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Production in China: tips and advice request

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Riviera2012

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Dec 19, 2017
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Hello, everyone. I don't post much but I'm posting this thread today to give some advice and ask for help.

A few months ago we changed our supplier and switched from Europe to China. All of this is new to us so we are learning as we go.

We made arrangements with a manufacturer to have custom products made, based on our own designs.

The custom samples were OK and we started.

Here's where the problems came in: during these months one product required changing materials, because they couldn't find the ones they promised us. We had to pay more and I suspect they took advantage of us. In any case, we accepted, because we didn't have much time to negotiate and we wanted products ready for Christmas.

***
Tips we have learned so far:

  • During orders always specify a deadline for delivery. If you don't do this, you run the risk of seeing the products months later. We wanted the products ready for Christmas but they are only ready today. Don't make our mistake.
  • Always specify when ordering that you will do a 3rd party inspection. There are different types of inspections, marked with the AQL level (level I, level II, level III). Specify a level and that if the inspection does not pass, they will have to fix the products and you will do another inspection, this time to be deducted from the final balance.
I know, not a lot of tips, but that's all we've learned so far. :happy:

***
Now come the problems on which we would like advice from someone who has already been through this.

The products are ready and we have done the inspection. Unfortunately it failed: out of 4 products one has a 5% defect rate, another one 9.5% and two others 19%. In general, the quality is very low. Even in the case of a low defect rate there are problems: boxes with different colours between them, poorly made wrappers, etc.

We have always highlighted that quality is very important to us and this kind of defect rate scares us. We do not feel comfortable giving our customers poor quality products.

We have asked them to fix the products (especially those with a 19% rate), but we don't think they will do anything serious to solve the problem. Now, given the way they work, we are afraid that they will tell us they have solved the problems, we will pay for another inspection and this one will also fail.

Another risk for us is to pay the full amount for products that will then only cause us problems. On the other hand, we are keen on long-term partnerships, but we have the impression that these manufacturers have tried to take advantage of us.
 
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Kevin88660

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We have some sourcing experts here who have experience dealing with China. They might give you some really good suggestion.
 

Walter Hay

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Sep 13, 2014
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The Acceptance Quality Limit (AQL) is not as important as the timing of the inspections. When you are running to a tight deadline it is vital to have inspections done during production.

When setting out to have a product made to your design you need to be more careful in selecting a manufacturer. There are two ways to do this:
  1. Research that company to find what their reputation is really like. You can't rely on Alibaba's Reviews.
  2. Arrange for a reputable Quality Inspection company to do a factory audit. They will do more than the audits done for Alibaba, Made-In-China.com, and Global Sources.com. Those audits are a big help but they are not as thorough as a privately arranged audit.
For the benefit of other readers I suggest that it is better to ask your questions before you start sourcing. See my AMA Sharing my lifetime experience in export/import. Product sourcing specialist. where there are a lot of answers that could help.

Unfortunately many of the people who buy my sourcing and importing book do so after they discover that they have made costly mistakes. My AMA helps many people, but it doesn't provide the level of help that the 100 tightly packed pages of my book does. It is more like an instruction manual.

You asked for advice, and my suggestion is to cut your losses, and start again. Your chances of having all your problems fixed in time for delivery by Christmas are practically zero.

Walter
 

Riviera2012

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Dec 19, 2017
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The Acceptance Quality Limit (AQL) is not as important as the timing of the inspections. When you are running to a tight deadline it is vital to have inspections done during production.

When setting out to have a product made to your design you need to be more careful in selecting a manufacturer. There are two ways to do this:
  1. Research that company to find what their reputation is really like. You can't rely on Alibaba's Reviews.
  2. Arrange for a reputable Quality Inspection company to do a factory audit. They will do more than the audits done for Alibaba, Made-In-China.com, and Global Sources.com. Those audits are a big help but they are not as thorough as a privately arranged audit.
For the benefit of other readers I suggest that it is better to ask your questions before you start sourcing. See my AMA Sharing my lifetime experience in export/import. Product sourcing specialist. where there are a lot of answers that could help.

