If you insist on doing your own sourcing in China, here are some helpful tips that you cannot do without. Our purpose here at Asian Prosource is to make this sourcing process less painful and ensure that you get a quality product, built to your specifications, on time.
1. Find a Suitable Supplier.
Many importers find a nice sample at a trade show, get a good quotation from the company believed to have manufactured the sample and then think their supplier search has ended. It is very risky to choose your supplier in this way. Online directories (e.g. Alibaba) and trade shows are only a starting point. Suppliers pay to be listed or to exhibit, and they are not rigorously screened.
If your contact claims to own a factory, you can run a background check on his company to confirm this claim. Then you should go and see the factory or order a capacity audit (around USD$1,000).
If your orders are small, it is usually best to avoid very large manufacturers because they will probably quote high prices and not care about your orders. However, smaller factories usually need closer monitoring, especially on the first production run. Be forewarned: showing a nice factory and then subcontracting production to a smaller workshop is very common and the source of many quality problems.
2. Clearly Define Your Expected Product
Some buyers approve a pre-production sample and a pro forma invoice and then wire the deposit. This is not enough. What about your own country's safety standards? What about your product's labeling? Will the packaging be strong enough to protect your goods during freight? These are just some of the many things on which you and your supplier should reach written agreement before money changes hands.
I recently worked with an American importer who had told its Chinese supplier that "the quality standard should be the same as that of your other US customers." Of course when this American importer started experiencing problems, the Chinese supplier replied by claiming that "our other US customers never complain about this, so it is not a problem."
The key is to write your product expectations into a detailed specification sheet that leaves no room to interpretation. Your methods for measuring and testing these specifications, along with the tolerances, should also be included in this document. And your contract should set forth specific dollar penalties if the specifications are not met.
3. Negotiate Reasonable Payment Terms
It can get a bit more complex if a mold or special tooling is necessary during development.
Those vendors who insist on more favorable terms are usually seeking to trap you. I recently worked with a buyer who was so confident he would receive a good product he paid the full price before production. Needless to say, delivery came late and there were quality problems. He had nothing to use to leverage appropriate corrective action.
4. Control Your Product Quality in the Factory
How do you make sure your supplier met your product specifications? By going to the factory yourself and monitoring for this or by appointing a third party inspection firm to manage this process for you. The most common type of quality control is a final random inspection of a statistically valid sample. This statistically valid sample gives professional inspectors enough to quickly and cost effectively draw conclusions about an entire production run.
In most cases, quality control should also take place earlier so as to catch problems before all production is complete. In these cases, an inspection should take place either before the components are embedded in the final goods or when the first finished products just get off the lines. In these cases, some samples can be picked up and sent for lab testing.
To take full advantage of QC inspections you should first have defined the product spec sheet, which then becomes your inspector's checklist.
5. Formalizing the Previous Steps
Most importers are not aware of two facts. First, it is possible for an importer to sue a Chinese supplier, but it only makes sense to do it in China. Second, your purchase orders will aid in your supplier's defense; they almost certainly will not help you.
To minimize your risks, you should buy your product pursuant to an OEM agreement (preferably one that is in Chinese). This contract will decrease your chances of problems and give you greater leverage should a problem occur.
My last bit of advice is that you be sure to put this entire system in place before you start negotiating with potential suppliers. Doing this will let them know that you are a professional importer and they will respect you for this. They will be more likely to agree to your requests because they will know that you can easily find another supplier. Perhaps most importantly, it will be much more difficult and much less effective if you start scrambling to put this system in place after you have already placed your order.
As I mentioned in the beginning, here at Asian Prosource, we have been handling these negotiations for over 20 years. we have an office in the US and in China to help support you and protect you. Call us today for a free consultation!
(702) 616-2298
contact@asianprosource.com
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