We've heard so many stories of poor quality or incomplete product being shipped out of Chinese factories (or not even leaving the factory!), or Chinese manufacturers who dramatically under-deliver on quality, deadlines and price, we could write a book. However, horror stories aside, it is possible to source a reputable factory that is willing to enter into a long lasting relationship with you and provide a product that meets your expectations. You just need to find them.
Herein lies the difficult task; sifting through the multitude of manufacturers to find those suitable to your company's needs.
The “easy” way for a lot of people to find a manufacturer is to go directly to sites such as amazon.com or madeinchina.com. Most people’s first reaction is excitement at how easy it all is after the flood of reply emails from various “manufacturers” wanting your business. Quickly this can turn to confusion and exasperation after endless back and forth emails from the “factory” who doesn’t appear to understand what it is you are trying to order….By now, if you have tried to look online for manufacturers you probably know what I’m talking about.
The major problem here is the fact that most of the people who have reached out to you are in fact agents of trading companies. Trading companies aren’t factories. They act as a go-between you and the factory and that is how they make their money. They get a cut from the factory, and that percentage of the profits is dependent on how much they can get you to pay. After they have secured the deal, and you have placed your order with the factory, their job is done. They get paid, and the promises of quality, price, and lead-time deliverances are left up to the manufacturer who didn’t in fact promise anything in the first place.
Sure some factories do advertise on the China Manufacturing sites, but they are few and far between. So how do you know you have contacted a genuine factory and not a trading company or commission agent? The rule of thumb is that a trading company will have an address that is a room number while a factory will have an industrial estate address.
Once you have established a manufacturer that you may feel comfortable dealing with, then you need to perform due diligence. It’s not at all like sourcing a screen printer to print a few t-shirts for your local school’s charity event. When we deal with suppliers in the Western countries, we know in the back of our minds that we are protected with some varying degree of consumer protection. The suppliers also have the constraint of competition in their industry and delivering the best results is paramount to a successful business. So we need to shift our mindset to another culture, where guanxi or relationships are extremely important. The Chinese are not bad people, far from it. We just need to act and perform our business relationships in a different manner.
All in all there are several ways to source manufacturers in China and the graph below sets out the various Pros and Cons relating to each method of sourcing a manufacturer. As we have mentioned in previous posts, relationship building is the foundations of doing business in China. It all relates back to “guanxi”.
If you are sourcing your manufacturer from online, you need to ask for references from Western companies with which each manufacturer has done business. You can then “interview” the shortlisted manufacturers after considering those recommendations and references. Bear in mind, there will be language barriers as well and now may be a good time to bring in an interpreter. Nowadays with various online freelancer sites, these are fairly easy to find.
The next step is to verify the manufacturer's business licence to check the legitimacy of its operation. This shows that the factory has been registered with the government and needs to abide by regulations and compliance codes. Chinese companies are bound by geographical jurisdictions and areas such as the Yangtze Delta region are far stricter concerning labor laws and environmental concerns than provinces further afield. You can also further investigate the scope and operation of the manufacturing business, and its quality control processes, through business consultants or investigators on the ground in China.
Once you have verified the factory, you need to visit them. This is essential. By visiting, you will be able to inspect their equipment and manufacturing capacity and determine whether the manufacturer has the capabilities to produce the type, quality and quantity of products you need. Even if your company is starting out with small orders, consider potential growth and ensure the manufacturer will be able to accommodate that growth. Seeing the factory will help you navigate the huge variance in quality between Chinese factories, a variance not always reflected in the price of manufacture.
Image compliments of www.qualityinspection.org