I finished that book recently, and I have some comments on it.
First of all, it's important to note that the author has been working with Chinese factories on the importer side so he's pretty jaded by it by now. At the same time, no one knows about working with these factories as well as he does.
He talks mainly about "qualify fade," and how Chinese factories have very low prices in the beginning but they end up playing all kinds of games to maximize their own profits without passing on any benefits to the importer. Once they have more customers they no longer treat individual importers very well, and they begin to demand higher prices. Midler describes them as "playing chess, while importers are still playing checkers." The main reason Chinese factories are able to do this, though, is the lack of a good legal system. Midler acknowledges this and says that the West has opened up trade with China "too soon." At the same time, I would say that these issues probably accelerate the development of the Chinese legal code. I think I remember from the Rise of China class that the most developed parts of the Chinese legal system are those related to trade and commerce, especially with multinational companies. I doubt that it would be developed at all if China was not heavily trading with multinational and foreign companies. Midler also sometimes seems to be arguing against working with Chinese companies because it will not ultimately be a good deal even though it sounds like a good deal. I think this is just a case of "you get what you pay for." The fact is that China has made very cheap production of many good possible, and I'm sure many foreign companies and importers have made a lot of money. Is it a surprise that Chinese factories are raising prices and becoming more difficult to work with as they become more affluent? I think there is another way to read this, and that is that the times are changing. Chinese manufacturers had previously offered American companies very good deals because they were still in the beginning of the learning curve. They also needed American consumers because no one in China could afford to buy anything. Now many Chinese manufacturers consider themselves caught up and the Chinese consumer now has more buying power. In the end, it may be true that Chinese manufacturers are not good to work with anymore, and it could be a good thing. On the other hand, I am not sure it is good for China to become more powerful. They may become just as arrogant and shortsighted as the US is now.