of that one company for the aftermarket car parts, I still stayed close friends with the other gentlemen. We stayed close friends. We did different ventures throughout the years. His daughter even stayed at my house with my family for one whole summer, one year. That’s how close of friends we were. I taught her how to drive. I mean, well, we were pretty close family friends even though we weren’t always doing business together. I would help him with different things. He would help me; he would put me up at his house when I would visit Korea and different things. This went for a good 15 years. And then, he approached me, and said, “Hey, I’m going to start a cell phone case company. I got a good manufacturer here in Korea. I want to launch this to the states.” And at that time, I was just working for-the-man as a marketing analyst for a large food corporation, and I was like, “You know what, this working for-the-man thing that I’ve been doing for a few years, it’s kind of annoying. Sure. You’ve never steered me the wrong way. I’ll go ahead and join your company, and let’s see what we can do.” So we started off like just like crazy. All right. We joined with another partner who was here in the states, another Korean gentleman, and he was working for a business that was selling a lot of accessories online. So all three of us joined together and formed this company, and I was the money man—or not the money man—the named person because being the only US citizen, I had to have everything in my name.

Bradley Sutton: I also provided my house and a warehouse. It was part of the deal too as our new warehouse. I actually have a warehouse at my house, a 2000-square-foot warehouse. What happened was it used to be run by somebody who had a wood-making business and when I bought that house I was like, “Oh, this is perfect for my car parts business.” And by the way, my house became the office for the company. I actually moved back in with my parents at that time. We started this company, and it was just doing crazy. In the beginning, we only had five or six SKUs, and each one was selling like 500 to a thousand units a day of phone cases, it was just ridiculous.

Bradley Sutton: Our one other gentleman who had joined with us, he had the idea that was unique at the time. He’s like, “Hey, let’s do some 3-D rendered images for our listing instead of just photography.” And that was game-changing at that time. And we didn’t really know what we’re doing. Me personally, I didn’t know anything. I was kind of like the logistics guy. I was there in the warehouse sending everything to FBA. We had a machine that was an automatic packager. I would literally package, by myself, 500 to 800 cell phone cases a day that were Amazon orders Fulfilled by Merchant. We weren’t even doing FBA (Fulfilled by Amazon) at the beginning. That’s how successful these were. We could just send that many out FBM and so that was my job. I was like the money guy. My name was on everything, and I was the logistics person.

Bradley Sutton: They really didn’t even teach me how to do much on Amazon at all. So you know, this was going great. I mean this was crazy. They didn’t really know much about Amazon. They looked into this. Basically my partner, the one guy who I’d been friends with for a long time, he was the guy who was the supplier. He would find the factories we were using, and he would be the one to always go to China back and forth. Actually, he moved the production from Korea to China to save money. He said that he started a factory over there with some other people, and we just kind of trusted him to do all that stuff. And anyway, after a while, a business started going down a little bit, because again, they didn’t really know what they were doing on Amazon.

Bradley Sutton: Once other companies started catching onto what we were doing and who actually knew what they were doing, they were taking a little bit of the market share, but we were still making some pretty good money. But then on one of his trips— one of my partner’s trips to China—what happened was all of a sudden I got a call. I don’t even remember if it was from him, or from the lawyers over there or something, but here’s the crazy part of the story. He basically had been kidnapped by the Chinese mafia. All right, Chinese gangsters kidnapped him. I don’t remember who I was talking to because I was just kind of in shock, but I got the call. I’m like, “what?” As it turns out, what happened was — he was getting cell phone cases from a certain factory that he had done a deal with, and he had credit terms because we were bringing in containers of these cell phone cases every month.

Bradley Sutton: So, they loved us, and so they gave him some terms. But then what I found out was he took one of their production managers and started a new factory with that production manager and still owed a few hundred thousand dollars to the original factory. But then, he just didn’t pay them, and he started ghosting them. All right. So he was going to China, little did we know, just to start with this new factory that he had started with this guy and was checking on things, but then somebody, an employee of the new factory, told the old factory because they were looking for him. They’re like, “Ooh, this guy owes us a few hundred thousand dollars.” You know, what’s going on? And they had told them that this guy was going to be here. So basically, the Chinese mafia and the Chinese police who were in on this, they went and kidnapped him.

Bradley Sutton: All right. I mean they tied them up with zip ties and everything, and it was crazy. I heard more of the story later like when they kidnapped him, he actually was able to jump out of the moving car, because he was trying to escape from them and got all cut up because he rolled on the street a few times when he jumped out of the car. But it was all for nothing because they went and caught him. I mean this is like a legit Hollywood story. Anyways, they called me, and they’re like, “Hey, you know, we have no guarantee that he’s going to pay. If you want him to get out of here, you have got to sign something that says you’ll pay”, because you’re the business owner. Bradley, you are going to pay us back in the next— I forgot what it was like—nine months or six months or nine months, “$150,000 cash.”

