The definitive guide for MFG/QC issues and what you ecommerce sourcers and inventors must know

[Niptuck MD]

Types of quality inspection agencies​

There are a number of companies providing quality inspection services in China. When evaluating a QC inspection firm, apart from looking at their size, knowledge and experience of the product, Renaud advises to also find out if the inspection agent is focused on reliability.

The "high flexibility, low touch" agency

This type of agent is suitable for hands-off buyers who:

• Need to book an inspection fairly quickly
• Work on simple consumer goods, and are happy to get reports with many photos and little text
• Want to know the inspection cost in advance, in a predictable way
• Do not mind booking the inspections by themselves, every time

Such buyers tend to deal with many product categories and many suppliers, says Renaud. Shipments should never be delayed. They use quality control as damage control — they only check goods to avoid disasters.

The "high reliability, high touch" agency

This type of agency is suitable for hands-on buyers who:

• Value quality over speed
• Work on complex products, or have special requests. They want to work hand-in-hand with a technician who will come up with a suitable solution
• Want to work with a partner company (who takes over certain activities in their organization) over the long term.

Such buyers tend to work with fewer manufacturers, they often deal with only one product category, and they sell in a channel that will not accept quality problems.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

Not sure if this will pertain to any of ya’ll however it may (as i hope all of you sourcers scale up to skyrocketing levels)

This issue has came up several times... (something routine with the big boys) (again not to scare any of ya’ll just sharing the actualisations that big corps and well known brands have to deal with in this new age of manufacturing)
And that is...

Do you need a backup factory?
(There was a scenario when a mid-big level company that dealt with a factory that had issues due to meeting target production date)​

Chances are, they did not work with a big factory on this. Bigger factories tend to be less flexible, more expensive, and less interested in unproven product concepts.

However, there are two problems with relatively small manufacturers in China.

An immature quality system
The biggest risk is that they show their inability to manufacture at the right quality standard. Good communication and development skills DO NOT correlate with good manufacturing skills.

The worst situation goes something like this:

• The buyer does no inspection in the factory before shipment,
• The factory sends a few well-chosen samples taken out of production, which reassures the buyer,
• Upon arrival, the buyer finds that most products are defective,
• All the supplier offers is a discount on the next order, as well as profuse/redundant apologies (or excuses),
• The second shipment is bad too (there is an 80% chance that the second shipment is no better than the first one).

Why does this happen? Here are the main reasons:

• The customer did not audit the supplier’s manufacturing facilities,
• The customer did not send any inspector to check product quality,
• After the complaints, the factory sees this customer as a troublesome customer who actually cares about quality (and who might leave at any time),
• The discount means factory managers don’t care about the second order (no profit, no attention).

The factory can’t ramp up production volume quickly enough
In case the product sells well, can the original manufacturer follow this growth?

In the consumer electronics business, volumes can be multiplied by 10 over a 6 months period, and production delays are very, very painful.

Unfortunately, most factories are unwilling to invest in new equipment and to hire tens of new people without clear long-term visibility. What if your version 1 is successful but your version 2 is a flop?

If capacity is insufficient and orders shoot up, subcontracting will be necessary. And guess what… the subcontractor will have to learn how to make the product, and will have to be checked too! If you don’t do it, you are counting on your supplier and that’s usually not very wise.

The arduous reality of getting a new factory started
Onboarding another new Chinese manufacturer to make a complex customized product can take as long as it took to onboard the first one… And there is always a chance that they give up if the boss’ priorities shift in the meantime.

The key is to get as much done as possible during the first 2 months, while they are still excited. After that period, everything takes longer. So the buyer needs to have a process for getting all the information to the right people in the factory (not the salespeople) in a short time period.

 

[nitroheadz28]

Arun, its Tom from the cigar lounge and early Saturday morning outside the Cantina (Pre IHOP run with James, Tyler & Dave haha). First off, it was such a pleasure being able to talk to you for as long as we did. Your story is one for the books, and your experience is second to none. You really have created something special in this thread, I'm not sure why it hasn't gotten the attention it deserves but it is pure gold. You're the truth my man, I look forward to our paths crossing again!!

