I already wrote about my feelings regarding 80%+ of Chinese trading companies. The most disturbing for QC inspectors is when an order is split among several factories. But the real loser, in this situation, is the importer.

Of course, sometimes it is necessary to split an order. Chinese manufacturers tend to make one type of product only. They cannot manage the complexity and the extra costs of having several types of processes for several lines of products.

But spreading production among 3 or 4 workshops, even though the products are nearly the same, is typical of Chinese intermediaries. And it is NOT a good sign for buyers.

The best strategy for outsourcing in China is usually pretty close to this:

• Find and qualify a couple a factories, select one for production and keep the other one for back up;
• Use all your weight (and contractual penalties) with the chosen manufacturer to get the attention of management and to be delivered without much delay;
• Spend time with the factory people to make sure they understand your expectations, and then watch production quality regularly during production and before shipment.

Now, what do some middlemen do? The exact opposite:

• They develop samples with whatever factory accepts to do it;
• Once you have given the greenlight for production, they give each separate reference to the workshop that quotes the best price;
• They don’t do any quality control, even though they tell you not to worry.

What are the consequences of spreading an importer’s order that thin?

Shipment is ALWAYS late, for three reasons. First, delays happen as soon as 1 factory is late. Second, no one maker cares much about this order. Third, the cheapest workshops usually get this type of business, and they are the least organized of all.

Quality also suffers, of course. A workshop that quoted a very low price, under no supervision, will usually produce in a rush and will not rework anything unless the importer sends his own inspectors.

Pricing is totally distorted, and is sometimes raised unexpectedly. The factories usually don’t count on repeat orders from local intermediaries–anyway, with a low enough price, they can always find another order. So they often play games and threaten to drop the order if price is not increased.

What can buyers do about it?

Direct sourcing is not adapted to all importers. I suggest to make it clear from the beginning that the customer have to approve all factories (if possible, they should also audit them and qualify them). Then they can send an inspector when production is under way.