Unfortunately many of the people who buy my sourcing and importing book do so after they discover that they have made costly mistakes. My AMA helps many people, but it doesn't provide the level of help that the 100 tightly packed pages of my book does. It is more like an instruction manual.

You asked for advice, and my suggestion is to cut your losses, and start again. Your chances of having all your problems fixed in time for delivery by Christmas are practically zero.

Walter
Hi Walter, thank you for sharing.

I'm reading your thread, so maybe I have to read that part but... What do you think is important to look out for once a third party inspection service visit to the factory is scheduled?

A quality control process for the manufactured products?
 
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Walter Hay

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Hi Walter, thank you for sharing.

I'm reading your thread, so maybe I have to read that part but... What do you think is important to look out for once a third party inspection service visit to the factory is scheduled?

A quality control process for the manufactured products?
The report will tell you all you need to know about quality control, but if the inspection finds instances of carelessness by production workers that would be a red flag.

They will examine all parts of the production process, from checking any automation of set up or workers skill and carefulness in manually setting up, right though to cleanliness during production.

To get the best results from an inspection you need to provide the inspection company with your specifications.

They take on your role as if you were the production manager and will not declare the factory suitable to handle your orders if they find any part of the process unsatisfactory.

Walter
 

Riviera2012

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Dec 19, 2017
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The report will tell you all you need to know about quality control, but if the inspection finds instances of carelessness by production workers that would be a red flag.

They will examine all parts of the production process, from checking any automation of set up or workers skill and carefulness in manually setting up, right though to cleanliness during production.

To get the best results from an inspection you need to provide the inspection company with your specifications.

They take on your role as if you were the production manager and will not declare the factory suitable to handle your orders if they find any part of the process unsatisfactory.

Walter
Thanks again for sharing.

Would you have a producer inspection done before, or after, requesting a costum sample?
 

Walter Hay

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Sep 13, 2014
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World citizen
Thanks again for sharing.

Would you have a producer inspection done before, or after, requesting a costum sample?
A custom sample will often be made by hand, or even by 3D printing, and will very often be of excellent quality that won't be equalled in a production run.

For this reason, a factory Audit before you see a custom sample would be a good idea.

Walter
 
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Chubbie

New Contributor
Nov 25, 2021
9
1
Hello, everyone. I don't post much but I'm posting this thread today to give some advice and ask for help.

A few months ago we changed our supplier and switched from Europe to China. All of this is new to us so we are learning as we go.

We made arrangements with a manufacturer to have custom products made, based on our own designs.

The custom samples were OK and we started.

Here's where the problems came in: during these months one product required changing materials, because they couldn't find the ones they promised us. We had to pay more and I suspect they took advantage of us. In any case, we accepted, because we didn't have much time to negotiate and we wanted products ready for Christmas.

***
Tips we have learned so far:

  • During orders always specify a deadline for delivery. If you don't do this, you run the risk of seeing the products months later. We wanted the products ready for Christmas but they are only ready today. Don't make our mistake.
  • Always specify when ordering that you will do a 3rd party inspection. There are different types of inspections, marked with the AQL level (level I, level II, level III). Specify a level and that if the inspection does not pass, they will have to fix the products and you will do another inspection, this time to be deducted from the final balance.
I know, not a lot of tips, but that's all we've learned so far. :happy:

***
Now come the problems on which we would like advice from someone who has already been through this.

The products are ready and we have done the inspection. Unfortunately it failed: out of 4 products one has a 5% defect rate, another one 9.5% and two others 19%. In general, the quality is very low. Even in the case of a low defect rate there are problems: boxes with different colours between them, poorly made wrappers, etc.

We have always highlighted that quality is very important to us and this kind of defect rate scares us. We do not feel comfortable giving our customers poor quality products.

We have asked them to fix the products (especially those with a 19% rate), but we don't think they will do anything serious to solve the problem. Now, given the way they work, we are afraid that they will tell us they have solved the problems, we will pay for another inspection and this one will also fail.