An immature quality system
The biggest risk is that they show their inability to manufacture at the right quality standard. Good communication and development skills DO NOT correlate with good manufacturing skills.

The worst situation goes something like this:

• The buyer does no inspection in the factory before shipment,
• The factory sends a few well-chosen samples taken out of production, which reassures the buyer,
• Upon arrival, the buyer finds that most products are defective,
• All the supplier offers is a discount on the next order, as well as profuse/redundant apologies (or excuses),
• The second shipment is bad too (there is an 80% chance that the second shipment is no better than the first one).

Why does this happen? Here are the main reasons:

• The customer did not audit the supplier’s manufacturing facilities,
• The customer did not send any inspector to check product quality,
• After the complaints, the factory sees this customer as a troublesome customer who actually cares about quality (and who might leave at any time),
• The discount means factory managers don’t care about the second order (no profit, no attention).

So I found myself nodding along throughout the entire thread, what I quoted is an alarmingly similar painful experience I went through that I don't wish on anybody repeating here. Here are the consequences of my actions in a scenario that took place in 2017 so anyone reading this understands how these situations unfold:

1. Multiple manufacturers email me after taking notice of my level of performance on Amazon offering me the same or better quality as my current supplier, cheaper pricing, and faster lead/ shipping times.

2. (11/7/2016)- I say screw it and give one of them a chance, at this point I've been having my widgets manufactured by the same supplier for over 3 years and have never had a backup supplier. This new supplier demonstrates an eagerness and flexibility that I'd never experienced before in my days of sourcing from China.

3. (11/23/2016)- I receive free samples promptly, complete with a heartfelt note showing their eagerness to form a fruitful partnership. The samples look good, we Skype/ email back and forth working on changes I'd like to have made to the original mold. They are so eager to work with me that they offer new tooling free of charge and create a new mold for my new & improved widgets.

4. (12/25/2016)- Terms and product specs are nailed down, pricing has been negotiated and a 30% deposit is put down for a small 300 unit test order. I was firm with having them use Paypal, which I also used my business credit card to pay with. I am promised that the cargo will be on it's way before CNY.

5. (1/12/2017)- Supplier emails me with the balance invoice, letting me know that only 2 of the 3 variations will be completed before CNY. Apparently their material supplier couldn't deliver on time to complete SKU #3. Pics are sent, things look good. I send funds over and instruct them to send part of the order to me (Less than 25% in total quantity).

6. (1/25/2017)- No tracking updates, I send an email and don't hear anything back until 2/13/17. The shipment had just arrived a couple days prior. Of course I get a bunch of sorry's and the blame gets passed onto UPS.

7. (2/26/2017)- I request the remaining amount they have finished for SKUs #1 & 2. Variation #3 still not finished.

8. (3/14/2017)- I receive the remaining units for variations #1 & 2 with the following issues upon inspection: Polybag printing is shit/ most of the ink had worn off in transit, stitching is the wrong color on #1, main color is off on #1 and different from samples. Overall finish is low quality, to the point where they are borderline unsellable under my brand on Amazon (I have a premium tier product line).

9. (3/23/2017)- After having gone back and forth about the errors, I get nowhere. They offer me a bunch of spare polybags and 9 extra units of one of the SKUs (Lol). SKU #3 is ready, at this point I'm in the process of moving to San Diego from NYC. I instruct them to ship to a new address making sure its in bold and bright blue color.

10. (4/20/2017)- Multiple emails sent, and no tracking number is given with BS excuses until this date. (Turns out the shipment was never actually shipped until around this time).

11. (5/9/2017)- I receive a phone call learning my cargo is sitting at my previous address across the country. Supplier gives me a bunch of "I'm sorry, I will fix it".

12. (6/15/2017)- Communication has been sketchy with a lot of back and forth. I finally get a wall of text with them placing the blame on literally everything else under the sun.

13. (8/25/2017)- I recover the 100 units of SKU #3 finally, inspect them and quality is slightly worse than the initial #1 & 2 SKUs with obvious defects and sloppy finish.

