Product safety standards – do your homework and due diligence

What people are saying about Mulberry Fields
“What you say is absolutely true about what you need to do in order to succeed in China.” – a company in Italy

There are many safety standards that a product must conform to if is sold in the US, Canada or Europe. Depending on your industry, your product and your customer’s specific requirements you might be doing any number of tests e.g. flammability testing if you have apparel or upholstered furniture, small parts testing for baby and kids items, lead, cadmium, phthalate tests for kid’s items and food related items, testing or fumigation for wooden product or palletized orders. And the list goes on and on and on.

When you are developing a product, make sure you know what the testing requirements are for that product and then pass on these requirements to the vendor early in the game so as to give them all the notice they need to get in compliance. Because China does not have the same strict consumer safety regulations that the US and Europe have your vendor may have to go outside his own network of suppliers to find an environmentally friendly supplier. This may take time and will cost more. A couple of years ago I was working on a kid’s bag and the PU straps on the bag had to be phthalate free. The vendor I was working with explained to me that not all the PU vendors he dealt with had phthalate free PU and that the minimums for this material would be higher than for regular PU. It was an obstacle but it was good to know this early on when we were still in the prototyping stage.

It is also important that you get your samples tested both in China and locally. Don’t rely on vendor assurances that their products are compliant, or that they have been tested. And don’t consent to use vendor designated product testing labs. Do it yourself. There are several big international testing agencies in China e.g. BV, SGS, Intertek and you can arrange with your vendor to have your product sent to the agency you choose. But also test product on your side with local product testing labs (most big cities have them). Make sure you tell your vendor that you are going to have the samples tested and that if it fails you will just lose more time. That should give them the incentive to do it right. Needless to say, all testing requirements should be spelled out clearly on spec sheets and sales contracts.

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The new buyer-supplier relationship in China

Since China opened its doors to the West in 1978, overseas buyers have come to demand and expect perfection from their Chinese suppliers, even for low value-handicraft product.  Up until very recently this mindset was tolerated by Chinese vendors because over the years orders from overseas accounted for most, if not all, of their sales revenue.  There was very little demand coming from within China itself and Chinese suppliers had no choice but to defer to their overseas customers.  But this is  no longer the case as domestic demand – not orders from abroad – is driving a myriad of Chinese industries nowadays.  A case in point : during my visit to the Canton Fair last month I saw more mainland buyers than I had ever seen at the fair previously and I overheard conversations in Mandarin in which vendors were negotiating with domestic, not overseas, customers.

In fact, if given the choice Chinese vendors would probably prefer to manufacture for the domestic market for several reasons:

1.)  Chinese customers present very few, if any, language or cultural barriers. When communicating with overseas customers, on the other hand,  China vendors must pay for skilled staff who can speak English, and they must entertain overseas customers, often at their own expense.

2.) There are significant incidental costs when dealing with overseas customers.  For example vendors may be asked to pay hefty air freight charges for late or incorrect samples and/or production.  Orders are also subject to lengthy delays because of design requirements, and there are frequent lags in international communication and logistics. I don’t know if I have ever been in a Chinese factory where a worker or management has not complained about an overseas customer’s product specifications or lead-time requirements.

3.) The market in China for consumer goods is not sophisticated vis-a-vis markets in the west.  There are no extensive product testing protocols in China that rival CPSIA in the US or EN-71 in Europe. One vendor recently told me that most of the PU his factory used had not been tested for Phthalates and that if my customer wanted Phthalates free PU they would have to order a special grade at a much higher cost.  In other words, Phthalates is not something Chinese factories have to worry about when they manufacture for their own markets.

The result is that many Chinese vendors now seem to have a take it or leave it attitude with overseas customers. I have been surprised how many companies I have contacted this year have not sought to follow-up on samples sent to me or who have expressed little or no interest in doing business with certain of my customers. They have failed to do so either because the MOQs I have provided them with are not large when compared to those of other overseas buyers, or there is plenty of domestic demand with equal, if not larger, QTYs. 

Overseas buyers need to exercise some sensitivity about these changes in China manufacturing, all the more so if they do not have large order QTYs. Sampling demands should be kept to a minimum and product design should be well thought out on the buyer end so that little is left to the vendor to solve on his/her own. Vendors do not want to spend valuable time re-designing your products.   Buyers should not rush vendors or work under the assumption that their order is the most important order the vendor has on their production schedule.  Most often it is not.  The point is this:  China vendors still want your orders.  But  they are no longer  desperate for them.