Another risk for us is to pay the full amount for products that will then only cause us problems. On the other hand, we are keen on long-term partnerships, but we have the impression that these manufacturers have tried to take advantage of us.
I have a lot of factory resources in China. If you want to prepare a plan b you can contact me anytime. Maybe you can take a look at my first post in this forum. I hope to reach out to more people like you, even if I offer my services for free in the beginning.
 
D

Deleted85763

Guest
Hello, everyone. I don't post much but I'm posting this thread today to give some advice and ask for help.

A few months ago we changed our supplier and switched from Europe to China. All of this is new to us so we are learning as we go.

We made arrangements with a manufacturer to have custom products made, based on our own designs.

The custom samples were OK and we started.

Here's where the problems came in: during these months one product required changing materials, because they couldn't find the ones they promised us. We had to pay more and I suspect they took advantage of us. In any case, we accepted, because we didn't have much time to negotiate and we wanted products ready for Christmas.

***
Tips we have learned so far:

  • During orders always specify a deadline for delivery. If you don't do this, you run the risk of seeing the products months later. We wanted the products ready for Christmas but they are only ready today. Don't make our mistake.
  • Always specify when ordering that you will do a 3rd party inspection. There are different types of inspections, marked with the AQL level (level I, level II, level III). Specify a level and that if the inspection does not pass, they will have to fix the products and you will do another inspection, this time to be deducted from the final balance.
I know, not a lot of tips, but that's all we've learned so far. :happy:

***
Now come the problems on which we would like advice from someone who has already been through this.

The products are ready and we have done the inspection. Unfortunately it failed: out of 4 products one has a 5% defect rate, another one 9.5% and two others 19%. In general, the quality is very low. Even in the case of a low defect rate there are problems: boxes with different colours between them, poorly made wrappers, etc.

We have always highlighted that quality is very important to us and this kind of defect rate scares us. We do not feel comfortable giving our customers poor quality products.

We have asked them to fix the products (especially those with a 19% rate), but we don't think they will do anything serious to solve the problem. Now, given the way they work, we are afraid that they will tell us they have solved the problems, we will pay for another inspection and this one will also fail.

Another risk for us is to pay the full amount for products that will then only cause us problems. On the other hand, we are keen on long-term partnerships, but we have the impression that these manufacturers have tried to take advantage of us.
I read an excellent article by an attorney who specializes in advising US importers/buyers of goods made in China. This article was focused on personal protective equipment made in China but the basic trade aspects are the same for any other goods produced there.

The gist of the article was that dealing with China can be extremely complex, buyers can lose their, or other people's, money and have no recourse at all. The went into how contracts are very important. For example, if issues arise what does the contract say about resolving them? The one that may seem acceptable might be the wrong way for an importer.

On the other hand I personally know someone who imported goods from China and made a small fortune. But I also was told by someone else that containers arrive in the US and everything is ok but then one container will be full of sand!
 

doster.zach

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Always specify when ordering that you will do a 3rd party inspection. There are different types of inspections, marked with the AQL level (level I, level II, level III). Specify a level and that if the inspection does not pass, they will have to fix the products and you will do another inspection, this time to be deducted from the final balance.

Woah didn't know about these!

Sorry no experience from me though, something I'll have to look into once I finish with my prototype.

Why did you switch from your European manufacturers to Chinese if you were happy with the quality? Price probably?
 
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Walter Hay

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I read an excellent article by an attorney who specializes in advising US importers/buyers of goods made in China. This article was focused on personal protective equipment made in China but the basic trade aspects are the same for any other goods produced there.

The gist of the article was that dealing with China can be extremely complex, buyers can lose their, or other people's, money and have no recourse at all. They went into how contracts are very important. For example, if issues arise what does the contract say about resolving them? The one that may seem acceptable might be the wrong way for an importer.

On the other hand I personally know someone who imported goods from China and made a small fortune. But I also was told by someone else that containers arrive in the US and everything is ok but then one container will be full of sand!
Today I helped another member who is new to sourcing and importing. He is planning on having a product made to order in China, and had been following a YouTube "expert" who had given him incorrect advice and had complicated his process.

