Three years ago, in Comparing Wages Across Asia to Make Sourcing Decisions, I showcased 2 analyses large companies tend to do before they decide on their sourcing strategy. These data are key measures of the competitiveness of producing countries. At the time, I explained: Naturally, most companies that want to compare Asian countries tend to do so on the basis of easy-to-find numbers: minimum wage levels. The conclusion is usually “China is not competitive; the future is in Vietnam, … [Read more...]

If you have quality requirements that are challenging to one of the factories you work with, or if you are working with them to develop a complex new product, you might discover that it makes sense to help them. It sometimes makes very good business sense. Spending 10,000 USD might save your company 1 million USD in the end! And yet, there is a point where you can't keep "helping" them all the way, as they start to take the habit of being "baby-sitted" and they reduce their … [Read more...]

By Fabien Gaussorgues Do you prefer to work with an OEM or an ODM? What are their pros and cons? And what is a CM? This is particularly important if, as the importer, you want to develop a product that is different from what is already on the market. The advice in this article is especially suitable for mechanical and/or electrical products. First of all, what do those acronyms mean? Here are simple definitions: Original Design Manufacturer: the supplier provides the design and … [Read more...]

I wrote 2 articles about the similarities and differences between product inspections and factory audits on the SynControl blog. I thought it would be interesting to mention this here, too. Here are the main points I mentioned. Main similarities: factory audit vs. product inspection They are done on-site, at the production facility. There are exceptions to this (e-audits, review of a few samples...), but they are exceptions. There are bribery risks. Following a code of conduct is a … [Read more...]

Many people think auditors go on site, look at the situation, and suggest improvements. However, it is not that simple. Auditors acting as consultants can cause several types of issues. And yet, the line between these 2 roles is often very thin... I have spent time working in each of these roles, and I wrote my observations below. Let's look at each separately. What is the purpose of an audit? To establish to what extent an organization complies with a set of requirements (often based … [Read more...]

Last week I wrote about the best way to have a Chinese supplier take responsibility. However, the most important question, I feel, is how to work with manufacturers that will keep improving over time. And it all starts from supplier selection. If, at the sourcing stage, you don't try to work with people and companies that will tend to improve, you are sabotaging all your other efforts. Here are 5 areas I'd look at. 1. Is there professional management? Or is it operated by the owner and … [Read more...]

I used to believe that Chinese manufacturers were great at sourcing their own materials/components. There are many reasons for this: They are based here and have teams who can go and visit local suppliers. They have extensive networks they can tap for suggestions. They consolidate buying power for many customers. They have mastered the art of selling to oversea companies. They know how to 'make deals'. And yet... After reviewing the way they manage their procurement, I have seen … [Read more...]

If you have followed the advice of part 2, you may have found a few interesting suppliers. The next step is to confirm that they told you the truth and that they are reliable. Even if you place one-shot orders, you should spend a little time to check if a potential supplier is legitimate. You don’t want to fall victim to a scam, do you? There are three main ways you can verify a manufacturer: Background checks You want to avoid scammers who will run away with your deposit, but … [Read more...]

Now I am assuming that you have decided to source in China by yourself. One key point I want to communicate is this: you need to follow a process. You CANNOT browse a website, send a few emails, respond, and see where it takes you. If you want a written checklist that you can adapt and follow, you will find an example here. It deals with sourcing, development, production, and transportation (but it is not applicable if you develop your own product). But let’s look at the sourcing … [Read more...]

A few years ago I wrote a 15-part course that was sent automatically, lesson by lesson, to interested readers. These days, such autoresponders are a thing of the past and we will switch to something different. But, rather than ditching these courses, I will update them a bit and publish them, one at a time. They are still quite relevant to new buyers.  --- If you are starting to buy from China, your first decision will be: should I manage this by myself? If your team can’t dedicate 1-3 … [Read more...]