When sourcing in China – the more product detail the better

What people are saying about Mulberry Fields
I REALLY do enjoy your posts and find them informative and helpful.” – a Wal-Mart supplier

I have been reaching out to some vendors this week for a children’s product made with EVA foam. Since this is a kid’s product that is going to be sold in the US and Canada it has to be Phthalate free (which according to CPSC standards cannot contain more than 0.1% of Phthalates). In case you are not in Children’s products and do not know what Phthalates are, they are plasticizers, what gives plastic items their rubber feel. But of course they are harmful and in some countries, like France, they are banned entirely in children’s products. Germany bans some products and others have to meet stringent testing requirements just as they do in the US and Canada.

I had thought it was good enough to tell the vendors that I wanted EVA that was 环保 “huanbao.” In Chinese this is what you ask for when you want an environmentally friendly product. However, what I have learned on this project is that there are in fact 3 grades of EVA foam A, B and C, A being the most “huan bao” and C being the least. It all depends on the content of EVA foam in the product. Grade A will generally pass all tests, Grade B will pass some tests but not others and Grade C is generally not going to pass any tests. One vendor has assured me that B Grade EVA will pass the phthalate test and he even sent me a testing certificate. Another vendor has told me that B Grade will not pass the test and that we should get A Grade. It may be that they just want us to order a more expensive product. I don’t know. But I am learning a lot on this project.

In any case, it is good to know all this info up front. The lesson is anytime you are dealing with products, especially children’s products, try to learn as much about them as you can and discuss with your vendor. They will also be able to educate you.

http://www.theeastasiaco.com

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Why sightseeing with your China vendor is good for your business.

What people are saying Mulberry Fields
“Your blog speaks to the many issues I have experience with when doing business in China:” – a company in California

The other day I wrote the final blog post in my series “The best way to find a reliable supplier in China” and I mentioned that when you travel to China you should build a day or a half a day into your schedule for sightseeing. One of my former clients emailed me and said she was surprised by this because she had never considered it. Thus this blog post.

In fact, when you go to China, it is very normal for vendors to invite you to do some local sightseeing, especially if you are near a city with an important tourist attraction. If you don’t take them up on the offer they will probably be offended.

I speak from experience. I have accompanied many overseas buyers to China and have seen the palpable looks of disappointment on vendor faces when the senior person in our party would decline invitations to visit local places of interest, saying we were just too busy or we would rather spend time at the factory. The attitude, obviously misplaced, was that nothing in China was worth seeing at the expense of business. Make no mistake about it: This is the message your are sending to your vendor.

When your vendor invites you to see some of the local sites, he/she does this for a couple of reasons:

1.) They are simply showing you some hospitality which you should accept even if your schedule is tight and you feel your time would be better spent at the factory. The analogy I would use is that if you are a guest at someone’s house and they invite you to see their garden, you should accept, even if you have no interest in gardens. This is basic courtesy. And when you go to China, even if you have initiated the trip and you are the customer, you are nevertheless a guest.

2.) China vendors want you to pay your respects to China. China has no shortage of historical sights and places of great natural beauty. The Chinese are proud of their culture and their history, as they should be. They are also aware that China fell behind the industrialized world following WW 2 and for many years was regarded as a developing country and more recently as an emerging market economy. Many Chinese, to borrow a Rodney Dangerfield line, still feel they “get no respect. “ This is especially true in cities and areas in China which have not yet seen the breakneck pace of development that one sees in places like Shanghai, Xiamen, Guangzhou et al. Inviting you to see a local temple or walk around a famous park and hearing you say how beautiful it is, is one way Chinese vendors feel respect.

I would add that Americans do not seem to have the same values. I have worked in the US for companies that would occasionally invite Chinese vendors to visit. But no days were scheduled for anything but office and warehouse/factory visits. Vendors came quickly and left just as quickly. I don’t know if it was a lack of respect for the Chinese or just the way Americans do business. I suspect a little of both. But in China it is very different. You arrive as a guest and are treated like one.

