If you spend time in a factory visit, don’t just record the information given to you. Prepare your questions!
Here’s what you should be asking during a Chinese factory visit…
Asking about private/sensitive issues is a bit rude in China. But I often say that, if a supplier gets offended too easily, he is not familiar with export customers’ requirements, and you might have problems down the road with his mentality.
I compiled a list of questions that will allow you to discover a bit more about each manufacturer you meet.
Questions about top management and their priorities
- When was the factory started? What was the previous job/experience of the owner?
- Is the factory profitable? What were its sales last year? And 3 years ago?
- What is the latest investment made in the factory, and how much did it cost?
- What is the next investment they are planning?
Questions about middle management
- Who will probably follow your order, besides the salesperson? How long have they worked in this factory?
- How many other orders do they follow?
- Where do the line leaders and the in-process QC staff come from? Were they promoted internally, or hired from the outside?
Questions about the workforce
- What proportion of workers came back after the last Chinese New Year?
- What is the employee turnover rate month over month (excluding the new year period)?
- What happens when an operator makes a mistake? Is she fined?
- Are operators paid by the number of pieces? Or by the hour?
- Is a part of their compensation based on the team’s results, or is it all individual?
Questions about the capacity
- Observe one line that is making about the same product as you intend to purchase. Ask for the output of this one line in one day. Then, based on what you see in a few minutes, calculate whether it makes sense.
- When the factory was set up, what was the expected (theoretical) capacity?
- What is the lead time from receipt of all materials/components to full packing?
- What materials/components do they buy? Do they only do the final assembly and packing, or they also make some components?
Questions about the quality management system
(See more checkpoints in a previous article about ISO 9000 factory audits.)
- How do they control the incoming components? Can you see it?
- How do they do in-process QC? Can you see it?
- How do they do final QC? Can you see it?
- Do they send samples for testing in a laboratory? Can you see the test result for a production batch that you point to them?
Questions about certificates and other customers
- Who do they work with? Can they give you references that you can call? Do they work directly with these customers, or through an intermediary?
- Can they show you the latest two purchase orders from a big customer they proudly mentioned to you?
- Can you see their business and export licenses? Can you take a photo of them to show to your investors?
- The last time they made a big mistake regarding product quality and their customer found out about it after shipment, what did they offer as compensation?
Get answers to these questions and you’ll be far closer to deciding if this potential supplier is the right choice to manufacture your products.
Did I forget any other questions? What have you found to be particularly useful to ask or see when visiting a Chinese factory?
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questions about payment the suppliers regularly use,this will reflect suppliers’ ability and experience on international orders.questions about who is the real owner of this factory(some trading firm will deliberately mislead clients to believe he is the owner of this factory. )
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some clients don’t release his previous suppliers ,he explain that is trade serect. accordingly, suppliers can hold his cusotmers information.
Good suggestions, thanks. I agree.
good article! i am ray from china, if any customer want to visit chinese factories, please feel free to contact with me, i can act as your translator, i also can supply you advice on buying from china, as i have been worked as sales manager in china for a long time. sjzrightsourcing@163.com
Renaud,
First of all, your postings and articles are fantastic! I am a bit new to direct international sourcing and especially dealing directly with factories in China. So THANK YOU for sharing your knowledge.
Now to the question. I have heard that Chinese in particular place much importance on the personal relationship when it comes to business. So how do they take it when I ask them for a Purchase Order from a customer of whom they boasted? I thought about asking to see a packing list or bill of lading if they don’t want to show prices. But I am wondering if this will be perceived as “I don’t trust you” and damage the relationship.
I’m headed to Asia for two weeks in about one week and am trying to understand how to explore this kind of information in the factories. Thanks so much!
John
Thanks John.
Chinese exporters are used to dealing with Westerners, so just watch your behavior when you are physically in their premises, and all wil be fine.
It is perfectly OK to define the roadmap (including customer references, QC inspections, and so on) at the beginning of the relationship, and to get their written approval at that stage. And then, to do it.
If you feel hesitant, just say your boss/partner requires it. And you are the nice guy, but you follow what you are told.
But really, be careful not to show that you are soft. Many buyers were burned this way.
Read Paul Midlers book “Poorly made in China”, covers all the Guangdong supplier games and cost chicanery in great details.
Drb-
Yes that’s a very interesting read!
This is really great. I am in Pakistan looking at factories and need a steer on the ‘right questions’. Although this is a different region a lot of the logic applies. Asking to see a customer PO is a great one as one of my concerns is the big brand stuff these guys are showing me that could be knock off as easily as they could be genuine, who knows? A PO from the brand buyer, that settles it for me. Great call! I am here with my MD so hopefully I am gonna smack one out the park tomorrow.