14. (9/14/2017)- More back and forth, less excuses and more of them not giving a shit anymore. I subsequently open up a claim against them and get a chargeback going.

Its now 2/22/18 and the case is still ongoing. My bank (Capital One) royally screwed me with the evidence I'd uploaded backing my claims and reversed the chargeback against me alleging they'd never received my supporting documentation through their online portal. I'm still fighting this and awaiting a decision from Visa, needless to say I'll be closing my accounts with them as I've generally been unsatisfied outside of this situation.

There you go, a lesson in what NOT to do. Hopefully someone reads this and takes something away from it. It'll save you thousands of dollars and quite a bit of headache, thankfully the order I placed was fairly small and its only a question of about 5 grand so not a huge deal to me. Still, 5k is 5k...

 

[Philip Marlowe]

@Arun Siva - This is pure gold. Thanks for dropping so much knowledge here. Rep+!!!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[amp0193]

There you go, a lesson in what NOT to do. Hopefully someone reads this and takes something away from it. .

Awesome story @nitroheadz28 , I always wondered what the back story was on all of that.

What a nightmare.

At least you only put in 5k.

If the factory just isn’t capable of quality, I don’t know if any amount of @Arrabista relationship building is going to solve the problem.

@Arun Siva is expanding our minds in this thread and uncovering just how difficult sourcing correctly can be. Anyone who claims otherwise has just gotten lucky.

I’m never going to manufacture any sizeable order again until vetting a factory's capabilities first.

 

[Niptuck MD]

@Arun Siva - This is pure gold. Thanks for dropping so much knowledge here. Rep+!!!

Just trying to give back more to the forum haha

 

[Niptuck MD]

I’m never going to manufacture any sizeable order again until vetting a factory's capabilities first.

This. This is the punchline @amp0193
And the premise and undertones of this thread is to make sure people that are new (and experienced even) not take ANYTHING for granted. The factories and their personnel over there are very shrewd and are able to conjure up any sort of dog and pony show just to get RFQs and bids... only after do we as sourcers realize their status and their capacities and by then we will have spent some $$$ unfortunately.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

Arun, its Tom from the cigar lounge and early Saturday morning outside the Cantina (Pre IHOP run with James, Tyler & Dave haha). First off, it was such a pleasure being able to talk to you for as long as we did. Your story is one for the books, and your experience is second to none. You really have created something special in this thread, I'm not sure why it hasn't gotten the attention it deserves but it is pure gold. You're the truth my man, I look forward to our paths crossing again!!



So I found myself nodding along throughout the entire thread, what I quoted is an alarmingly similar painful experience I went through that I don't wish on anybody repeating here. Here are the consequences of my actions in a scenario that took place in 2017 so anyone reading this understands how these situations unfold:

1. Multiple manufacturers email me after taking notice of my level of performance on Amazon offering me the same or better quality as my current supplier, cheaper pricing, and faster lead/ shipping times.

2. (11/7/2016)- I say screw it and give one of them a chance, at this point I've been having my widgets manufactured by the same supplier for over 3 years and have never had a backup supplier. This new supplier demonstrates an eagerness and flexibility that I'd never experienced before in my days of sourcing from China.

3. (11/23/2016)- I receive free samples promptly, complete with a heartfelt note showing their eagerness to form a fruitful partnership. The samples look good, we Skype/ email back and forth working on changes I'd like to have made to the original mold. They are so eager to work with me that they offer new tooling free of charge and create a new mold for my new & improved widgets.

4. (12/25/2016)- Terms and product specs are nailed down, pricing has been negotiated and a 30% deposit is put down for a small 300 unit test order. I was firm with having them use Paypal, which I also used my business credit card to pay with. I am promised that the cargo will be on it's way before CNY.

5. (1/12/2017)- Supplier emails me with the balance invoice, letting me know that only 2 of the 3 variations will be completed before CNY. Apparently their material supplier couldn't deliver on time to complete SKU #3. Pics are sent, things look good. I send funds over and instruct them to send part of the order to me (Less than 25% in total quantity).