Among other things the "expert" had provided that member with a template for a very complex contract that he was advised to get his chosen supplier to sign.

I warned him that the contract template used expressions that almost every Chinese business person would find offensive and the likely result would be that they would not even reply.

It is also true that a contract is only suitable if a buyer has deep pockets sufficient to go through a lengthy court battle in China, and even then, as my lawyer friend in China says, court fights rarely result in a win for the Westerner, and he has a much better success rate by bluffing.

I introduced the one seeking my advice to the best method of getting good results in China, namely building Guanxi. That is the Chinese name for relationships. It is also spelled Quanxi. Few Westerners understand that regardless of written agreements, most business is done on the basis of trust. A forcefully worded contract undermines trust.

I think I know the lawyer quoted by @robertwills. Could his enthusiasm for contracts be due to the fees he charges for them?

Walter
 

Chubbie

New Contributor
Nov 25, 2021
9
1
I read an excellent article by an attorney who specializes in advising US importers/buyers of goods made in China. This article was focused on personal protective equipment made in China but the basic trade aspects are the same for any other goods produced there.

The gist of the article was that dealing with China can be extremely complex, buyers can lose their, or other people's, money and have no recourse at all. The went into how contracts are very important. For example, if issues arise what does the contract say about resolving them? The one that may seem acceptable might be the wrong way for an importer.

On the other hand I personally know someone who imported goods from China and made a small fortune. But I also was told by someone else that containers arrive in the US and everything is ok but then one container will be full of sand!
Yes, it is undeniable that some people have a lot to lose when dealing with the Chinese. And, even with a contract, it's hard to pursue them across national borders. They have the option to close the company and reapply for a new one. The truth is that the information on the contract is not true.
That's why I want to act as a middleman to monitor the quality while vetting the supplier's qualifications. And keep costs as low as possible. For example, submit a list of calculated material and production costs. Let the buyer know how much they paid for the product and how much they paid for the remuneration (profit) to the producer.
 
D

Deleted85763

Guest
Today I helped another member who is new to sourcing and importing. He is planning on having a product made to order in China, and had been following a YouTube "expert" who had given him incorrect advice and had complicated his process.

Among other things the "expert" had provided that member with a template for a very complex contract that he was advised to get his chosen supplier to sign.

I warned him that the contract template used expressions that almost every Chinese business person would find offensive and the likely result would be that they would not even reply.

It is also true that a contract is only suitable if a buyer has deep pockets sufficient to go through a lengthy court battle in China, and even then, as my lawyer friend in China says, court fights rarely result in a win for the Westerner, and he has a much better success rate by bluffing.

I introduced the one seeking my advice to the best method of getting good results in China, namely building Guanxi. That is the Chinese name for relationships. It is also spelled Quanxi. Few Westerners understand that regardless of written agreements, most business is done on the basis of trust. A forcefully worded contract undermines trust.

I think I know the lawyer quoted by @robertwills. Could his enthusiasm for contracts be due to the fees he charges for them?

Walter
Actually what I read is that one major purpose of the right contract is that if issues arise the buyer can avoid all courts and go to arbitration which is recogized by all countries to a specific treaty. That's what a good lawyer can tell an importer that they might have never known. But that would only come into play if there were issues.

I absolutely agree that the customary way business is done successfully is the best way to go about it. In my experience most companies in the US pay what is agreed and deliver as promised but when the opposite happens, and it is intentional, it tarnishes the reputation. To most companies this is their most valuable asset.
 
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Riviera2012

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Dec 19, 2017
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A custom sample will often be made by hand, or even by 3D printing, and will very often be of excellent quality that won't be equalled in a production run.

For this reason, a factory Audit before you see a custom sample would be a good idea.

Walter
This definitely makes sense.
 

Riviera2012

Contributor
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Read Unscripted!
Dec 19, 2017
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40
Europe
Woah didn't know about these!

Sorry no experience from me though, something I'll have to look into once I finish with my prototype.

Why did you switch from your European manufacturers to Chinese if you were happy with the quality? Price probably?
I am not happy with him anymore. During production he makes a lot of mistakes.