So the next time your vendor invites you to go see some local places of interest, your reply should be “Great, I would love to.” If you do this, who knows, your next order may ship on time.

http://www.theeastasiaco.com

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Book Review: The China Price by Alexandra Harvey

What people are saying about Mulberry Fields
A very interesting blog.” – a company in France

I have three benchmarks of a good book which are as follows:
1.) Is it well-written?
2.) Is the substance new and interesting? Do I learn things ?
3.) Is the writer truly passionate about his/her subject?

Based on these benchmarks, Alexandra Harvey’s “The China Price” is a good book. Ms. Harvey, a Princeton grad who spent years working at the Financial Times of London writes in a style I would call smart and accessible. The China Price also reveals a lot of interesting information about China and its rise as the ” factory of the world.” Some of the interesting things that I took away from this book are:

1.) In the 1980s many US Department store buyers – in a survey conducted by Business Week – predicted that China would never be a strong export country. Let’s just say I hope they were better forecasters of products than global economies.
2.) By the end of 2006 China employed only 22,000 full time labor inspectors to oversee a labor force of 764 million employees.
3.) From 1980 to 2006 Shenzhen’s population grew from 321,000 to 12.4 million.
4.) Before 1995 there were no formal procedures for resolving labor disputes in China.

The book is mostly focused on the human cost of development, from widespread cases of Silicosis in the gem industry to pollution in China’s cities, where just breathing the air is a risky practice. For example in Taiyuan, Shanxi Province, the home to China’s coal industry and at one time regarded as “the most polluted city in the world”, a 2001 WHO and United Nations Development study found that 70 -80% of Taiyuan’s air particles were polluted at a level considered “dangerous.”

The migrant laborers whose stories are told by Ms. Harvey are riveting. We learn the tragic story of Deng Wenping, who worked in the gem industry in Shenzhen, contracted Silicosis and died at 36. And there is Feng Lingzhong, another silicosis victim, who stood up to his employer and won a judgment of $ 40,000.

The only problem with the book is an underlying tone throughout that seems to condemn China – because of the human and environmental cost of development. Yet, development in any society is not a pretty thing. Industrial conditions in Britain during the Industrial Revolution or in the US at the turn of the 20th century were abysmal and spurred reforms – just as bleak conditions in China over the past 30 years have spurred reform. Only because of a series of incidents involving factory workers and their bosses and a few strong willed individuals was a grass-roots legal industry spawned in China. Now if workers have a claim against their employer – even if it is just because they don’t like the food in the factory, another anecdote passed on by Ms. Harvey – they can do something about it. As I see it this is progress. I would add that the sheer size of China’s society makes implementation of any reforms very difficult. The Chinese govt is trying to address labor issues but they simply do not have the trained manpower to do so as the statistic above regarding labor inspectors makes evident. Ms. Harvey acknowledges both the size of the task and the Govts efforts to make things better, but her tone is condemnatory nevertheless.

It also would have been nice if Ms. Harvey had touched, even if ever so faintly, on her experience working in Japan, which defined her career before she went to China. The government has made overwork, or kuroshi, illegal but it remains a social problem here in Japan. The term kuoshi means death by overwork and that is literally what happens sometimes. I wonder if Ms Harvey was aware of the problem when she worked here and how Chinese companies ( not factories that employ migrant labor ) match up with Japanese companies in this respect?

In the end though The China Price is a good book because it is well written and there is very interesting detail. But is Ms. Harvey truly sensitive about her subjects, my third benchmark of a good book ? I don’t know. One of the odd moments of the book in fact is the interview with Feng Lingzhong which takes place in a Starbucks in Shenzhen. Ms. Harvey writes: “We were sitting in a Starbuck’s in Shenzhen, its soft lighting and gentle- mannered staff at odds with Feng’s memories.” I somewhat cringed when I read this and thought to myself, “What an odd place to interview a Chinese migrant worker with Silicosis.” But I am sure Mr. Feng did not choose the venue for the interview.

