China may be a very profitable place to source many products, in both terms of money (though it’s not cheap anymore) and product varieties. Like I mentioned in my previous article, Chinese manufacturers are very creative in creating many varieties of new products. Moreover, Chinese government’s policy that gives them the incentive to keep innovate new things to push their agenda, moving Chinese industry to a better quality, not to a higher quantity.
OK, now, here is the issue. Chinese people are famous for their formidable ways of doing business. This ‘formidable’ word can mean 2 things, in the negative way or in the positive way. Now, let’s emphasize the ‘negative way’ term. I think, you are familiar with this, and that’s why you are reading this article :). Yes, it’s a very very fragile thing that can affect your business seriously.
Here is the bad scenario that happens most of the time:
“Let’s say you found a quality problem before shipment. The goods are still in the factory. You paid a 30% deposit and you have pre-sold a part of the order to important customers.”
Follow me in this 5 steps that can help you to reduce the risk!
1. Understand the nature of the quality issues
When my customers receive their inspection report, though the result is “Not Pass”, they would say that the defect is tolerable. But there are another things that you need to think:
– Is it widespread nonconformities? For example, the whole batch is made in the wrong grade of steel and won’t perform as expected when put to use. If that’s really unacceptable for you, you might have to cancel the order and forget about your advance payment.
– Or is it a high degree of inconsistency? For example, a batch of wallets is fine except for 30% of the embroideries that were sewn in a slant manner. This is much easier to solve — about 70% of what was already produced is acceptable, and rework is possible on the remaining quantity. Even in cases where rework is not realistic (e.g. dents on metal parts), the whole batch is not written off.
Well, you can explain the problem first to the supplier. If you’ve done that, and the result is still not satisfying, take a longer patience and assume that, it is because of the miscommunication.
But, it doesn’t close any possibilities to send someone in the factory to explain what their customer really wants. Plus, it’s better to make it documented and get it approved by the supplier. By doing that, you have proof to push your supplier to correct their mistakes later in the process, and apparently IF, they are honest.
2. Ask your supplier for information and for an action plan
What do they think? Let’s say 30% of production is defective: can it all be reworked? Even the worst defective pieces? Can they rework 3 pieces and show you photos of before, during, and after rework?
Is it realistic to remake a small batch as replacement? How long would it take? (Usually they refuse this, but on occasion it is negotiable.)
If you you prefer a short shipment, how long would it take them to sort out the good pieces? Depending on your deadlines, you might ask them to send the acceptable 70% first — or to send, say, 20% by air now because you can’t delay certain deliveries to customers.
Will the supplier accept to re-produce some pieces AND send some goods by air at their cost AND pay for a second inspection? Usually they will resist. At this point, a strong contract that includes the right terms and was signed & stamped by the supplier will help a lot. If that was not done before you sent the deposit, it is certainly too late…
(In addition to the reluctance to spend money, there is another common source of resistance: the fact that you work with an intermediary that has no control over the manufacturer. Your direct supplier might want to get things right, but the factory just refuses because they don’t know you and and they have no reason to believe in long-term business. This is quite common.)
3. Ask your supplier to correct the situation
Assuming that your supplier agrees to do something. Here are 2 main examples of what the ‘something’ means:
– They do a “quick and dirty job” of sorting the pieces without taking the pain to apply your quality standard. This is the most common case. Again, poor communication is the main culprit. This is easy to spot — for example the inspector representing the buyer found 30% of defective pieces but the factory’s inspectors only found problems on 5% of the quantity.
– They pretend to do a sorting & rework job, but they actually wait for the customer to write “We can’t wait any longer–please ship the goods out.” Obviously the importer is very frustrated, but in the short term the Chinese side “wins”.
So, how to avoid these issues? You may try these 2 remedies:
– Prepare detailed work instructions (adding photos will be best!) on what needs to be done. It means we usually have to go to the factory, or we need a few samples in our office.
– Explain the customer’s standard and the steps to follow to the right people in the factory, and follow up on what they do. Again, it often means we go to the factory. But sometimes we get good results with tools like Wechat and Skype, with large exchanges of comments and photos, if the factory’s salesperson is involved and motivated.
4. Re-inspect before shipment
This step also plays a big role. No matter how much you try to reduce the risks, anyway anyhow, you are not in China, that you can have real eyes on your products! Grab an inspection company and do some inspections!
I tell you one ultimate reasonable reason why it is good to have an inspection company to inspect your product. Inspection company is a third-party company who doesn’t even know you first hand, moreover your supplier! It makes things objective because inspection companies come to factory with blank ideas (except engineering knowledge), meaning, inspectors come with feeling if they’re the consumer of that particular product. Moreover, they also know how tricky supplier can be, as they are engineer. OK, you may say, what if the inspection company has known the supplier or being bribed by the supplier? You have to look for the reputable inspection company carefully, as good inspection companies have code of conduct fore their inspectors.
(You also may find out about the importance of Container Loading Supervision here)
5. Make sure corrective actions are implemented to reduce the risk of recurrence
Make sure to be more thorough, so that you won’t repeat the same mistakes.