As I wrote in my last post, it is possible to find good manufacturers who don’t play games and ship good quality products out of China. I see this type of situation with some of my buyers, who have narrowed down on a few good factories.

How do I see if a manufacturer is truly up to the standard? It’s quite easy: communication is clear and accurate; plannings are usually respected; inspections are nearly never rejected because of major issues (and rework is fast and effective).

But I should add a caveat: it took these importers some time and effort to get to that point. An importer coming to China for the first time will have to deal with (at least a few) suppliers who try to renegotiate prices to finally ship poor quality goods behind schedule.

There are basically two options:

• Find some good factories that already produce at the required quality level, usually for competitors on the same market (the easiest and most reliable option).
• Find some factories that have the technical ability, but not yet the right mindset/understanding/procedures, to meet the market’s requirements (possibly a source of lasting competitive advantage over competing importers).

The China Law Blog describes a typical case where a buyer worked hard and spent the time to develop his suppliers, in China Quality: It’s Getting Better All The Time:

I met with a client all afternoon on Friday. He is from China, but moved to the US maybe 20 years ago for graduate school. He eventually formed a now thriving construction parts business. We talked about his history of getting parts from China and he talked about how it took him two years of his training factories in China before he had product he could sell in the US. He said it took him another couple years before he had factories that understood how US quality definitions are so different from China. We talked about how in China if you make a $30 part badly, you just reduce the price to $10 and sell it, whereas in the US, that bad quality part is completely 100% unsalable at any price because nobody will accept it. Nobody. My client talked of how his Chinese factories simply could not grasp this at first, but that he now has around ten factories who have consistently been churning out excellent parts for him for years.

Did these ten factories start out evil and then become moral? I don’t think so. What happened is that the US company taught them how to make quality parts, taught them the long term value of making quality parts, and then, literally showed them the long term value by increasing their purchases and forming a partnership.

I also saw this with a few clients. At the beginning, they needed a lot of QC assistance. And, little by little, the factories understood what was acceptable and what was not. Those who agreed to comply with the buyer’s standard generally made it. Others were replaced by better ones. And over time the amount of QC services needed has dropped dramatically: it went from extensive assistance during and after production, to simple final inspections (and sometimes skip-lot inspections).

Now, the tough questions. How to know which factories will really make the effort to comply with a buyer’s demands? There are several factors:

• Is the boss truly convinced that it is the necessary path to his company’s success? Or will he only make a few efforts to please this one customer?
• Does the importer’s potential business seem large (and profitable) enough to attract top management’s attention? Or will a salesperson have to fight with its whole organization to get to required results?
• Are the factory’s other customers also asking for higher quality/reliability? Or will the factory have to maintain 2 standards in its operations (from my experience, this is virtually impossible).