Here are some other book reviews:

Poorly Made in China
One Billion Customers
China Shakes the World
The End of Cheap China

http://www.theeastasiaco.com

The best way to find a reliable supplier in China. Part 4 of 4

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips”     -an apparel company in Utah.

So you have found three suppliers from your Canton Fair visit.  These are vendors you have met in person and worked closely with on samples over 2-3 months. You are pleased with their costs, the quality of their samples and, most importantly, their communication. You are beginning to feel in the comfort zone with these people. The final step is to make sure they are who they say they are.  To do this you need to visit them.

But before you visit your prospective vendors, a preliminary step should be to do a credit check on them with a China business verification service. Some of these services are expensive. Some are very reasonable but this is a step you definitely want to take before you arrange visits with any potential suppliers. The service I refer my clients to costs about $ 250 for a credit report on a Chinese company, much more reasonable than D and B who also offers this service. The report my clients receive tells them all about the company including, number of employees, date company was established, annual revenue as well percentage of domestic and overseas sales. The report will also detail any important events in the company’s history e.g. a name or location change and any litigation the company has been involved in. It is a fairly lengthy report.  In fact what you should do is ask the company some of these same questions and then cross check their answers with the credit report to make sure there are no glaring inconsistencies. You are about to risk your business on an unknown and untested supplier in a country which is a wasteland of failed sourcing ventures. It behooves you to know as much as you can about your supplier and try to establish early on if they are trustworthy or not. Credit reports push you in that direction.

Let’s say that after you run a credit report on your three prospects you do not feel the credit report of one of the vendors was acceptable. That leaves you with 2 vendors. These are the vendors you have decided to visit.

When you go to China to visit a new vendor, you should count on spending 3 full days with each vendor. In this time you can see their facility and discuss your projects with them.  You should have a factory checklist just as if you were doing an audit. But the purpose of the trip is mainly to make sure that the vendor you have been working with over the past few months does in fact own the factory (you would be surprised).  This will be apparent early on as you the vendor interact with the people at the factory.  If you have asked for photos of your vendor’s facility when you first started sampling with them (highly recommended), you will also be able to verify that the facility is the same all along. If your vendor takes you to a place that you do not recognize from earlier photos then you have a red flag.  You should also devote a full or at least half day to local sightseeing ( you are paying your respect to China by doing this and it is a very important ritual in vendor visits). What you don’t want to do is rush in and rush out, as if you are telling the vendor all you care about is your product and cost. In short, the more time you spend with your supplier the better you will know them –for good or bad. Again, don’t rush in and out.

Generally you should be able to visit 2 vendors with a 7-10 day trip in China. Vendors will arrange your hotel for you ( and may even pay for it) and they will pay all your meals for you, so in a sense all you have to do is pay your airfare. That is a pretty sweet deal in and of itself. You may end up spending 3-4 K on your trip which is nothing compared to the sales you will have if you are able to deliver quality product to your customers when they want it.

www.theeastasiaco.com

Here are the other posts in this series:
Part 3
Part 2
Part 1

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What you can do to speed up your China deliveries

What people are saying about Mulberry Fields
“I have already learned a great deal about China and your business through your website and blog posts. Very impressive.”   – a company in Toronto.

It is very common for China vendors to be late on orders and go past the delivery date in the sales contract. Vendors may have bottleneck in their supply chain, esp if they use cottage industry sub-contractors, they may have to deal with power outages or bad weather, or they may just be bad managers who do not make their customer’s priorities their own. In short, anytime you give an order to a factory in China you should anticipate that it will be late.

So what, if anything, can you do to discourage vendors from delivering a product late ?   There are a few things as follows:

1.)  It is common to have an LD (Liquidated Damages) clause in your sales contract with your China vendor. This clause imposes penalties on the vendor if the agreed upon delivery date is not met by the vendors. Usually it is a percentage of the order or there is a charge for each day over the delivery period. Most China sales contracts I have ever seen have this but it can do more harm than good, depending on how it is handled.  In fact, some people advise leaving it out of a contract altogether.

