Twenty-five years ago, the companies that imported from Asia were mostly large structures. Some have set up local offices to conduct quality control. Others have secured the quality of their imports by working with large 3rd party QC companies. Together, buyers and QC firms have organized the supply chain to fit their needs:

• Most of the inspections take place at the end of production, just before shipment. These large buyers can afford to put pressure on their suppliers. If an inspection fails, the factory has to rework/reproduce, and then pays for a re-inspection.
• The QC firms perform inspections in a very inefficient way. Their sales people get the information, pass it to supervisors on the ground, then inspectors are sent to a factory and pass their notes and photos to typists, who finally write the report. Prices are usually around USD300 per day, when inspectors get paid about USD500 per month…
• Large QC firms have no incentive to re-engineer the way they work. These incumbent companies get business based on their reputation and their relationships with key buyers. Product inspections are a way to collect samples for (much more profitable) lab-tests. And a factory audit is invoiced at double the price of a product check, even though it is simpler and less risky.
• The client gets the final report one or two days after the inspection, even though current technologies make it possible to release the results on the same day.

In a few words, these large companies run inefficient operations and pass their costs on to their clients. Factories are kept under pressure, and they see inspectors as the “cops” who come when the work is done.

This was acceptable decades ago. What about now? The landscape has changed considerably, and the traditional QC offer is not adapted for many importers:

• Sourcing from Asia is easier, and thousands of smaller companies have joined the game. Many orders amount to USD10,000 or less, and shipments often have to be consolidated. These buyers cannot afford to put pressure on their suppliers, so most of them don’t do any QC (!!)
• Trading companies (and their role in controlling quality) are slowly pushed aside, as buyers want to “go direct to the factory” and get better pricing. But why is it cheaper? In part because external QC has been removed. Many buyers don’t recognize this reality and are not willing to pay US$300 for a professional quality check… And even less for multiple checks (early production, middle of production, before shipment).
• Many new product categories are sourced from Asia, including some highly customized goods. The large QC firms often don’t have the competence to help a factory set up their processes.

So these established corporations have chosen their sweet spot. They only compete in the profitable core of the market. They refuse to offer low-cost inspections of standard items, and they are not organized for assistance in development/production of highly complex products.

I heard many times the following estimate: only 20% of shipments are inspected professionally. And as a consequence, millions of products are recalled every year and full containers are thrown away after delivery. What a waste…