3-D printing: An alternative to expensive prototyping.

I was talking with my friend Hank yesterday.  Hank is an old friend from my “China days.”  We lived in the same Guest House at Jiaotong University in Shanghai way back in the day.  Hank, like I, has a lot of China manufacturing experience, although for the last ten years or so he has been working in a role completely unrelated to China, as a Senior Manager at a well-known Silicon Valley co.  We were discussing sourcing in China and I mentioned to Hank the high, often prohibitive, cost of molds for plastic injection molded products.  These molds can easily run into the tens of thousands of dollars.  And, believe me, the high cost of a mold has stalled many a promising product launch.

Hank mentioned 3-D printing which is a new technology for making prototypes and which is much cheaper than the old technologies. 3-D printing is also known as Additive Manufacturing, Desktop Manufacturing, Rapid Manufacturing, Rapid Prototyping  etc etc. The best way to think about this is as follows;  In traditional prototyping when you make a metal or plastic part you cut that part from bar stock or plates. You are basically subtracting a part from the whole and for this reason traditional prototyping is also known as Subtractive Manufacturing. Another term you often hear is machining. A good analogy for traditional prototyping is chiseling a statue, which is labor intensive and expensive.

With 3-D printing, on the other hand, you are developing a product from nothing. After your computer makes a 3-D rendering of your design you send this design to your printer as you would a normal document.  Instead of ink, however, a 3-D printer contains glues, powders, resins, molten plastics etc etc and these are fashioned via a nozzle into a prototype according to the CAD design. Materials are then cooled to harden. This is why 3-D printing is also known as Additive Manufacturing.  In fact the term “printing” can be a little confusing because nothing really is being printed, but is being built instead.   I like to call it “Organic Prototyping.”  And whereas a good analogy to subtractive manufacturing is chiseling, a good analogy for additive manufacturing is baking a cake, where you pour successive layers of batter into a mold and then harden the whole in the oven.

Some vendors in China have 3-D printing capabilities but as 3-D printing is more suited to prototyping samples and very small production runs, I think the technology has only limited application in China right now.  Injection molding is still the way to go for big production runs.

Hank sent me a link to a company in New York that specializes in 3-D design.  I am pasting that link here as it might be helpful to inventors who have a great idea but lack the resources to get expensive prototypes  or molds made in China. 3-d molding company .But ask your vendors in China as well if they have these capabilities. As I said, some do and some don’t.

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Required reading for anyone thinking about sourcing in China

I was thinking this morning how many times over the years people have told me how they were cheated when they sourced in China. One of the better articles I have read on this subject appeared in 2013 in Inc Magazine.  The article describes the trials and tribulations of one entrepreneur from Ann Arbor Mi who learned the hard way that doing business in China is not easy. It is such Ona good article, in fact voted one of the best business articles in 2013, that I usually send the link to prospective clients who are approaching me to help them.  I see it as required reading for anyone who is thinking of doing business in China. INC Magazine article

 

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How to qualify your suppliers in China

Had an interesting conversation yesterday with a local company.  The guy I spoke with detailed some of the problems they have had with one of their major suppliers.  Apparently, the supplier consistently struggles to meet shipping deadlines because they do not have the capacity to handle the increasing order QTYs and they have to subcontract a lot of production.   It turns out that this supplier was selected without a qualifying audit. And this is one of the perils of giving an order to a vendor whose facility you have never visited.  In other words they may not be who they say they are.  A GOLDEN RULE of China sourcing is this: never give an order to a vendor you have not yet qualified.  And by qualified I mean visited with a checklist in hand.

When you do an audit you should have a checklist of things to look for.  Some of the following come to mind:

  • In the office: Make sure the vendor has an organized office. If they are as busy as they say they are they should have several computers.  If you go into an office and just see just one terminal and a fax machine that is not a good sign. What if that computer breaks down ?  You may not be able to get an answer to a question for several days. Ask to see your company file with a record of all sample orders, revisions etc etc.  Ask to see counter samples which you have approved, as all should be clearly labelled and dated.   All this tells you if the vendor is on top of things.   If you have concerns about order capacity, then ask the vendor to show you invoices from completed orders of other customers.  Are the QTYs big ?  Are there multiple invoices from the same customer indicating repeat orders and customer satisfaction ?  These are things the vendor should be more than willing to show you.  In short,  a quick tour of the office will show you how organized the vendor is.  And believe me you do not want to work with an unorganized China vendor, all the more so if you have a design driven product when record-tracking of details is very important.
  • Subcontractors: Since so many vendors in China use subcontractors it is vital to make sure those subcontractors have themselves been qualified by your vendor. Ask your vendor what procedures they have in place to qualify subcontractors.  In fact any visit to a factory in China will usually include a visit to that factory’s subcontractors.  If your vendor does not volunteer to do this then you should suggest it.  If they balk at the suggestion, then that means their subcontractors are scattered and probably not at a convenient distance to the factory, which is not good for you.
  • In the workshop. Are areas well lit?  Are instructions to the workers posted? Are QC and Production areas clean?  Does the factory look busy? Is there any evidence the factory  uses child labor ? Is the person showing you around knowledgeable about the orders?  I remember qualifying a vendor a few years back.  I went to the factory and I discovered that the person showing me around, who told me he owned the factory, knew nothing about any of the orders on the workshop floor.  And I mean nothing.   He was either a very hands-off manager or was simply a Trading Company Manager posing as a FTY manager (plenty of those in China). But in either case it was a warning that I delivered to my customer.  And there are just so many more questions to ask when you are thinking about giving a vendor an order.