I for one think the LD clause is a good idea if it is structured reasonably and does not assess severe penalties on the vendor or seem threatening. A per diem late charge is better because it just seems more reasonable than charging a vendor a percentage of the order ( what some LDs do).  Vendors of course will try to recoup any damages they are forced to pay – esp if they have subsequent orders with you – but that is to be expected. The purpose of the LD is to serve as a reminder that the vendor has promised to ship a product by a certain date.  You should see it as a nudge and not a hammer. It also gives you a pretext to talk often about your contract to remind the vendor of their responsibilities. Vendors are very busy sometimes so the more you remind them about these things the better.

2.) Get regular updates on production.  By regular I mean weekly. Have a conference call every Friday with your vendor.  Request photos every week showing how much has been done. Photos can be very valuable in seeing what the vendor has accomplished. And I am not talking about just a few snapshots here but extensive photos.  The value in doing this is not so much to push your vendor ( some vendors cannot be pushed), but to make yourself aware as early on if an order is going to be late. You can then inform your customers in a timely matter, rather than having to surprise them.

3.) Have realistic production and delivery dates.  Many China importers want their products as fast as possible because the product life cycle in their own countries can be very short.  Not knowing much about China production, buyers sometimes ask for unrealistic delivery dates. Vendors want the orders and promise everything under the sun. Although every industry, every product, every order is different, you just should not expect to see any order out of China in less than 6-8 weeks. Keep this in mind when you go over your delivery dates with your vendors in China. If they tell you they can complete your order in less than a month, don’t believe it.   Or, believe it and tack on a few weeks.

www.theeastasiaco.com

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The cost to register a patent in China

What people are saying about Mulberry Fields
” a very interesting blog”  – a company in France

I was involved in a Linked In discussion this week about IP in China. My advice has always been that IP protection is expensive in China and probably not very effective so, at least for small businesses, one’s time, money and energy would be better spent working with vendors to ensure quality and delivery than worrying about their product showing up on the shelf of a Chinese department store or online shop. One of the people who responded to me on Linked In, someone who has been active in China supply chains for over 20 years,  agreed with me that IP is still a very new concept in China and added that China patent law, something it appears he has a lot of experience with,  is “archaic.” However, he said he does go to the trouble to register patents sometimes in cases when he sees doing so as a “strategic” move. My first thought when I read this is that either registering a patent in China is cheaper than I thought, or this guy works with a company that has the resources to make “strategic” moves in China.  So just out of curiosity I looked up to see what it costs to register a patent in China nowadays.

I went to two websites, one a company based here in Tokyo, where I am, and the other a well-known online patent filing company in the US.  With the company based in Japan, the cost is about $ 2500.00 but does not include translation of some documents ( the translation fee for the application itself is about $ 30,00 for every 100 words. That does not sound cheap). There are fees for the initial application/ the patent search/ administrative paperwork/ and the actual registration. So figure at least $ 3000.00 to file a China patent through this company here in Japan.  The US-based company charges a flat $ 4400.00 for this. And this does not even take into account the time that one must spend getting the product ready to file a patent. Anyone who has filed a patent knows that the requirements for doing so involve quite a bit of work.

To me $ 4000,00 to $5000.00 is a lot of money to pay for a “strategic” move that in the end may not be very effective. Most of the small businesses I work with just do not have that kind of money in their budget. For this reason I always advise them not to overly concern themselves about their IP ( though they should think about it) and that their money would be better spent travelling to China to work with their current suppliers, finding new suppliers and inspecting their orders. In short, what they need to do to build their business.

www.theeastasiaco.com

 

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Not all China sourcing companies give good advice

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips” – a kid’s apparel company in Utah.