6. (1/25/2017)- No tracking updates, I send an email and don't hear anything back until 2/13/17. The shipment had just arrived a couple days prior. Of course I get a bunch of sorry's and the blame gets passed onto UPS.

7. (2/26/2017)- I request the remaining amount they have finished for SKUs #1 & 2. Variation #3 still not finished.

8. (3/14/2017)- I receive the remaining units for variations #1 & 2 with the following issues upon inspection: Polybag printing is sh*t/ most of the ink had worn off in transit, stitching is the wrong color on #1, main color is off on #1 and different from samples. Overall finish is low quality, to the point where they are borderline unsellable under my brand on Amazon (I have a premium tier product line).

9. (3/23/2017)- After having gone back and forth about the errors, I get nowhere. They offer me a bunch of spare polybags and 9 extra units of one of the SKUs (Lol). SKU #3 is ready, at this point I'm in the process of moving to San Diego from NYC. I instruct them to ship to a new address making sure its in bold and bright blue color.

10. (4/20/2017)- Multiple emails sent, and no tracking number is given with BS excuses until this date. (Turns out the shipment was never actually shipped until around this time).

11. (5/9/2017)- I receive a phone call learning my cargo is sitting at my previous address across the country. Supplier gives me a bunch of "I'm sorry, I will fix it".

12. (6/15/2017)- Communication has been sketchy with a lot of back and forth. I finally get a wall of text with them placing the blame on literally everything else under the sun.

13. (8/25/2017)- I recover the 100 units of SKU #3 finally, inspect them and quality is slightly worse than the initial #1 & 2 SKUs with obvious defects and sloppy finish.

14. (9/14/2017)- More back and forth, less excuses and more of them not giving a sh*t anymore. I subsequently open up a claim against them and get a chargeback going.

Its now 2/22/18 and the case is still ongoing. My bank (Capital One) royally screwed me with the evidence I'd uploaded backing my claims and reversed the chargeback against me alleging they'd never received my supporting documentation through their online portal. I'm still fighting this and awaiting a decision from Visa, needless to say I'll be closing my accounts with them as I've generally been unsatisfied outside of this situation.

There you go, a lesson in what NOT to do. Hopefully someone reads this and takes something away from it. It'll save you thousands of dollars and quite a bit of headache, thankfully the order I placed was fairly small and its only a question of about 5 grand so not a huge deal to me. Still, 5k is 5k...

Hey Tom ,
What a story, albeit one of many I assume that ecom sourcers on here go through. I would like others to chime in and share their experiences as well. This is just more case studies (actualities) that people can refer to as an ongoing guide just to watch out for the varying degrees and angles of uncertainty and mishap due to miscommunication and misinterpretations. Hope capital one gets their shit together (one can hope right) so you can move onwards from this hurdle.

 

[Niptuck MD]

The factory received the PO but the production time they are now confirming has increased 20 days. But why Didn’t the Factory Tell Me Earlier?

Unexpected changes and surprise increases are part of the routine struggle when manufacturing and importing from China (or any other nation in the East). Why does the factory not inform of such detail in more of a timely fashion so it doesn’t become a last minute bearer of cumbersome news???

“Why Didn’t the Factory Tell Me Earlier” – this is exclaimed as you’re gritting your teeth, staring at your Skype window, anguish frustration brewing and your wondering how you’re going to tell your client.

Too Much Lag Time: Imagine; you contact your vendor for a quotation. Then like so many buyers, you disappear for 20 days and then come back with another question. This goes back and forth for another week or two. Then you decided on sampling.
The vendor expresses you a sample and you’re ready to sign off and start the project. At that moment, the vendor let’s you know something that’s the equivalent to them tossing a bucket of cold water all over you. The price shot up 20%. The lead time you confirmed and stressed 30 days ago is no longer on the table. (I had to deal with this several times with my custom spec’d product)

Keep in mind, that along with your piece-meal inquiry to the vendor (5 days discuss, 10 days silence, come back, leave, come back, finally a sample), the factory may have 15-25 more clients doing the same thing at that moment, plus their normal clients who consistently bring them MONEY.