I think that with the same price I can have an higher quality in China.
 

Walter Hay

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EPIC CONTRIBUTOR
Speedway Pass
Sep 13, 2014
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World citizen
Actually what I read is that one major purpose of the right contract is that if issues arise the buyer can avoid all courts and go to arbitration which is recogized by all countries to a specific treaty. That's what a good lawyer can tell an importer that they might have never known. But that would only come into play if there were issues.

I absolutely agree that the customary way business is done successfully is the best way to go about it. In my experience most companies in the US pay what is agreed and deliver as promised but when the opposite happens, and it is intentional, it tarnishes the reputation. To most companies this is their most valuable asset.
In the 18 years since I sold my importing and marketing business and put my lifetime of experience to work in helping new importers I have only a very few times encountered ones that wanted to use a formal contract when ordering.

On each occasion they were following the advice of an importing guru whose clients were large scale importers, shipping multiple container loads.

That advice was and still is, irrelevant to the great majority of new importers. Such is the case with the suggestion to be prepared to go to arbitration.

Here is why it is an unlikely option unless you have very deep pockets, and the amounts involved in the order being disputed are in the hundreds of thousands of $$$:

Arbitration is conducted in tribunals agreed in a contract. A tribunal functions in a manner similar to court proceedings, although the parties can nominate arbitors that they think will best understand their case.

Legal fees constitute the biggest part of the expenses involved in arbitration. In addition to paying for their legal representatives, the parties must pay the arbitrators, any administering institution, and the hiring of venues for hearings.

Travel and accommodation costs will often be incurred for lawyers, experts, and arbitrators. International arbitration tribunals are generally empowered to award the successful party the majority, or at least some, of its costs, so if you go to arbitration you had better hope and pray that you don't lose.

SUMMARY: If it ain't broke - why fix it???? The normal system of placing orders, most commonly done by exchange and confirmation of specifications and a ProForma Invoice has worked successfully for many years. Save time, save money, save risks of huge costs.

Walter
P.S. Uncertain about the reliability of a supplier? Fastlane members know that I am always willing to help. Just post your questions in my AMA thread, or if confidential, PM me.
 
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JordanK

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@Walter Hay Might be a little off topic but are you confident that China will be a good place to do business into the future? There is a lot of news about a potential shift occurring as companies look to onshore more of their production back in western countries closer to their target markets. At the same time there also seems to be a massive squeeze on warehouse space in the US especially as companies keep more products in reserve (and obviously the shift to more online ordering too vs retail space). Also, the geopolitical games that are going on.

I'm ignorant of the situation except for a couple dozen articles and twitter threads. I'd love to hear from someone with an INSIDERS perspective as I presume the news I'm reading isn't entirely accurate.
 

Walter Hay

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Speedway Pass
Sep 13, 2014
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World citizen
@Walter Hay Might be a little off topic but are you confident that China will be a good place to do business into the future? There is a lot of news about a potential shift occurring as companies look to onshore more of their production back in western countries closer to their target markets. At the same time there also seems to be a massive squeeze on warehouse space in the US especially as companies keep more products in reserve (and obviously the shift to more online ordering too vs retail space). Also, the geopolitical games that are going on.

I'm ignorant of the situation except for a couple dozen articles and twitter threads. I'd love to hear from someone with an INSIDERS perspective as I presume the news I'm reading isn't entirely accurate.
For at least 5 years I have been advising importers to look outside of China for supplies.
In 2018 I posted about the benefits of manufacturing in the USA. See: 6 Figures At 18! 1 Year of The Fastlane Forum The situation has changed quite a lot since then, most notably the great increase in labor costs in China, coupled with their problems in coping with pollution restrictions imposd by the Chinese government.

I also suggest looking at: I'm a 7 figure eCommerce Seller and Here's My 2 Cents . Since I wrote that, I have increased to over 40 the number of countries for which I provide links to genuine export sites, together with guidance on how to navigate those sites.

In summary I suggest forget about buying from China.

Walter
 

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