I have been going to China since 1988.  That is 25 years of China experience.  I like to think that I have learned a lot in that time and can help other people get started in China.  And that is in fact my job. But I still feel that there is much more to know and to this end I am continually educating myself about all aspects of China, including language and various industries because I use this knowledge in my work. Not a week goes by when I don’t have to email a supplier in Chinese or learn something about a product or industry.

I also like to read other China blogs because I feel I can learn from my peers and I like to keep abreast of what is going on in China ( I am based in Tokyo). Unfortunately when I do this I see a lot of bad advice out there. I was on the site of a US /China based sourcing company today – I think a pretty successful one judging by some of the names of the contributors to the company’s blog –  and I was absolutely aghast at much of the advice I saw there,  some of which was as follows:

1.)  When you begin looking for a vendor in China you should have few hundred prospects and narrow the field down to 5 based NOT on any communication with the vendor but on their visual presentation in the form of website or catalogs.  My reply. This is an absurd number of companies to go through when sourcing in China and would be an incredibly time-consuming endeavor that may not be based on your needs.  What happens if you spend 2 weeks narrowing down your list to 5 companies and then all those companies turn out to be  30% over your target cost ? Would you  have to go through all 300 companies again ?  A more reasonable number of companies in a sourcing project is 25 – 50 – depending on the project. That number should leave you with a few good prospects at the end.

2.)  Don’t consider a company that does not have a good website.  My response ?  Totally disagree. Many vendors in China do not have very good websites but they may nevertheless be good vendors. Conversely I have seen some great websites only to visit the companies represented on the websites to find nothing.  And in fact I might argue that the nicer the website, the more likely it is you are dealing with a trading co. and not the factory itself.  In short a website should not be used to judge a vendor, except to see what kind of product they have and to get a general idea about the company, esp location, history etc. One caveat is that any vendor without a website is a red flag. I would not do business with any vendor who did not have a website. But don’t let a bad or slow website bother you. It is par for the course in China. In short, don’t judge a book by its cover.

3.) Do not discuss cost when you first contact a vendor.  Again, I fundamentally disagree with this kind of advice. The person’s rationale is that you will likely be seduced by the low-cost and may not pay attention to more important things like quality systems, lead time, delivery etc. This sounds good but in fact it is hardly practical. Cost is in fact a very important part of sourcing in China.  In fact, when deciding whether or not to do business in China the two most important factors are usually cost and quality. Companies have margins that help them build their businesses and they must work with vendors who can help them meet these margins. Why waste time with a vendor discussing product development when that vendor is going to end up being too expensive for you ?  It is best to find out quickly who you can work with and who you cannot. And then when you have that list you can eliminate others based on other sometimes equally important criteria, like quality and lead-time.

I would add that when I source I tend to pay less attention to the high and low costs on any given sourcing project, knowing that the vendors who offer extremely low-costs are probably not good on quality, or cannot hold those costs and the vendors who offer high costs are just not going to be acceptable to my client.

4.) Make sure vendors you are interested in have a QC manual. Once again this sounds like a perfectly good piece of advice.  But the more important question is not if a vendor has a manual but if they have one do they actually use it ? Many do not.  I would say it is a better piece of advice  to visit your factory and see if they have a dedicated QC area and if it is being used. If not than any manual they have on hand or have emailed to you is worthless.  I would add that QC manuals are standard in some industries – electronic – and not so standard in other industries e.g. handicraft. So depending on your product, industry and vendor setup e.g. vendors that rely heavily on cottage industry the absence of a formal QC manual should not overly concern you.

5.)  Tell vendors you are negotiating with to match costs you have received from other vendors or forget about the business. Sounds good but half the time it just does not work.  Many vendors have their own bottom line and the cost they give you covers this bottom line. It does not matter how much you tell them about the better costs  you have received from other vendors, if the vendor you are approaching simply cannot make your product at a cost that is acceptable to them ( not the  cost that is acceptable to you) they will simply not take your order.  A better strategy I think is to work with “target costs” and give these to vendors. This is less threatening to vendors and I think allows for more flexibility on both sides when trying to reach an agreement or cost that is workable to both parties.

