Posts Tagged ‘factories’

Suppliers going back on their word (Part 2)

December 5th, 2011 No comments
Give an inch...

Give an inch...

(Have you read Part 1 of this article?)

By this point, the overseas purchaser has been let down dreadfully by the supplier and had to compromise their margins in order to have their goods released. But it got worse. When the CI (Original Paper Commercial Invoice) and COO (Certificate of Origin) were requested from the supplier, they refused to do even this stating that it would cost yet more money to produce these documents and therefore not worth it.

We explained that in order to export the products these documents were required from the manufacturer. This was met this time with abuse and a refusal to have anything else to do with the matter. The aggression showed by the supplier at this point was typical to a kneejerk reaction by a lot of suppliers when their back is at a wall and they have gone so far that even though they are wrong, they don’t want to lose face by admitting it or even compromising.

Luckily my time in China has allowed me to meet some influential individuals in the export and customs world here and we were able to get some documentation to push the order through customs and onto the ship for our client. This documentation was also enough to comply with import, customs and duty purposes when it arrived at its destination port. Doing it this way should of course always be a last resort.

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Chinese Factories: Samples, Samples, Samples

August 29th, 2011 No comments

When you order samples from a Chinese manufacturer at any stage, it goes without saying that you, as the customer, expect to see a close to final product with small exceptions that only mass production can achieve.

Very often a buyer will accept that a mass production item will/should look like the sample they received. This is a fair assumption but unfortunately, more often than not, this is not the case.

If the correct and detailed drawings are supplied from the beginning, this can eliminate further interpretation by the manufacturer. If you are developing a product straight from the factory the supplier holds a certain amount of creative control over the process. This often leads to the supplier telling you what can and can’t be done in their opinion, or based on what’s easier for them in the short-term.

In my opinion samples differ from the final product because of shortcuts and interpretation of the original design. It’s a lack of clarity and communication that is unfortunately common when dealing with Chinese suppliers, due largely to language and cultural barriers.

If you want to ensure that you are getting the product you approved and expect, it is an advantage to look for ways to be represented at the factory during this process. It’s very important to get design files and make sure that the drawings you have are adhered to at all times. It’s about eliminating as many possible avenues for interpretation as you can.

Every order from then on should be checked to make sure that the product remains as close to the original approved sample as possible.

Chinese Factories: Is your factory outsourcing your order?

July 21st, 2011 No comments

On many occasions I have seen factories outsource total or part orders to other factories without the knowledge of their clients. As discussed in our previous article, is this an acceptable practice for you as the buyer?

If you have vetted a facility or had a factory approved for your organisation’s production, you most likely feel safe in the knowledge that your products will be manufactured there. You may believe you have a sense for the people involved in the manufacture of your product. However, if an order is outsourced to another facility without your knowledge, you have no idea of the people who are physically producing your order. The most important thing about the manufacture of your product is the knowledge that the people doing so know exactly what your requirements are. In your business, you manage the expectation of your clients so why shouldn’t your suppliers do the same?

We all know things get lost in translation and the more people involved in ‘Chinese Whispers’ the more chance your instructions will be misinterpreted. If you have received a final product that is very different to your production sample, there are high chances that an unknown element has been involved in the process. There are lots of clues that can tell you whether your supplier is outsourcing your order to another factory. The evidence is there to be discovered, you just need to know where to look, what to look for, and who to ask.

If you are curious as to whether this practice is occurring at one of your suppliers, it might be a good idea to get a 3rd party to investigate or at least use their expertise and experience to report to you what they think.

Dealing with Chinese Factories – Can they produce your entire order in-house?

July 13th, 2011 No comments

Smaller Chinese factories commonly outsource orders that are too large or are stretching their capacity. These factories would generally not tell you this and so without proper representation on the ground you will most likely not know this.

The outsourced factory may be producing highly inferior quality to the standards that you thought you were getting, based on the initial provided samples. A factory may buy the whole order’s worth of raw materials and hire outsourced factories to fabricate it. There are a few reasons why they could be doing this – This may be as a cost saving measure. They may be trying to develop relationships or guanxi with another factory. They may not have the facilities in-house that they promised you. Or they may be bartering with your business to make use of additional factory facilities or machinery in the future.

Considering the above, ask yourself these questions:
- Is it important to know that the factory/supplier you are buying your products from manufacture your order elsewhere?

- Is it ok that your products are being made in a place you haven’t been told about or inspected before?

