I had a funny conversation with one of my clients’ suppliers. My inspector had found too many defects and had to reject one of their shipments. I was also in the factory, monitoring the whole thing. I started questioning the supplier about their quality checks during production. This is what they told me:

You know, for the price [the importer] gives us, we really select the best factories we can work with in this area. We can’t afford to work with better factories.

Well, this might be true. In China, higher quality requirements mean higher prices. For example, I wrote before that larger factories tend to have more advanced quality systems, and also tend to be more expensive.

But this type of argument is not acceptable for an importer, once production is done and rejected. A quality standard should be clearly spelled out (and serious exporters usually understand this standard easily), and THEN pricing should be discussed. These two issues should be dealt with separately.

How to get a lower price?

A lower price can usually be obtained by one of three methods:

• Reducing the cost of inputs (e.g. a cheaper fabric for a garment),
• Simplifying workmanship (e.g. faster packing),
• Reducing the profit margin–hopefully for high volumes or very simple development.

Forget about reorganizing the factory’s operations to increase productivity–many Chinese factories do not welcome this type of assistance.

Is reducing the quality standard a way to get lower prices?

The short answer is: in most cases, no.

Importers usually purchase products for a specific distribution channel that has specific requirements. Lowering the standard of a product might make it unsellable. So serious importers from countries such as the US or Europe don’t even consider this option.

In some cases, parallel channels can accept lower quality products. For example, I worked with an importer of lingerie who sold his unsold inventory at a strong discount to nearby brothels (at the border between France and Spain)… The quantities sold this way were actually in the thousands of pieces per year.

And, of course, quality is not really important in some developing countries, where end customers are not particularly discriminating.

My point is that exporters usually know what is acceptable in the buyer’s country. Some Chinese suppliers produce a high proportion of defective goods and then place the importer in front of this fact… Is this responsible behavior?