Bradley Sutton: And you’ve got to completely sign this with our lawyers in the United States present. And that’s the only way you’re going to get him out of there and don’t think about getting out of this agreement because we know where you live and we’re going to come after you next. And I’m just like, “What in the world is happening right now?” I talked over with my other partner; there were three of us as I had mentioned, and I’m like, “Okay, what are we going to do?” We were like, “Hey, we’re making enough money on this right now. We can calculate it out. Oh, we’ve got to sign. Who knows what they’re going to do to our buddy over there?”

Bradley Sutton: We were, of course, pissed because we had no idea he was doing these kinds of shenanigans. Obviously, we were super pissed at him. But anyways, more like, “Hey, we got to do this because I don’t want Chinese gangsters coming after me and my family at my house,” or who knows what’s going on. Right? So we’re like, “Okay, fine, we’ll do it. Set up the meeting.” These Chinese gangsters who were hired by the factory, they had their own official American-Chinese lawyer. I had to go up to LA. I signed all these papers as: “I Bradley Sutton personally guarantee that I’m going to pay this $150,000 in the next x months” et cetera, et cetera. They released him; he got to come back to America. We kind of like dog-housed him like, “I can’t believe you did this dude. We ended up putting him in the warehouse, and here was this big successful Korean 50-year-old businessman as the one who is packaging the phone cases and stuff. We were obviously super pissed, but we were just working our butts off trying to raise the money for $150,000; we had to do these payments—I forgot what it was—like $20,000 every month and a half or something like that until it was paid off, and we were working our butts off, and it became harder because like I said, now all of a sudden, these other cell phone companies started coming on and figuring out what we were doing, and they were doing it much better than us. Our sales kept going down and down at the very end of it; we probably had like now 30 or 40 SKUs—different colors and different cell phone cases—and making less than what we were making or selling less than what we were making when we only had like four or five SKUs of the S3 and the S4, so it was probably one of the most stressful times of my life, knowing that my name was over everything. Who knows what these guys were capable of?

Bradley Sutton: What if all of a sudden, we couldn’t no pay back this loan? What’s going to happen to me legally and non-legally? Right. So long story short, we ended up being able to pay it off. It was a great feeling to be able to pay that last one, legally unbinding us to them. We started over and not to have that over me, but I don’t what the moral of the story is. I mean this is just a pretty crazy story. Cool story, Bro, right? What are some of the things to take away is, be very careful with any kind of partnership or joint venture that you do. Obviously, if it’s somebody you don’t really know, I mean have tons of things in place where you really know. Don’t just have your part of the business. They should have their part of the business. Everybody should have their own responsibility.

Bradley Sutton: But there’s got to be a lot of transparency. Don’t just give one person so much power with one aspect of the business where something like this could happen, and this could even go for somebody who you might consider or somebody who is a relative or a long—above 10 years—family friend. Like this guy was, we had no idea this kind of thing could happen. But because we just let him do his thing and just blindly trusted that he was taking care of everything in a way that was to benefit the company. This is what happened. And be careful too with your liability. Like everything was on me; my partner’s names weren’t on anything because it was all me because I was the American citizen. And so everything was on me.

Bradley Sutton: That was another mistake that I learned. But, guys, crazy things could happen in this business. And that was one of the craziest things that happened to me. And things could have gone very differently. Things might not have gone out that great had it not been handled or had something gone wrong or our Amazon account got shut down, things like that, right? Just make sure that you guys are really safeguarding your businesses; take a lot of precautionary measures to protect yourself, protect your partnerships, whatever agreements you have come in, and hopefully that doesn’t happen to you. I’d be really curious; do you guys have a crazy story? It doesn’t have to be with people kidnapping your business partner and threatening crazy things. But I’d be curious, what is your crazy story?

Bradley Sutton: Go ahead and send it to support at helium10.com. That’s support@helium10.com Send in your crazy story and just tell them, “Hey, this is for the Serious Sellers Podcast. Bradley had said to send in our story.” Maybe we could talk about your story on the air or maybe I’ll even have you as a guest or a few of you as guests, and let’s talk about your stories, especially if it’s something that you think people can and should learn from, and maybe it can protect them from something similar that happened. Thank you guys very much for joining me on Story Time with Bradley. I’ll try and think if I have any other crazy stories, but I hope that doesn’t give you any nightmares about what could happen to you. I didn’t mean it as far as that goes, but just as a kind of a warning example of what can happen, and I hope you guys are able to take something from it. So until the next episode, we’ll see you guys later.