 

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How to identify the region of China that is best for your sourcing needs.

I had a call from an entrepreneur in New York over the weekend. She has a succesful online apparel business and for the last three years has been using a supplier in Dongguan to make her products. She is about to head off to China for a few weeks, first to the Canton Fair and then to visit her supplier and other prospective vendors in and around Guangzhou.  She is doing the right thing by heading over there, to discuss issues with her current supplier and to scout new suppliers as her business expands.

She asked me if Guangdong Province was the right place to be looking for apparel suppliers.  It is a good question. I replied to her that historically much of the textile industry has been up north in and around Shanghai, in places like Jiangsu and Zhejiang Provinces.  If I were doing apparel or home textiles heavy in design I would target these areas.  About 50 % of the machinery in textile plants in Jiangsu meet international standards and design is probably more sophisticated given the province’s proximity to Shanghai. Having said that, Dongguan is home to over 6000 textile companies (about ¼ the number of textile enterprises in China ) and is probably as good a place as any to get started. If you are looking for a supplier then Dongguan is going to give you plenty of options, albeit much of the apparel production in places like Dongguan or Guangzhou is low value added product.   Nevertheless I have known apparel companies over the years that locate their production in the south, where labor costs and the costs of getting goods to port have always been lower.

One trend now is that more and more companies are beginning to source in Central and Western China as labor and operating costs in coastal and Eastern China go up. So in recent years one sees more and more textile production occurring in places like Henan, Hubei, Jiangxi et al. And more low value added production is moving out of China to SE Asia and India so Chinese companies can concentrate on more sophisticated product.

Another thing to consider, if you are doing apparel or home textiles, is if there is a major fabric market near your vendor.  If there is not your vendor may have trouble sourcing specific fabrics. In any case, it is good to do a little research to see where might be the best region to make your product.  There are a lot of resources online and the better you understand China, and how different regions may meet your needs,  the more smoothly your production will go.  As they say in China 量体裁衣, “ liang ti cai yi  trans. cut the garment according to the figure.

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Some things to consider when you have a new product and need a mold

Someone came to me with a new product the other day, an artistic and fanciful light fixture that they want to have made in China. They have tried to find someone to manufacture the product here in the US but, as you would expect, the cost is prohibitive.  The person has had some rough molds and prototypes made here and suggested that he could send these to China and have someone there run some samples for him and then maybe a small production order.  Not a good idea, I said.  There are a few things to consider here.

  • The molds this person has made might not be compatible with machines in China In fact, I bet this would be China vendor response were he to send the molds to China.
  • Compatibility of machines notwithstanding, vendors in China stand to make a good profit if they make a mold for a customer and they do not want to forfeit this profit.  And this is why when you get quotes for molded products the mold costs can be all over the board, so to speak. If you ask three vendors to quote on a mold, chances are their quotes will be off by thousands of dollars, because someone is making a hefty profit from the mold. I had project a few years ago for which I needed a mold and the quotes, for the same mold, were anywhere from $3,000.00 to $20,000.00.
  • If you send a vendor in China a mold you may not be able to get the mold back. You never know who you are dealing with and the vendor may just take the mold and start using it themselves.

If you do get your mold made in China make sure you know who you are dealing with because sometimes a factory will claim they own the mold, even though it is your design and you have paid for the mold.  There have been so many disputes like this over the years between SME’s and vendors in China that you just have to expect it to happen.  Just go over to the China Law Blog for some stories. To protect yourself you should have everything spelled out clearly in writing, as to who owns the molds and when they will be returned to you, and you should also be sure you have legal rights to your design before you ask someone in China to make the mold for you.

