Last week, a local trading company called me for checking thousands of products, one by one. They had found defects on several batches, and instead of repairing them, they had just put them aside. They were probably planning to sell them on the local market. But all of a sudden the importer told them "we need these products in the stores, please find a solution." What was the solution? 5 inspectors for 4 days, starting the day after. This service (checking 100% of products) can come under … [Read more...]
Final product inspections: should the whole order be ready?
Most product inspections take place after production is finished, and just before shipment. It is a convenient way of checking whether all the product and packaging requirements are met. However, timing is usually tight. The importer wants to get the goods and start selling them fast. And the supplier wants to ship out and get the payment as early as possible. A quality control inspection can usually take one day. But the buyer has to receive the QC report and sometimes communicate with … [Read more...]
Trading companies and efficiency
Some large retailers purchase their goods directly from Asian manufacturers, who in turn buy the components and process them. That's about as "direct" as it can get. It allows buyers to avoid the margins of all kinds of middlemen. According to this view, very large retailers would buy everything directly in Asia, right? Actually, the trend among American big-box retailers seems to be just the opposite. They buy more and more from intermediaries who go through all the trouble of Asian … [Read more...]
In defense of third party inspection companies
Third-party quality control (3PQC, or 3PQA) has gotten a bad name in some circles. It might be deserved in part. But I feel there is a lot of misunderstanding. I am going to explain the basics of our job, so that non-experts can make their opinion. What are 3PQC firms blamed for? Yesterday the SRI blog posted a guest article entitled Third Party Contracts. It focuses on some aspects of Chinese law, but here are the sentences about inspection companies: The contracts and disclaimers … [Read more...]
China low quality: the underlying reasons
The Economist just published an excellent article entitled “The flaws in Chinese business - Time to change the act.” The beginning of the article focuses on the impact of the current downturn on Chinese business. Then it goes on to explain why China has mainly remained a producer of low-value-added goods. The most interesting is the list, towards the end, of all the factors that tend to prevent Chinese factories from investing in innovations and quality improvements. That very little of this … [Read more...]
Why quality can be so bad in China
There are all kinds of factories in China. A few are truly world class (think of the joint ventures producing luxury cars, for example). Others are good enough for the core (and the low-end) of Western markets, in dozens of product categories. And the rest are adequate for the needs of developing countries (Africa, India...) and the domestic market. But how low exactly is the quality of the products sold on the domestic market? I found a very interesting description in Managing the Dragon, by … [Read more...]
Chinese vs. Western business: different ethical standards?
Last night I had dinner with someone from the Trade and Industry Dept. here in Shenzhen, China. A very nice individual, who studied and traveled in the West. I was asking questions about the foreign investors, and he confirmed that many were delaying or canceling their projects, because of the crisis. We were discussing the way people do business here in China, and straight away he told me there was an "ethical problem". But is there, really? Why? Tax evasion I thought about it for a while. … [Read more...]
Hiring quality inspectors: a few tips
In my previous post entitled Quality control inspectors: an ideal profile?, I introduced the Ned Hermann model to show that only a certain thinking style tends to make a good QC inspector. Now, how to know a candidate’s profile? Recruiters can administer a full questionnaire, but it is a little pricey. In this post I suggest a few tips to use during interviews. The single best thing to do is to see this inspector perform an inspection. One can see right away whether she is experienced in … [Read more...]
Quality control inspector: an ideal profile?
Is there an "ideal profile" for inspectors? Is it enough to write and read English, and have previous experience on the job? I don't think so. Research, and our daily observations, show that every human's brain is "wired" in a specific way. It means they tend to prefer (and be good at) different types of activities. For example, a typical graphic designer likes to be "creative" and forget about all the rules that limit our action/imagination. BUT ask him/her to do an inspector job … [Read more...]
Why is the “China price” so low? And other insights about Chinese industry
I just finished reading Managing the Dragon, by Jack Perkowski. It is a great book for anybody trying to understand modern China, its opportunities and challenges. Here I want to reproduce his description of two very interesting things ignored by most foreigners: -1- The local governments' incentives A 17% value-added tax (VAT) has been levied on most manufactured goods since 1994. Local governments get a quarter of the VAT collected in their area, so they have a strong interest in attracting … [Read more...]