In all fairness to the person who runs this sourcing company, there are a couple of good pieces of advice, namely visiting your vendors before doing business with them ( nothing but common sense here)  and hiring a third part auditing firm to make sure the vendor is in good enough financial shape to do your order.  I think this is a very solid piece of advice.

But all in all, I think one needs to be just as careful when choosing a China consultant or overseas sourcing company as they are when choosing a factory.  Because I for one would not want to have to go through a list of “a few hundred” vendors seeking a few whom I might be able to work with.  But whom I might not be able to work with as well.

www.theeastasiaco.com

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What you understand is not necessairly what your China vendor understands

What people are saying about Mulberry Fields
“I have already learned a great deal about China and your business through your website and blog posts. Very impressive.”  – a company in Toronto

I am reaching out to some vendors for quotes on a project now and accordingly I requested some comprehensive product photos from my client.  About half the photos he sent were very  low resolution (under 10 kb) that do not lend themselves to easy understanding.  When I told him that I would need high resolution photos, he replied to me that a description of the item would suffice in North America, so why not China?  Well, there was my blog post for the day.

I went on to explain to him never  to assume that vendors understand what he and I  understand. He knows his product very well, as do I after working with him for awhile, but I am sure some vendors would look at the description and the low resolution images and scratch their heads. High resolution photos showing the product from all angles and with all details just complements the product description.  I finally gave my customer my summary of the process of requesting quotes from China vendors based on written desc/photos/samples.  These are good guidelines you should keep in mind when requesting quotes from vendors.

Written description only –  not good. Very inaccurate on which to base costs.

Written description and poor or limited images – acceptable but cost will probably go up significantly when vendor sees an actual sample.

Written description and several good images – good. Should get you a pretty good idea of cost.

Written description, images, actual physical sample – best to get the most accurate cost possible.

Just remember, the more information your vendor has at the beginning the less likely it is that costs will go up in the end.

http://www.theeastasiaco.com

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Building trust in China – a letter to a prospective client

What people are saying about Mulberry Fields
“Your blog speaks to the many issues I have experience with when doing business in China.”   – a company in California

I had someone come to me this week asking me about helping them out in China.  This is a startup consumer products company and they are worried about protecting their IP as they begin to look to China as a manufacturing base.  They seem to be genuinely concerned about this so this is how I responded:

Dear So and So:

One of the realities of doing business in China is that you may lose your IP.  In fact a client of mine just skyped me two nights ago and told me that someone had seen his product ( currently only  sold in the US and Canada ) on an online B2C site in China. I looked into it and sure enough, there it was. But my advice to him was simply that, hey, if you have to lose your IP in China in order to build your business in North America it is probably worth it. He agreed and was even able to laugh about it at the end ( a good thing because he is currently on vacation in the Caribbean ).  Having said that there are things you can do to protect your IP but they are very expensive, time-consuming, will give you a lot of sleepless nights and more often than not are ineffective over the long-term, if you go by all the trouble big multinationals have protecting their IP in China. The example I like to point to is the Subway Sandwich Corp which spent how many tens, if not hundreds, of thousands of dollars and eight long years trying to close down a fake Subway shop right in the middle of the financial district in Shanghai ( the fascinating story is told  in a new book,  The End of Cheap China by Shaun Rein). 

Doing business in China is difficult to begin with esp for the issue you mention, trust. There are many good people in China but trust is NOT something that comes easily. I have ex-colleagues and friends in China that I have known for 20 years.  They are wonderful people and I truly value their friendship. I trust them but only because I have worked closely with them and known them for 20 years.  So for this reason your attitude going into China should  be ” I will try to build up trust but will ALWAYS verify.  I will NOT trust people blindly. Yet I will NOT be paranoid about being ripped off or having someone steal my IP.  I understand that it may happen but if that is what it takes to put me on the map in my industry in the US, then so be it.”   Companies that think like this tend to do well in China because more than anything else they are practical. Companies that go into China seeking to impose their value systems and business culture on their Chinese partners tend not to do well. 

