In this episode…
Covid-19 has continued to dominate the headlines in 2021 and its impact on the manufacturing sector and importers with long supply chains continues to be felt with the numerous challenges this year including the disease itself, supply chain disruption, crazy shipping costs, raw material cost rises, and so much more.
Renaud recaps some of 2021’s biggest stories for manufacturers, especially those with Chinese supply chains, with Adrian from the team, and predicts how 2022 may be different (or similar).
We also give you an insight into our company’s departments’ activities and achievements during 2021, some of our plans for next year, and recap our top podcast episodes and some key content you may have missed from Sofeast, the company that brings you this podcast.
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🎧 Looking Back At 2021’s Key Stories For Importers From China 🎧
00:00 – New Year Greetings
01:25 – Covid 19. China seems unlikely to change its zero Covid policy any time soon in 2022. China can’t really afford to have a large epidemic within its borders after claiming such a political victory by keeping cases very low, so this will probably lead to them remaining quite isolated during 2022. Not being able to visit Chinese suppliers could lead to standards slipping, affecting quality, safety, etc for buyers abroad.
03:48 – The supply chain crisis. Sea freight, in particular, has been really tough this year with extremely high costs, delays, and poor availability. The backlogs going into ports, especially the US West Coast, remain and it’s unknown if the Chinese New Year break will give them enough time to clear it. Perhaps not. So expect the prices and delays to remain high in 2022. Also, more businesses buying extra stock to give them a buffer against supply chain disruptions exacerbates the issues.
05:04 – Just-in-time being replaced by just-in-case. The thinking before the pandemic was to buy in stock just as it was needed, but now businesses are buying in extra ‘just-in-case’ because they can’t be sure they’ll get what they need with reasonable lead times. This makes sense, and if shipping stays the same way in 2022 more buyers will be buying extra in order to shore up supply to customers.
07:13 – Tensions between China and other countries. The AUKUS alliance, the USA’s continuing pressure on China over forced labor in Xinjiang, etc, means that there are still tensions running high between China and other global powers which, again, leads to a lot of uncertainty in 2022. With large manufacturing nations such as Germany relying on Chinese consumers for purchasing its cars, for example, it’s hard to see the EU coming down very hard on China any time soon.
09:56 – Diversifying supply chains out of China. Despite political tensions making it more attractive, many traders and retailers who don’t develop or manufacture their own products are having a very hard time finding suppliers outside of China as other countries just don’t have the wealth of equipped suppliers to outsource to, especially if they’re electrical products. That being said, some SMEs have started to diversify and the interest to do so will remain strong in 2022, but it is mainly the larger companies who have managed to move production out of China so far. Even if you are assembling in a different country, if your components come from China you have a risky supply chain as you need to ship them to the assembly country and hope they’re fine as any issues found will mean they need to be shipped back again at great expense and delays.
13:59 – The ‘exodus’ from China. Soft goods aside, it’s far more difficult to get hard goods outside of China. Despite the pandemic, it has been a good year for China in terms of exports due to booming consumer sales from the West (perhaps partly spurred by ‘lockdown purchases’). Therefore, the exodus of companies moving their sourcing and manufacturing away from China has not materialized. Vietnam, once a popular alternative, has become a source of risk due to strict lockdowns and Covid outbreaks, Myanmar has had a military coup, etc. This has led to China being seen as a relatively stable option. India has been improving as a destination to source and assemble products, but it still doesn’t compare to China where hard goods are involved.
17:02 – Predictions for 2022? More of the same, unfortunately. Logistics issues to continue, China to remain closed off, especially with the rise of the very contagious Omicron variant that, if not controlled tightly, could lead to vast numbers of cases in China that could potentially cripple society there.
22:00 – What has Sofeast been up to in 2021? We spent a lot of time defining our new product development process into dedicated team checklists in order for all of the different departments, quality, R&D, sourcing, etc, to work together in a structured, streamlined way when supporting clients with their new product development projects. This helps make sure that nothing important is forgotten and milestones are hit before the next stage can begin.
On the production side, we have arranged things in the format of SOPs and forms that are important for our BSI ISO 9001 certification for the production of electronics that we’re currently undergoing. This gives assurance to clients who only want to work with ISO 9001-certified manufacturers. In 2022 we plan to do more work on information security, going deeper into quality management, and being more eco-friendly and developing policies around that initiative.
The Quality Assurance team has been performing more off-site work, remote inspections and audits, and we have been developing work instructions and defining the best possible software solutions for undertaking them. Covid controls in China have forced us to start providing these solutions in order to offer some visibility over suppliers who otherwise would be working completely unsupervised. Taking a hybrid ‘blended’ approach where off-site inspections and audits are performed alongside on-site ones has been working well for many clients in 2021 because document reviews and labelling can be checked quickly via video calls or photos and is cost-effective, too.
The warehouse, 3PL, and contract manufacturing facility has increased to over 10,000 SqM in Dongguan alone and has gained a lot of fulfilment experience in 2021. Many new clients have joined us for purely fulfillment projects, such as receiving components from various Chinese suppliers, kitting, labelling, and consolidating shipments or drop shipping for them to their customers. This new capability has been used in complement to other services we’ve been providing for longer, such as product inspections, sourcing, product development, etc, by clients from around the world.
31:56 – 5 top episodes of the podcast in 2021. These 5 episodes were the most popular with you all this year. Renaud gives a short summary of each and you can listen to the episodes here:
- Jon Monroe | How Did Sea Freight End Up In Such An Expensive Mess In 2021?
- 3 Quality Control Plans & Why They’re Needed BEFORE Production
- The Many Benefits Of Preventive Maintenance
- Analysing the (NPI) New Product Introduction Process & its Benefits
- Manufacture in China, Vietnam, India, or Elsewhere in 2021?
37:51 – A few suggestions for great pieces of content we’ve created in 2021 that you may have missed. We create regular content in the Sofeast resources center. Take a look if you haven’t already. Notably, our IP Protection guide for companies who’re developing new products and manufacturing in China, our guide to 9 types of packaging, their pros & cons, costs, and green credentials, and our white papers on bioplastics, printing processes used in manufacturing, benefits of silicone, and more.
42:13 – Wrapping up ~ happy new year to all of our listeners! 🎉
- Off-site factory audits
- Off-site product inspections
- When Is Product IP Most At Risk From Copycats? [Podcast]
- Omicron and supply chains: Buckle up
- Want even more content? Read Sofeast’s Top 10 Blog Posts Of 2021 and QualityInspection.org’s Top Blog Posts and Videos from 2021
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