Evaluating a potential supplier – more tips

I have been thinking more about this over the last several days and I have come up with a couple more tips that you might find useful when trying to determine if a prospective supplier is right for you. These are as follows:

1.) Consider how far your vendor lives from the factory. You are going to be communicating with your vendor on a regular basis and will be expecting them to pass on all of your instructions and concerns to their workers. It is imperative, therefore, that the vendor lives in close proximity to the factory and is there at least a few times a week. “Mr Huang” in my previous post lived three hours from his factory and relied on his brother – who lived nearby – to manage the workers. When I was at the factory, I asked one of the workers how often Mr. Huang or his assistant came to the factory and was told once every two weeks. Vendors do not like to go to the factories because the roads are bad causing significant wear and tear on vehicles, there are sometimes significant bottlenecks with the traffic meaning a three-hour trip can take all day and, most importantly, there is an abundance of down-time at the factory and nothing to do.

2.) It can sometimes be insightful to meet a vendors family. I will never forget making a trip to China to talk to a couple of suppliers, one from Anhui and one from Guangxi Province. I spent a few days with each and in that time had occasion to meet their families. Mr Zhang, the Anhui vendor, had a son whom he seemed to be having significant trouble with. He was attending a private school in Beijing but, from all appearences, was not very motivated. Well, as it turned out, Mr. Zhang’s son was just like Mr. Zhang. Even when we dangled promises of lucrative orders in front of him, Mr Zhang moved with all the alacrity of a snail. He was always behind on the production and shipping schedule and this caused significant problems with our customer because we were delivering a seasonal product. In fact at one point our customer had to stop their order processing just to wait for our deliveries. After just one year we cut ties with Mr. Zhang.

Mr. Ma, the Guangxi vendor, on the other hand, was an impeccable vendor. Although he could not boast first-rate production facilities he always delivered product on time that was according to specifications and very clean. But this was not surprising to me after meeting Mr. Ma’s son, a sharp kid who was studying engineering at a very good university in Beijing. He also spoke great English. In fact, Mr. Ma’s other two sons were also attending very reputable universities. That a rural vendor – Mr. Ma lived close to the factory, five hours from the nearest city – would be able to send three children to good universities spoke volumes about Mr. Ma’s work ethic and values. Of course, you are not going to select a vendor just because he sends his son or daughter to a good university, but how he/she runs his/her family can be a clue as to how he/she runs his/her business.

These, then, are some of the little things that can help you to evaluate a vendor.

Evaluating a potential supplier – a tip

I had an email from a company yesterday detailing some of their problems in China. They have burned through three factories as follows:

Factory # 1 Good factory but bad management
Factory # 2 A rotten egg
Factory # 3 Internal communication problems so that QC issues are not passed on from management to workers.

This third scenario I have seen all too often in China. In China today factories that have traditionally been engaged in light industry ( esp high volume & low-cost handicraft product ) are actively looking for new ways to make money, the margins on their existing products being minimal. The owners of these factories are extremely entrepreneurial and it is not uncommon to meet someone who has three or four businesses going simultaneously. Unfortunately, this means that they often do not give your orders the priority you want them to, and in some cases ( what I suspect happened with the company above ) neglect to train the workers on your quality standards. They are simply too busy. Take “Mr. Huang”, for example. A company I was working for once had contracted Mr Huang to make baskets for them. But Mr. Huang was also making Christmas ornaments, picture frames and Chinese medicine. In fact, every time we visited his factory the first place he would take us would be to the section of the factory where he and his father had stored hundreds upon hundreds of medicinal roots. Mr. Huang was always trying to get us to invest in his new Chinese medicine venture, which he seemed generally excited about. I think baskets were the last thing on his mind, which was unfortunate for us because they were the first thing on our mind. We had a big order from an important customer.

A good lesson to be learned from this is that when evaluating a supplier, make sure to visit their showroom ( most factories have one). If there is a variety of product this means the owner is likely involved in several projects at the same time. Ask him about his other products and try to gauge his interest. If he shows more interest in a line of product other than your own he will probably be that way when production time comes.