I am sure you know a lot of lawyers who would disagree with this and tell you that you should always take steps to protect your IP in China. I read blogs by China-based lawyers and consultants and they often, though not always, give this advice ( as is to be expected because that is their bread and butter). For big companies with a lot of resources and clout IP protection is probably a smart thing (though the Subway example does not inspire confidence). But for startups and small companies on a shoestring budget it may not be.  As I said it is very expensive and it may not be effective at all – depending on your product and the extent of the protection you afford it. Your time and energy would probably be better spent working with your vendors on quality and other issues so that you can deliver the best possible product to your customers and grow your business where it counts most, in the US. When the time comes and you really have something to protect and then means to do so then you can worry about IP

Good luck ! 

Sam

 

www.theeastasiaco.com

 

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5 Steps to lessen the risk of quality fades in production

What people are saying about Mulberry Fields
“A very interesting blog…”  – A company in France

I just had an email from a customer yesterday who told me she was very happy with some samples she had received. These are handicraft products from a vendor we have been working with over the last eight months. My customer has exacting standards and it has not been easy to get to this point. But we have gotten there and it feels good.

Accordingly I wrote to my client as follows today:

I think half the battle is making sure your vendor can do product to your quality standards.   These are very intricate handicraft pieces made by hand and there is a lot of artistry involved. It is not easy to get people who have no concept of high-end product and who probably have never even been in a western style department store to make to your standards.  But you have won this battle and should feel good about that.”

I then added:

“The next battle is to make sure they can maintain these standards in production.  How to do that will need some discussion. “

I have written before about being lulled into complacency after receiving some outstanding samples from your China vendor.  So how can you ensure that a vendor will maintain those same standards in production that you see in the samples?  This is definitely one of the trickiest and most aggravating issues when sourcing in China.

The most obvious way to prevent quality fades from sample to production is to go to China yourself to supervise production.  Of course for many small business owners this is neither practical nor feasible because of the cost and time commitment. So often you have no choice but to rely on your vendor. Although this can be a very risky proposition there are quite a few steps you can take to make it more likely that your vendor will end up delivering what you have ordered.  Five of these steps are as follows.

1.) Begin a dialogue with your vendor about the nature of your business and how you see your partnership unfolding over the long-term. Let your vendor know that as your business grows and you become more confident in their abilty to supply you with quality product the orders will get bigger (hopefully this will be the case).  At the same time you have this discussion, you have to be aware that China vendors are notorious for being very short-sighted. Many want no more than to cash in on the order at hand and they have no interest when you talk about a long-term relationship. No matter how many 500K orders you dangle in front of them, their focus will be to cut costs and deliver a minimally acceptable product to you.  But you have to have this conversation nevertheless because, who knows, you may be with a vendor who truly values a long-term partnership. China manufacturing is changing and vendor’s attitudes are changing as well.

2.) You have to make it clear to vendors that if they do not maintain your quality standards there will be no second order. This message has to be delivered firmly but nicely.

3.) Make the vendor know that you have options. I found the aforementioned vendor at the Canton Fair on behalf of my client.  The vendor knows this, has met me and is probably aware that I can give my customer other options if she does not work out.  In fact, one of the worst things you can do in China sourcing is to let your vendor know that they are your only option. If you do that you are putting yourself in a very disadvantageous position. So line up other vendors while you are in production with your current vendor.

4.) Consider having a third-party inspect the order and make the vendor aware of your intentions.  Never give the vendor the idea that once they have an order in hand all they have to do is make it and that no one will show up to inspect it. Leave the possibility out there that someone will be visiting to inspect the order before it leaves China.

5.) Tell the vendor that you will be requesting TOP production samples and if those samples are substandard you may request to halt production. This should be in your sales contract as well.  Additionally, tell the vendor that you will not pay the air freight on any samples that are far off specs.

These are just five things you can do  But there are many more.

In short, you have to show vendors you care. Because only if you care, will they care.

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