China sourcing – Five things to consider (2021 version)
China sourcing can be great when done riight. However, buyers who source products from China many times face disappointment. Here is what you need to look out for to avoid dissapointment.
This blog article was first published on www.sourcingallies.com
China sourcing can be great
Ever come out of a movie theatre disappointed, wondering why you wasted two hours of your life? It is common for people to be taken in by slickly-produced trailers only to find that the movie did not match the expectations it generated.
Many buyers who source products from China sometimes face similar disappointment. They find that the factory has promised them the moon, but does not deliver. In this case, however, there are more than a few dollars at stake — your business, your money, and your reputation are all on the line.
Here are five things you could look at to ensure your order does not disappoint in terms of quality, there are no surprises during production, and your order reaches you within the leadtimes agreed upon.
1. Beware the “golden sample”
The golden sample is the wonderful sample a factory may send you, which looks awesome, and probably is. It is meant to be the benchmark against which the rest of your products are measured to ensure quality control. There is a risk, however, that the rest of your order might not match up to the golden sample. This may be because it may not have been made in the same way, or by using the same material or not even by the same factory if you are really unlucky.
One way to protect yourself from costly disappointments is, of course, to do a thorough background check on your supplier to ensure that they have the technical expertise and production capability to deliver what they say they can deliver.
Second, put your quality control specifications in writing, clearly and in a detailed manner and ensure that the contract says that quality will also be measured against these specifications and not only against the golden sample.
Third, while drawing up your factory agreement, you could negotiate with the supplier to insert provisions in it that link your payments to certain quality control checkpoints being met. This will keep the supplier on their toes, and will ensure that your final order is exactly as per your specifications.
2. Be realistic about leadtimes
In manufacturing, leadtime is the time period between the placement of an order and its shipment to the customer. Leadtimes usually find a mention in the contract but they might not always reflect reality.
While fixing on a leadtime, remember that factors such as the location of the factory and the product specifications can affect it. If your product requires injection molds to be made, for instance, it may take longer to ship because the mold has to be designed, which is usually done by a subcontractor. The more complex the mold, the longer the leadtimes will be.
If you are not able to regularly visit and push the factory then leadtimes could slip back slowly, especially if there are any issues with production. It is therefore useful to engage a global sourcing agent to do this for you.
3. Pay attention to packaging
Often, buyers receive a sample of packaging that looks great, but you must consider how it will perform during a 30+ day ocean shipment under damp and hostile conditions such as products pressing down from above, movement within the packaging and so on.
Depending on the size and weight of your product and how urgently you need it, you could also consider shipping it by air, which is theoretically a better environment and takes less time. But when buyers sometimes choose this option, it is not unusual for the factory or freight forwarder to leave out the pallet, and so instead of a fork truck moving your package with the help of the pallet, it gets tossed about by cargo handlers. Such handling can also damage your packaging and ultimately your products. It can be devastating, especially if it is retail products such as premium cosmetics. When Sourcing Allies handles your order, we insist on a pallet and sometimes even send someone out to check that one has been provided.
4. Be aware that sudden price changes can happen
It’s not unusual to sign contracts with the factory, agree on a price and a leadtime then, a few days into production, be told that the price has gone up. This infuriating phenomenon can happen for many reasons, but I would say one main reason is that the supplier did not fully understand your drawing specifications completely and THEY did not ask you because YOU did not specifically point anything out (because you assumed they did not have any questions).
An example would be a metal shaft with a clear, fully dimensioned PDF drawing that includes a note about heat treatment in English that says something like: “HEAT TREAT TO HARDNESS XXXXX HRC”. With some smaller vendors this note may go unread, and when you complain about it, the price goes up. Then you have a conversation pretty similar to this:
Supplier: “Oh you didn’t tell me you wanted it to have heat treatment!”
You: “I didn’t have to TELL you because its written on the drawing!”
Supplier: “Oh well now I’ll have to increase the price to include heat treatment.”
You: “You can’t change the price now, and if you do then I don’t want the parts.”
Supplier: “Ok well in that case you can’t have anything and I’ve already used the deposit buying tooling so you can’t get it back”.
This is why, when dealing with manufacturers in China, it is best not to leave any scope for assumption. Spell out everything, clearly and even repeat yourself if necessary.
If this situation occurs despite all your precautions, it helps if you realise that doing business in Asia can be different to what you are used to. Having said that, in most situations the supplier will be reasonable as long as they are not losing too much cash and believe that there will be future orders or see evidence of that.
This brings me to our last point, which is somewhat related to the case study above.
5. Remember, there are cultural differences between the East and West.
As mentioned elsewhere in this blog, there are differences in language, culture and expectations between the East and the West and buyers must be cognizant of that. For instance, in many countries in Asia, suppliers tend to make assumptions instead of asking questions if they are unsure about some aspect of your order because they are anxious that asking questions makes them look bad.
This is why, when shortlisting suppliers, you could give a higher ranking to those who ask you questions in the course of your communication because that shows they are interested in details and do not mind asking about them.
Another cultural aspect peculiar to Asia is hiding bad news such as delays or production problems from the buyer. Research has shown that problems caught later in the production process will always cost more than those caught earlier. So encourage your supplier to keep in regular touch with you and update you regularly on the production process — the good news AND especially the bad news.