Finally, really the best way to do a molded product would be to have the CAD work done here in the US, including drawings and 3-D renderings, and then to send these to China so a mold can be made for you. In this way, you can project to vendors in China that you are serious about your product, for drawings look official and will show all proprietary information. Should any dispute arise with them you will have a record of your designs, what you would not have if you asked the vendor to do both the CAD and mold for you.

Needless to say, these are all costs you have to expect to incur if you have a unique product that you want to have manufactured overseas.  But if you can do it, it is worth it.

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Attending the Canton Fair for the first time ? Prepare, prepare, prepare.

The Fall Canton Fair is coming up next month.  I have not been to the Fair in a couple of years and I do miss it, from the excitement as we get on the shuttles to the fair every morning to a cold beer in the hotel bar with other traders at the end of a long day.  It is kind of like being on tour with the Rolling Stones.  I always prefer the fall fair to the spring fair because the spring fair usually coincides with the onset of rainy season and with May Day which can make travel in and out of China pretty uncomfortable.  The fall is much nicer weather wise and the major fall holiday, National Day, occurs well before the fair. So if you are planning on attending one of these fairs, by all means go in the fall.

I had an email from someone the other day who is headed over to the Canton Fair next month. He will be attending Phase 2 of the fair looking for toys for his online business. This will be his first visit to China and he is understandably nervous.  I told him he needs to prepare, prepare, prepare.  This means putting together a list of the vendors he would like to meet with, contacting them prior to the show and then mapping out his visits beforehand.  The fair is too immense to just ‘wing it’ as they say.  If I remember correctly Toys take up Hall 14 1-3 and some space in adjoining halls 13 and 15 meaning there are probably between 1200-1500 toy vendors.  Needless to say, no one can visit that many vendors in a few days’ time, and by not spending time on the CF website before the show, contacting suppliers, you may miss some perfectly good vendors if you walk the show unprepared.   Additionally, there is a psychological benefit to contacting vendors prior to the show, for you go to Canton feeling that you know someone.  And when vendors know you are coming they are usually very welcoming. This will make you feel more relaxed and give you more confidence as you walk the show.  You need that confidence because not only are there so many booths to walk past but everyone is Chinese. If you are coming from Boca Raton Fla is the person who emailed me is, then you are probably going to feel like a fish out of water in China.  Whatever you can do to minimize this feeling you should do. The more relaxed you are in China, the more positive you will feel about your business there and the better will be your chances for success back home. And it all starts with preparation.

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Using online payment systems when you source in China

Until recently whenever you wanted to pay a sample fee to a vendor in China you would have to send a bank wire. Service charges for a wire transfer run between $30.00 -$50.00 and the wire can take up to a week to go through, although the ave time is 2-3 days. Not to mention the fact that you have to spend time to go to the bank and do all the paperwork for the wire transfer. Nowadays however, more and more vendors will accept Paypal as a way to pay for samples. I would say that whereas two years ago maybe one in ten vendors would have accepted Paypal, now it seems that about 50% of vendors will accept PayPal for sample fees. The advantages for you, the buyer, are obvious. Paying a vendor thru PayPal will save you a lot of time and a little money. PayPal also protects you if do not receive the samples or if the samples are not what you were expecting.

However, all this is not to say there will not be problems. A case in point: I have a client now who is ordering some samples from a vendor in China. This is a vendor who accepts PayPal. Last week I had an email from the vendor telling me that the samples were ready to go as soon as the sample fee was paid by my client. So I told my client who wrote back that he had already made a PayPal payment to the vendor several days previous to the vendor’s email. I checked again with the vendor who told me that there was no record of the PayPal payment from my client. We went back and forth for a few days and finally discovered the problem which was simply that the vendor was taking PayPal payments through his gmail address. However since Google is persona non grata in China the payments were not going through. So the vendor had to register another email address with PayPal and overall we lost about 4-5 days because of this. PayPal in China still has growing pains.

One other method of payment that many vendors accept nowadays is alipay which is Alibaba’s online payment system, and the largest payment system in China. Many vendors who sell on taobao.com (China’s equivalent of Amazon) use alipay as their payment system and the reviews are generally good. However, I would not recommend you use a China based payment system to pay for your sample fees for the simple reason that if you have a problem it may be hard to resolve it. If for example a vendor accepted alipay or wire transfer I would probably just opt for the wire transfer, time consuming as it is.

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Is manufacturing really coming back to the US ?

