Earlier this week I was with a client, during one of their China trips. They import garments, and one of the most important criteria is the respect of size charts. If measurements are out of tolerances, the garments might be uncomfortable... or even unwearable. One supplier was asking "if some samples are inside the tolerance, and others are out of the tolerance, how do you decide if the order is not acceptable?" It is a good question. After thinking about it for some time, I see two ways … [Read more...]
Who is responsible for China quality problems?
In a recent post, I was wondering whether many importers calculated the fully-burdened cost of imports. Today, I came upon an interesting article on Knowledge@Wharton (Can China Meet the Quality Challenge?) where Mr. Pinney, from BCG Shanghai office, explains the roots of this situation: "They have a procurement mentality and focus purely on price negotiation, and it's an arm's-length transaction," he says. Because their expectations are based on their experiences with home-country suppliers, … [Read more...]
Are Chinese courts unreliable?
Most companies buying in China don't take the precaution to write a contract with their suppliers. Even when large sums are at stake. The common perception is that going to a Chinese court is a long and expensive process, for a highly unpredictable result. But are Chinese courts' judgments truly unpredictable? Or do they follow a logic on their own? The China Law Blog just wrote a very interesting post entitled China Sex, Mistresses, And Improper Payments, And What They Mean For Your China … [Read more...]
Western importers in China, forced to compromise on quality
I am reading Poorly Made In China, and it is a real treat. Paul Midler, the author, does a great job at analyzing the psychology of oversea buyers. He gives examples where the importer got himself locked into a relationship with a given factory. The manufacturer could feel it, and took advantage of it to raise prices... and, at the same time, reduce its cost by degrading quality. Each time the buyer protested, the supplier just pushed back. Here are two extracts that detail the mechanism at … [Read more...]
What is the fully-burdened cost of imports?
In Hot, Flat and Crowded, I read that the exact cost of oil delivered by air-borne tanker to the US military stations in Irak is... $42 per gallon. Here are the elements to add up: Commodity price of oil + cost of delivery + cost of protection along the way + cost of casualties from transportation. The total is the fully-burdened cost (or total cost of ownership). This calculation convinced the army to work on improving energy efficiency (e.g. improving thermal insulation of air-conditioned … [Read more...]
WIP inventory in Chinese factories
I often tell the factory employees they have too much work-in-process inventory. In general, they don't understand how lower inventory can go hand-in-hand with faster production and lower costs. Last week I was in a factory that really, really doesn't see anything wrong with WIP inventory: Another problem is that WIP can be lost, stolen, or damaged. This time I got a great illustration... I couldn't help taking a picture: They are sleeping on the fabric, before it's used by the … [Read more...]
QC luncheon (organized by the Supply Chain Council)
Today I attended a QC luncheon in Shanghai, organized by the Supply Chain Council. Its aim was to gather people from different QC firms and share experiences. Andrew Reich, from In Touch, was the speaker. He touched on some interesting topics, and from there the conversation quickly took a life on its own. I didn't get namecards from all participants, so I can't attribute properly each remark. Anyway, I listed below the insights that I found most interesting. About sourcing … [Read more...]
Different products, different ways to control quality
I published an article on Smart China Sourcing, an excellent knowledge base about sourcing in China. The article title is How to control the quality of YOUR products?, and it distinguishes between 3 main product categories (see below table). To each category corresponds certain types of quality control and supplier relationship (see the 2nd figure below). … [Read more...]
5 legitimate reasons why your company does not need third-party quality control
I exhibited at a few trade shows and I talked to hundreds of importers. I noticed that many of them don't have their products inspected at all. Another thing I noticed is that they have not really thought about it. It sounds like they can choose a supplier, arrange the payment and the freight, pay for import duties, and "the job is done". In this post I am sharing the good reasons why an importer would not consider third-party quality control. -1- Your company controls the manufacturing … [Read more...]
Reducing quality risks without paying more
I published an article entitled China Production: Reduce Your Quality Risks Without Paying More, on China Business Success Stories. It is a series of 7 tips for importers: Write your product specifications Put in place a QA system in your company Audit factories more effectively Qualify your suppliers at their cost Ask for regular reporting from your suppliers Force your supplier to invest in improving their processes Use production samples wisely Nothing in the list above … [Read more...]