This week my company had a booth on a China Sourcing Fair. I noticed that some questions/remarks came back regularly. A few days ago I wrote about importers who ask us the contacts of good factories. Another hot topic was how easily a supplier bribes an inspector.

I had in-depth conversations with maybe 15 prospects, and more than half evoked this issue. Here are just two examples:

A Mexican importer told me how, two years ago, one of the largest QC firms produced a report that suggested quality was acceptable, but the whole shipment was actually unsellable. He told me he flies from Mexico to China to check every shipment. He sells to Wal-Mart, and he can afford no mistake.

An Italian who manufactures garments in China (and was on another booth) told me how some inspectors make a big fuss of minor issues, in the hope of getting some cash. He said to me “if we let them send the report, the customer gets upset and asks for discounts, discounts, discounts. You know how thin the margin is for a factory… Arrrh QC inspections, f**c*l*!!!”

Clear corruption cases

I have seldom been directly confronted to clear corruption. Last year, I remember an inspection when the merchandiser kept saying to me “is there anything we can do to get a passed report?” and “my boss would like to have fun with you, maybe you can stay in Guangzhou tonight?” It was just before Chinese New Year, and the importer was ready to cancel the order.

But, in Chinese, a factory can be understood easily by an inspector (or the other way around). I even heard cases where the factory’s boss and an inspector argued loudly and at length about the amount to pay for covering up some quality issues. The risks are pretty high with Chinese staff is sent to factories without proper guidelines.

Inspection companies have policies against corruption. You can read Do QC Inspectors get Bribed? to know more about this. What I like about this article is that it describes the responsibilities of the QC firm as well as those of the buyer: define clear product specs and require point-by-point reporting. This is a crucial point. I remember one of my inspectors, who worked for one of the major QC firms, telling me how the “light” reporting made it easy for the staff to get bribed without getting caught. Ever since then, we spend the time to define a full checklist in advance and we ask inspectors to take photos of each spec.

There is no such thing as a gray area

Sometimes corruption is not as clear as the above example. Say, the factory is picking up other inspectors at the train station, and they can pick you up at the same time. What do you do? This one is not easy, and in case of doubt it is always better to say “no, thanks”.

Or, you are going to a factory that you regularly visit for inspections, the Moon Festival is coming, and the boss offers you moon cakes. What do you do? For me it is easy (I never eat these cakes), but a Chinese inspector has a hard time doing something impolite–it requires lots of prior training. Same thing if the boss gives you a red envelope (of cash) just after Chinese New Year.

My conclusion: good inspectors keep a distance from the suppliers, don’t let themselves get caught in nice-guy games, and are not afraid to invoke company rules.

What we do against corruption

Small inspection companies have a huge advantage in this respect. I hired every inspector, and they know I review most of their reports.

If I receive a report with surprisingly good results (for example: I know this factory is generally imprecise, but in the report every record is within the tolerance), I immediately ask the inspector for confirmation. He knows he is watched. We also frequently ask the supplier for some feedback, and we do some surprise visits.

The most important is that we try to foster a sense of family. I see my inspectors often, and we try to have a good time together. In the end, the most important is to make sure they are happy with their job. I don’t have to under-pay just to respect a standard salary grid for the whole company (large QC firms often pay their staff below rmb5,000 a month). Their whole job content is actually different from that of their colleagues in similar companies. As we seldom resort to part-timers, our inspectors are under-utilized (they only go to factories about 50% of the time). The rest of their days is spent working on checklists, or just having a rest. Overall it is a wholly different working atmosphere.