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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21 Steps To Follow When Sourcing From China (Part I)

This is a guest post by Barbara Cisneros who moved to China four years back to set up and manage a Representative Office in Shanghai. She is an outstanding professional and specially dear to me as she became a friend after I met her and interviewed her for this blog two years back, when I was just starting this journey.

by Barbara Cisneros

I’ve been working as Chief Representative in China for four year, mainly in the sourcing area. Since I was specialised in the same field and type of products, my main objective was to establish long-term suppliers in order to optimise the  cost / quality / delivery times of our products.

Some of the points that I will mention below may seem obvious, but from my own experience, and what I’ve seen others (small and medium enterprises) doing, the same mistakes are repeated over and over.

These are the tips I would give to anybody who starts sourcing from China:

Before your start sourcing

1. ALWAYS visit the factory.
Do not rely on the information on the internet. Even websites like Alibaba are not reliable enough when looking for suppliers. Sometimes a supplier is classified as a Golden Supplier for more than two years and when you visit the factory there is not much behind the online presence.
In order to find certain type of products the best way is to attend specific exhibitions.

When working on OEM projects where you want a product to be developed according to your specifications:
2. Prepare/ be ready with ALL required documents / specifications from the very beginning.

3. Check the production facilities in order to confirm that they produce what you expect.

4. Clarify and agree all technical aspects
Have a first meeting in order to make sure that you clarify and agree all the technical aspects of the product. Most of the times the standards and material specifications are different in China. Make sure you agree to use the ones that are equivalent / closest to what you need.

5. Do not assume that because they work in a specific field they are familiar with foreign specifications / nomenclature.

6. Do not expect them to be proactive.
You have to confirm that they have read and studied all your specifications. Do not expect them to act in a proactive way. Most of the time, if they have doubts they will follow their normal procedures and use the most common or cheaper materials, which may not be suitable for your product.

7. ASK and CONFIRM as many times as you think is needed.
This way you will avoid future “surprises”.

8. Be prepared to be FLEXIBLE.
For some materials/standards you may not find the exact equivalent that you need. Be prepared to be FLEXIBLE, although avoiding any degradation in quality. Discuss with them in order to reach an agreement, and provide them with different solutions. Flexibility is a must when dealing with Chinese factories.

9. Changes during the manufacturing process will lead to terrible headaches, including renegotiating prices.

10. Make sure all the PACKING information is included in the initial requirements.

11.Do no trust anybody saying “Yes, I can do it”.
When starting to produce a new product in China do not trust anyone who says “Yes, I can do it” – even if they are already your suppliers. Normally small / medium factories are specialised in one type of product / technology. For example, a factory that works with certain type of forged steel will not work with cast steel, although the products may have the same usage.

12. Consider using some suppliers as “traders”.
If you do not work with very large volumes, try to group your products with only a few suppliers. Sometimes they can work as a “trader” in some of the parts you need, getting a better offer than the one you may have obtained alone.

Coming soon “21 Steps to Follow When Sourcing from China. Part II”

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