So, when you ask, “Why didn’t the factory tell me earlier?”, you’re asking, “why didn’t they better manage my project for me and daily give me an update on all on-goings between them and the material vendor and the print shop and how busy they are on the floor... you get my drift.

Also keep in mind this expert project management you feel entitled to from the factory is before you’ve given them 1 red cent.

The factory has other fish to fry. If you want to play “now you see me, now you don’t” for 2 months over a $20,000.00 order (which is nothing to a factory), that’s fine. But don’t be surprised if minimal interest is taken in the project. Factories and Chinese vendors understand (to a degree) that the buyer side has to spend time to make a decision and sign-off. Buyers need to understand (also to a degree) that a factory operates like a big machine and has to keep CHURNING along often times just to break even no matter what and then make a profit.... its a rather perplexing machine nonetheless...

Lastly, another subtlety that wont be derived from skype convos nor emails is
Sadly enough,

You’re Not a Consistent Enough Buyer:

These types of problems happen less in retail than in other businesses because there is more consistency. New and custom product buyers frequently are reinventing the proverbial wheel therefore consistency isn’t a luxury. New materials, infrequent orders from 1 vendor, customization for lower-volume purchases; all these factors lead to more control on the factory side and the likelihood of more intangibles therefore, more excuses to take care of other more established customers within the factories hierarchical day to day system.

————————————————————————————————————
LONG STORY SHORT——— STAY ON TOP OF THOU SH*T!!!!! Keep the lines of communication always a two way street and engage with your team overseas.

 

[amp0193]

Hey @Arun Siva,

I'm shopping around for a lower product liability insurance rate, and was wondering if you knew anything about getting added onto a manufacturer's policy, and if that's possible to do, worth doing, and what all it would cover, if anything.

I came across this short article, and it got me thinking: https://www.chinalawblog.com/2010/09/if_you_are_a_retailer.html

"Importers/retailers can lower the price of their product liability insurance (and oftentimes increase their protection as well) by requiring their Chinese suppliers indemnify them for costs arising from faulty products and by requiring those suppliers secure their own product liability insurance naming the importer/retailer as an additional insured on these policies. If the importer/retailer is named as an additional insured on the Chinese manufacturer’s insurance policy, the importer/retailer itself will be able to file claims agaist the policy."

"The best way for American importers/retailers to protect themselves from product liability risk is usually to have their Chinese manufacturers secure a U.S.-based product liability policy... "

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

I came across this short article, and it got me thinking: https://www.chinalawblog.com/2010/09/if_you_are_a_retailer.html

although this is a bit outdated (2010) i believe one cannot go wrong with finding a suitable agency to help them with their operations (if they are not able to regularly go to the plant(s) themselves physically) however this is all dependent on the size/scope of your operation and your limitations/expectations.

looking at the article it quotes

"The best way for American importers/retailers to protect themselves from product liability risk is usually to have their Chinese manufacturers secure a U.S.-based product liability policy. These policies can typically be secured if the following three requirements are met. First, the Chinese manufacturer is reputable and has appropriate ISO certifications. Second, the Chinese manufacturer can show it consistently produces a quality product. Third, the Chinese manufacturer must be able to show a five+ year favorable loss record. The goal is to make the U.S. underwriters comfortable writing a policy for a Chinese manufacturer."

I would highly recommend contacting the folks at china caso (now ningbo caso international) they may be able to help (they may know of reputable insurers and agents) these guys are the best in the business in worldwide logistics and logistics consolidation (if you are sourcing several products from different regions in mainland china)

Ningbo CASO International Logistics Co.,Ltd. - 86-574-87868106 - Room 1203, Fortune Building A, Fuming Road #828, Jiangdong District -Jctrans

 

[amp0193]

I would highly recommend contacting the folks at china caso (now ningbo caso international) they may be able to help (they may know of reputable insurers and agents)

I'll reach out to them, thanks!

