From time to time, I talk with an inventor who is planning to have his/her new-to-the-world product made in China. And they often need to get from initial designs to production… Which means they need to get the “development” done.
Unfortunately, some inventors have no idea what the development phase entails. Here are a few questions I ask them:
1. What type of engineering skills will be needed?
What type of factory do you need to work with?
- Medium size?
- Large? (Only possible if projected volumes are quite large, pretty much from the start)
Who should do the development?
- An R&D company
- The OEM manufacturer
- A trading company with very strong engineering skills
Then I explain the common challenges that await them in China, a few of which are below:
- OEM factories don’t like projects for which design is not complete, and won’t assign good engineers to projects that (in their mind) are not 100% sure to lead to large orders.
- OEM factories generally don’t invoice customers for new product developments — that cost is factored in the product price.
- Chinese companies tend to believe the IP rights of the products they have developed are theirs — even if they assure you that’s not the case when you interview them. When the time comes to give you critical files, they might say no.
- If development is done by engineers who are NOT familiar with Chinese production, then the designs are “sent over a wall” to a manufacturer who might say “this is impossible to make”. It means you may well have to start the development phase again.
Fortunately, there are a few solutions. Here are a couple of shortcuts that have worked well for certain startup buyers that couldn’t commit to huge orders:
- Finding a manufacturer that already makes products that are similar (in terms of key components and production processes).
- Working with an engineering/R&D company based in China that can guide them through manufacturing.
- Working with a 50-100 people factory that has good engineers for the first orders, and then moving to a different manufacturer if volumes pick up strongly.
For further reading on this topic, you can read 6 tips to design products to be made in China.
Fredrik Grönkvist says
I’ve been in this situation far too many times. Many businesses still don’t understand that Chinese manufacturers operate like low cost airlines – no extras included. No bag of peanuts, unless you pay for it.
And it makes perfect sense, as product development is not free of charge. The supplier must commit resources to the development, and as a result increase their pricing. This will then in turn lead to the buyer wondering why this is the case, and then move on to the next supplier.
Obviously, no supplier can afford to offer advanced product development services as some sort of charity, that in the end will not offer any advantage what so ever, or even be appreciated by the (often opportunistic) buyer. Yes, I may sound somewhat hostile as I write this, but I do have very good reasons.
Outsourcing is simply not about “adding to cart and then worry about what shipping method to use”, which seemingly is what most small businesses assumes, but to adopt a technical mindset to everything from product development, supplier selection – and of course regulatory compliance. Manufacturing is a technical process, and the process shall be managed from an engineers perspective.
Renaud Anjoran says
I am not accusing Chinese suppliers of dishonesty in case they finance the development and they keep the source code, the CAD files, etc. It is the importer’s responsibility to clarify this upfront, and to have the supplier sign a contract about each party’s promises.
The problem comes from inexperienced importers who don’t understand the implications of their actions, and from dishonest Chinese suppliers that promise something and then decide not to honor their promises. I see a lot of both.
So it’s not just an engineer’s perspective that is needed. It’s also good business sense!
Fredrik Grönkvist says
I shall clarify. When I wrote “hostile”, I was in no way referring to your post. I am highly aware of your position on this matter. Instead, I was just expressing how fed up I am with dealing with these situations in general, which has been the case for roughly 5 years now.
I find the product development process the most challenging part, as it requires a strong commitment from the buyer. In fact, outsourced production is not really that complicated if this pre-condition can be fulfilled.
And yes, a basic grasp of good business sense is the 2nd part of the puzzle!
Renaud Anjoran says
Oh yes. both parties need to commit strongly. If the buyer doesn’t do what he can to prepare prototypes in his country, if he doesn’t go to the factory, if he doesn’t have a plan for marketing and sales, then suppliers should be very wary!