I love reading the Wall St. Journal. In addition to great book reviews and the always interesting human interest stories at the bottom of page 1, there is a lot of China news, usually in the Marketplace section. This past week there was an article entitled “It’s No Fun Making Toys or Toasters in the USA.” As the headline suggests the article was about the challenge that small business in the US face when they try to manufacture here in the US. In fact if you are a toy company and want to get, say, a plastic toy made in the US, it is almost impossible to do so. The main reason is that US manufacturers are just not set up nowadays to handle large orders, most of those orders having gone to China over the past 20-30 years. So China now has the infrastructure and the US does not. This is nothing new, really, and I have written about this before here. Making dolls in the US But I like to see these stories now and then in the major news outlets because I think they offer a good dose of reality and offset the almost fantasy like stories about manufacturing returning to the US. Because you know, with very few exceptions you just can’t make low cost consumer goods in the US anymore and have a viable business. A case in point: I received an email from a vendor in China the other day and this vendor was offering a 3 pc breakfast set , a table and two chairs, made out of particle board and powder coated steel. The price $ 28.00. And I am sure if I went back to him and told him I wanted to place an order for 1000 pcs I could get it for under $20.00. And there are probably 1000 more vendors like him in China. Do you think there is any place in the US where you can buy a breakfast table and two chairs for $ 28.00 ? I seriously doubt it.

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China’s Great Leap Forward with Intellectual Property (IP).

A former client of mine sent me an email a couple of weeks ago asking me to help him with his trademark application in China. He applied for a trademark in China last year and he is just getting the results of his application now. But that is par for the course in China with trademark registrations, the process easily taking upwards of a year. This may sound like a long time but it really is not because the trademark bureau has to search quite a few filings to make sure there are not similar trademarks. China has the largest patent office in the world in terms of how many patent applications it receives per year, well over 500,000, and I imagine trademark applications are just as many.

The result of my client’s application was that some of his product has been approved and some of it has not. It seems there is a similar trade name on the market in China that the Trademark Bureau felt too closely resembled my client’s tradename. I looked at the report from the Trademark Bureau and I can see where they might have a problem with my client’s tradename. The law firm in Beijing that is handling my clients application said he could appeal if he wanted. But my client seems reluctant to spend more time and money on this. My advice to him was to consult an English speaking lawyer in the US or Canada as language seems to have been a bit of an obstacle in his correspondence with the law firm in Beijing. Although undecided about what to do, he says he is glad he has gone through this exercise and has acted in good faith to protect his name in China. I agree.

But I am impressed how far China has come in terms of protecting Intellectual Property. China’s first trademark law was implemented in the early 1950s but it was more a law in name than in practice given the communal nature of post revolutionary Chinese society and the suspension of many commercial laws during the Cultural Revolution. With the opening of China in the early 1980s the Chinese Government saw fit to establish a new Trademark Law and they did so in 1982. That law has been revised three times since, most recently this past May. It is evident that the Chinese Government, facing severe criticism from overseas firms doing business in China, has identified a need to catch up to international Patent and Trademark standards, and I at least see my client’s application as one example that they are doing a pretty good job of it. It is pretty amazing when you consider that 30 years ago trademarks and patents meant next to nothing in China. Now they are protected.

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The risks of sourcing on alibaba

As much as I like Jack Ma I really have to question sometimes how effective it is to source product on alibaba. A case in point: a company in Vienna asked me recently to help them locate a supplier in China. The company has bought some health products from someone they met on alibaba but the orders have not gone too well and the Viennese company now realizes that it has been dealing with an agent and not the manufacturer itself. So they have asked me to help.

And this is one of the risks in using alibaba, namely that you really have no idea who you are dealing with. Many agents in China set up on alibaba and use the names of the companies whose products they are selling but in fact they have no association with the company. So you think you are buying direct from the factory in China when in fact you are not. For this particular project, I looked up the Chinese company in question and I found 5-6 alibaba sites for them all with different contact people listed. It looks like agents or individuals in China are selling the Chinese company’s products on alibaba simply using the company name. It is very confusing to say the least and I can understand how the company in Vienna could have been misled. But this is SOP in China so you have to be careful.

One clue that the Viennese company has not been dealing with the original manufacturer was that they had been making payments to an individual and not a company. This does not necessarily mean that one is not dealing with the vendor itself for small companies may sometimes have payment arrangements like this. I had another project recently where I was asked to pay a sample fee to an individual’s Western Union account in China which I thought was strange. But the vendor explained to me that if paying a sample fee to the bank, the service charge really offsets the sample charge. It made plenty of sense and it was not worth worrying about for a sample fee. But if you are asked to make a sizeable payment for an order to an individual you should at least try to obtain proof that the person is affiliated with the company you think are buying from. You can do this by running a credit check on the company in question and then using the contact info on the credit check to contact the company to verify who you have been dealing with. A credit check on a Chinese company will cost you a few hundred dollars but you have to see it as doing your due diligence. And in China sourcing you have to do your due diligence. Make no mistake about it.

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