 

[Niptuck MD]

For those of you that have dealt with this here is a short list of suggestions to think about when negotiating with the suppliers (this applies not only to Chinese suppliers but overseas suppliers of any accord)

NEGOTIATING WITH YOUR SELECTED SUPPLIERS

-Understand perfectly the production process

- Be very clear on who is going to be making decisions

- “I can’t” is not in their vocabulary, so be wary if you get silence for an answer

- Make them recap and restate the agreements, do not assume they understood just because you feel you were clear enough”

- Give realistic purchase estimates. If you promise 10 more times than you are planning to buy, they will cut corners to meet their profit so it will hit you back with poor quality (they work on small margins)

- Expect long negotiations: even points that have already been agreed will be raised again in the future

- Pricing: Do not get obsessed with the cheapest deal. Quality has a price and you should also consider that.

- Learn about your suppliers cost structure (how much goes into labor, materials cost *NOTE this may take some extensive probing but maybe can be done better if confronted face-to-face with them)

- Make sure you have good contracts in place (and readily accessible). It may be a lucrative option to get a (Chinese or whichever country you are sourcing from) knowledgeable lawyer to draft them (so that the terms are enforceable and it covers all the points you need to cover- IP, stocks, product quality, product specifications, penalties, etc) - This may or may not apply to your scale of business but just something I have seen help clients in the long run save a lot of anguish and money....

- Again hate to reiterate this but double check and verify if they have the necessary equipment/machinery & capability to produce your product. Ask them to produce a few samples in front of you (if you are there) or ahead of time for it to be sent to you if you cant be there in person, even if they don’t match your exact specifications, you will save $$$.

-If you are not a fluent Chinese speaker, bring a native Chinese speaker to the negotiation- he/she will be a valuable support (This only applies on your business model and how large your business is)

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

This is something that has come up with the big dogs that is often taken for granted (when not implemented within their supply chain)... Some of the factories look to get business from others (there have been instances of prints "missing" etc etc).

Draft a vendor guide with terms and conditions​

Maybe you’ve analyzed a manufacturer from overseas and you’re confident that you’d like to work with them. The next step is to set expectations as explicitly as possible, typically done by creating what’s sometimes called a “vendor guide".

This is a document outlining policies and procedures that a manufacturer must abide by in order to work with a particular buyer. Vendor guides often can be quite lengthy, particularly those for larger retailers like Home Depot. Vendor guides typically include guidelines related to social compliance, shipping and logistics, packaging standards, approving samples, and receiving authorization to start production.

Perhaps the most crucial component of any effective vendor guide is a terms and conditions agreement. This should specifically address areas including:

- Payment terms
- Nondisclosure agreement (THIS IS CRUCIAL)
- Penalties for late shipments or defective orders (dependent on the setup you have with your respective freight forwarders)
- Right of inspection
- Exclusivity, i.e., to what other markets the supplier can distribute (if your operation is big enough)

You never know what to expect in the JUNGLE.
people come and go.. factories come and go... leaders of factories quit and go to the one down the street....

AGAIN INSIDERS, this is by no means a scare tactic whatsoever. I have witnessed the hardships of this and arduous debating and hardship in purchasing departments and on both ends of the manufacturing spectrum. Just telling you all its a JUNGLE out there just be prepared to expect the unexpected

 

[Niptuck MD]

Here is an infographic to help novices with the realms of a quality inspection technique called RANDOM SAMPLING.

 

[amp0193]

- Penalties for late shipments or defective orders (dependent on the setup you have with your respective freight forwarders)

Can you give some examples of penalties?

You said in an earlier post, that "45 days" can mean a lot of things. When is a shipment actually considered late? What is a reasonable penalty?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

Can you give some examples of penalties?

You said in an earlier post, that "45 days" can mean a lot of things. When is a shipment actually considered late? What is a reasonable penalty?

Depending on the relations with your existing supplier if they dont FOB or whichever incoterms you agree upon within a certain date (manufactured batch is done) i know that the big boys charge a penalty which kind of puts pressure on the manufacturer to get their (the bigger fish production batches done on schedule) kind of got them by the b*lls so to speak.... this puts smaller sourcers and importers on the back burner sometimes because the factory (the animal the beast) unfortunately responds to its hierarchy

I would set some solid terms (within reason) with a supplier that if they fail to communicate ANY sort of production mishaps or material sourcing issues etc etc that you must be credited an amount that you both think is fair... (LEVERAGE again the keyword)

What i am advocating is that even though you may be small on paper (they dont know that for sure) you still are entitled to somewhat of a fair and equal treatment when in regards to getting your products made despite all the intangibles and variables....

