21 Steps To Follow When Sourcing from China (Part II)

This is the second part of “21 Steps to follow when sourcing from China”, a guest post by Barbara Cisneros  who worked as Chief Representative in China for four year, mainly in the sourcing area.
You can read the first part here (steps 1 to 12)

by Barbara Cisneros

Once the production has started:

13. Do Quality Control, often.
Check several times. Go to the factory, even plan some “surprise” visits, so you can confirm that things are running properly, mainly in terms of quality and delivery times.

14. Do not relax – even with established suppliers.
Check every production run. Although you may have produced the same product several times, KEEP A CLOSE EYE on every single production run. DO NOT RELAX.

15. Make sure to inspect the product in the factory once production is completed.
I always inspected the product once the order was completed. Sometimes I would inspect myself at the factory, and other times, when in doubt, I would send random samples to our headquarters lab. Only if results were satisfactory, would I give the green light.

16. Do your quality control assessment again when the goods arrive at your home premises.

On Logistics:

17. Work with a reliable company.

18. Closely monitor the shipment / logistic process.
Be on top of the shipment, if you want to avoid unwanted delays and unexpected destination charges. If you do not have an export license, my advice is to use FOB conditions.

On relationship building:

19.Trust and relationship building is important for both sides.
Of course China works somehow different, but when doing long term business mutual trust and confidence will be important for both parties.

In our case, after one year of working together, we reached payment agreements with some suppliers that did not involve advance payments. Obviously, it gives you peace of mind in that fact that your payments will be done after the goods arrive at your premises.

20. Press them, but fulfil your own commitments.
It’s very important to build also a more “personal” relationship, but if they see you do not reach the committed volumes or payment terms they will back off.

A final observation, which should probably be the first one

21.Make sure it makes sense to source from China
The way things have developed lately, make sure the prices you find in China will fulfil your expectations. For some type of products, especially those that must be made according to more strict technical specifications, it may not be in your  interests any more. Take into account that in developed areas in China (the southeast mainly), the labour costs have increased by more than 10% on average per year in the last three years, and freight costs for 2012 are growing rapidly. It may be more in your interests to manufacture in other countries, or even in your own country (unless you are planning to enter the Chinese market).

What do you think?

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One comment

  1. This is a comment left by a reader in the “About Us” section in this blog. I´m reproducing it below because it relates to this post.

    Comment by Eric Giraud
    Dear All,
    I would like to add my stone to this blog.
    I have been living and working in China for many years and also a founder of a 3rd party Quality Assurance company.
    Further to the great post from Barbara Cisneros “21 steps to follow when sourcing from China”, If I may, I will add a comment.
    According to my experience (and others), when sourcing from China, a key question would be:
    Is my business attractive to this supplier?
    I do not know any supplier who will refuse a new customer and especially a foreign one.
    However, your business should represent between 10% to 30% of their production.
    Do not choose very big suppliers who will not necessary give you priority.
    We are dealing, sometimes, with customers whose orders represent a small fraction of their supplier’s production output and often, suppliers subcontract these orders which, in 90% cases, affect the quality.
    In contrary, do not choose a too small supplier. A workshop with less than 50 people is not reliable.
    Going through an agent or a trading company is also risky. If the production is delayed or the quality is not up to your standard, your agent has little leverage toward the manufacture.
    As Barbara wrote, keep pressure on your suppliers.
    Using a QA company is a good way of doing it. Another way is to always keep a significant amount of money until you approve the shipment. On sales contract you can negotiate, for example, payment of 30% at order, 30% when production is complete and 40% when shipment is accepted.

    Eric Giraud, Gmet Quality Control