- If outsourced facilities seem to make the same quality products as per your order, does that make it ok that your products are being assembled in unknown locations?

- If completed order arrives at your destination and there is a marked difference in quality from your expectation that hasn’t been properly explained, the root cause could be an outsourced factory. Would your supplier tell you this? Wouldn’t you want to know this information?

If any of the answers to the above questions make you feel uncertain about the standards of your production in China, having a 3rd party representative on the ground can assist you. Inspecting the factory and the above aspects can help you get a firmer idea of what is really going on, allowing you to make more informed decisions.
Visit the official ETP website for more information on sourcing products in China.

Dealing with Chinese Factories: Protecting your IPR – Basics

July 12th, 2011 No comments

Protecting your IPR with small and large factories alike is always an issue in China. You can be assured that most of these factories only do business with foreign entities and foreign markets but a sample of your product will more than likely end up in their showroom as an example of their work.

There are no strong legal frameworks as yet in China to protect your brand from being picked up by others and produced by the factory for sale in other territories and markets. We have all heard stories of similar SME produced products being sold under a different brand in another country unbeknownst to the original purchaser/customer. It is your brand, your design and it should remain in your hands which territories your designs and products go to. You need to stay in control of all relevant production documentation in order to prevent this.

A good working relationship with the production facility can help build trust and confidence. However there is still nothing stopping your product from ‘falling off the back of a truck’ or leaving through the back door. In this case, the saying ‘imitation is the best form of flattery’ is untrue. You want to be in control of your product and brand development and it’s no-one else’s place to take your designs.

As mentioned in previous articles there is no strong legal framework yet in China to protect you from copyright infringement, especially if it is a new market product. Getting components made in several different places and assembled in another is a solution many adopt but this can get very expensive.

An NDA doesn’t hold strong between an International client and a Chinese supplier but having one certainly doesn’t hurt. Having a 3rd party representing you on the ground in China looking out for your product and brand, applying pressure on the manufacturer and supplier to keep your product trade secrets under wraps can help eliminate and reduce the chances of copyright infringement.

For more information on protecting your brand and products, visit our official website for a free sourcing and IPR protection quote.

Dealing with Small Factories in China: Pros and Cons

July 11th, 2011 No comments

Small Chinese factories offer lots of pros and cons, and it is important to weigh these up before taking a leap with a supplier. They can give you the attention that a large factory can’t. They can spend extra attention to detail on your products, but smaller factories cannot turn an order around as fast as a large factory and they cannot produce very large orders in a short time.

They will also have a higher overhead overall and their stock material purchasing prices will be higher due to the smaller facility/smaller storage. If product and component prices are cheaper than a larger factory, then it’s worth looking closely to the quality of the purchased materials and ultimately the end product.

If you are an SME or on a budget it’s tempting to use a smaller Chinese factory if you are satisfied with their product. There is that level of personability that makes them easier to deal with and a willingness to work with you in order to grow their business.

If you choose to go with a smaller production facility make sure you have and control of all your product drawings, samples details. This will allow you to more easily move to new or additional facilities if the need arises due to order demand or better prices. It is also a useful leverage tool. Knowing that you have relevant information to do with as you please, the supplier will be more incentivised to keep you happy and keep you from talking to their competition.

For more conclusive advice on how to manage your order in China, visit our website for a free sourcing and manufacturing consultation and quotation.

How to control your China production more: Part 1

July 8th, 2011 No comments

As we have all experienced, once it is in the hands of the production facility more often than not there is a lot of confusion over what the production schedule actually is. This is usually due to a breakdown in communication between departments.

The production schedule the sales department agree with you will often be a different date to the actual production department’s. If you’d planned to visit you might find out that your order is not scheduled when you were told it was. The disconnect in many factories is between the production department and whomever your contact is there. If you want a realistic picture of your production and a 3rd party to identify possible issues during the production process, a quality control service is very useful.

Factories can promise quality control and introduce you to their QC department but these departments are not incentivised to protect and look after your product during production. Most workers in factories are paid per item; this means that the more they produce, the more they will be paid. They are not incentivised to find any differences between your guidelines and the product being produced. Of course they are manufacturing the item ordered but there are those fine details that make a quality product. This is where a 3rd party can be brought in to look after your product at a fraction of the cost it would be for your company to visit.

It’s useful to get to know the production department heads for a little extra information. This allows you to know how closely the sales/logistics and production departments work together.

For a free quotation and consultation on managing your order, please visit the ETP official website.