 

[Niptuck MD]

For those of you doing business with Chinese suppliers (for the longer run) here is some useful cultural cues to consider....

In spite of the fact that China has passed through a modernization stage over the last three decades, it’s still be difficult to understand for a westener how to do business in China. Understanding and adapting to these cultural differences is primordial. A clear example is, that making business in China will be based on relationships, often called “Guanxi” opposed to the west, where business transactions are based and primarily focused on the economical factors. That doesn’t mean that economics are not important. It means that collaborating closely with a partner in China’ such as the owner of the factory on the details of a win-win business can come only after gaining his trust.

What is Guanxi?

Informal networks, developing relationships, calling for favors, among others. Guanxi is all of it and even more.

The term guānxi means RELATIONSHIPS or CONNECTIONS it’s composed of two characters:

关系
Guān: to close (v) or barrier (n) and
Xi: to tie (v) or system (n)

Guanxi is ingrained in the Chinese culture. It’s more than just a mere exchange because this is most of the time just one time transactions.

The best way to describe someone’s Guanxi as a complex web of connections and relationships. The links of this web can be extended in an infinite number of directions it carries along not only the relations but also someone’s influence and obligations towards the other members of the network. The relationships formed can be considered to last as long as some one’s life.

Relationships located in the first circle are nourished by the practice of giving and taking favors. This is a two ways system where “If I scratch your back, you’ll scratch mine,” is the modus operandi. Favours can be called in at any time this can be within a couple of days, weeks or even years.

Two important facts to take in count

Guanxi is reciprocal: It doesn’t simply involve monetary transaction from one person to another for a favor.

At its core, it’s characterized by activities of trust and reliability between people of the success of all parties involved.

Guanxi is about building strong relationships, and strong relationships take time to be built, and time means money when talking about business.

2) The “Yes” phenomenon or the “ke yi” (可以) society problem

The Chinese people have been raised to not say “NO”, no matter if it’s in their day to day life or in the business scenario, saying no can carry bad news for their social status. Saying yes or “ke yi可以 (can do)” will be the most likely reply you’d get when asking a supplier if they are able to produce something.

In China the concept of “Face” is deeply embedded in the society. Charles Custer says that just like in the English expression “saving face”, the “face” we’re talking about here isn’t a literal face. Rather, it’s a metaphor for a person’s reputation amongst their peers. So, for example, if you hear it said that someone “has face”, that means that they have a good reputation. Someone who doesn’t have face is someone who has a very bad reputation.

The common expressions where the “face” concept is used:

• Having face (有面子): Having a good reputation or good social standing.
• Not having face (没面子): Not having a good reputation or having bad social standing.
• Giving face (给面子): Giving deference to someone in order to improve their standing or reputation, or to pay homage to their superior reputation or standing.
• Losing face (丢脸): Losing social status or hurting one’s reputation.

Therefore in the business scenario, a sales representative or even a factory that refuses to do something can lose face in society, and this can represent a bad omen for business.

Chinese people will never say no in response to a suggestion or question. This because they are more likely to be polite, but vague.

How to deal with this?

• First of all physical presence is primordial for this, once your selected supplier has committed to do something you need to be sure they will be able to do it, affirming something doesn’t necessarily mean that they can do it or have done it in the past. The best way to do that is by having ears and eyes on site. You can either go to the factory yourself or hire an experienced 3rd party to do so.
• Remember that assumption is the mother of all evils: seeing is believing.
• Another way to confirm that the supplier can do something is being pushy with them, confirm & reconfirm ad nauseam! This is the only way to ensure they can do something they committed to do.

 

[amp0193]

• Remember that assumption is the mother of all evils: seeing is believing.
• Another way to confirm that the supplier can do something is being pushy with them, confirm & reconfirm ad nauseam! This is the only way to ensure they can do something they committed to do.

Good tip, there's a handful of things that I need to be "pushy" about here in the next couple of weeks.

Not sure if their "yes" was a yes.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

Good tip, there's a handful of things that I need to be "pushy" about here in the next couple of weeks.

Not sure if their "yes" was a yes.

Yes, pushy should be seen in a negative light. Some cultures are pushy to begin with (think population, day to day livelihoods lol the Indians, Chinese) are pushy compared to Americans in day to day transacations because of their environments etc day to day dealings...

You are just standing your ground and want to deliver a quality product and they must administer to that, plain and simple.

when you see them or encounter with a group face to face, just keep it simple; (let the first meeting be cordial and professional and then take (gauge) it from there.... Some may wine and dine you lol some may not give you the time or the respect you deserve... its all part of the game.

 

[Niptuck MD]

Sorry it’s been awhile been busy traveling.

Here is more pictorials to break down some useful quality tools and concepts. If anyone needs me to break down further or give specific examples regarding their respective businesses PM me.

 

[Niptuck MD]

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[SYK]

This is a phenomenal thread. Big thanks for doing it! Must-read for anyone thinking of Chinese manufacturing.

Couple of questions...

1. Have you ever had an experience where mistakes were made in tooling which made them unusable? If so, how'd you deal with it?

2. Any experience working with overmolding? I'm currently doing this for a project of mine.

P.S. Some rep. $$$ coming your way!

 

[amp0193]

@Vigilante Time for a #notable on this thread? Tons of value.

 

[SYK]

@Vigilante Time for a #notable on this thread? Tons of value.

I second this motion!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Niptuck MD]

1. Have you ever had an experience where mistakes were made in tooling which made them unusable? If so, how'd you deal with it?

2. Any experience working with overmolding? I'm currently doing this for a project of mine.

Thanks @SYK yes I have encountered many times where the root causation was the incorrect tooling and or machining process that was used to create XYZ product(s). Even despite the numerous verifications of whether or not the manufacturer (i know for one occasion it was a laser engraving operation and it was supposed to be done using a proper laser engraver that would be able to engrave various alloys, they used an engraving machine that was made for engraving trophies and soft metals!) So yes it has happened, but if you cover your bases and know exactly what you need and what you want versus what they have and what they are willing to do for you (within their realm) you will be okay.

In terms of plastic injection moulding yes out of curiosity is your product

Plastic over plastic, rubber over plastic, plastic over metals or rubber over metals?

 

[Niptuck MD]

@Vigilante Time for a #notable on this thread? Tons of value.

@LightHouse this is all your fault with your motivation

 

[LightHouse]

@LightHouse this is all your fault with your motivation

You've done awesome with this thread so far. It's all you with that knowledge in your head Arun. Great job!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[SYK]

Thanks for the info.

they used an engraving machine that was made for engraving trophies and soft metals!)

Wow! That is an ambitious attempt at tooling! I have my engineers taking care of all the tooling for me, but in the back of my mind there's always the 'what if the tooling f%&ks up' thought because that's where most of the investment is.

Plastic over plastic, rubber over plastic, plastic over metals or rubber over metals?

It's plastic (TPU with small % foaming additive) overmolded over plastic (PC + glass fiber).

 

[Niptuck MD]

Thanks for the info.



Wow! That is an ambitious attempt at tooling! I have my engineers taking care of all the tooling for me, but in the back of my mind there's always the 'what if the tooling f%&ks up' thought because that's where most of the investment is.



It's plastic (TPU with small % foaming additive) overmolded over plastic (PC + glass fiber).

@SYK
How is the quality of resin? Have you already dealt with residues and the consistencies of the molds etc
Just a tip make sure your manufacturer (s) checks parts are initially inspected directly out of the molding machine. This way it can prevent the following

-Sink marks
-Short shots
-Burn marks
-Flash marks

Ahead of time during batch runs. Plastic is a unique substrate because there is a lot of varying polymers that have different properties. When these polymers are machined, it can go in several directions etc (dont want to confuse people by getting into the intricacies of machining/manufacturing of polymers/plastics etc)