It is coming again. Chinese New Year (CNY for short). All Chinese manufacturers will close sometime in early February and re-open slowly toward the end of the month. The more they rely on migrant labor, the longer the break (on average). If you are a seasoned importer, you know how to manage the disruption. This is not what I am writing about today. This year comes with an extra risk: closure of the business because of environmental non-compliance. Many factories have been completely … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 2: Still Hoping Your Manufacturer meets Your Quality Standard?
Are you frustrated because a Chinese manufacturer has proven unable to meet your quality standard? Do they keep making promises of imminent improvement? And are you seeing no improvement? So typical. I have had several discussions about this topic in the past week, so I thought I'd write about it. It reminded me of an 'oldie but goodie' article -- The Focused Factory by Wickham Skinner. Skinner wrote this about US factories in the 1970s, and it is quite applicable to what we see in … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 3: 4 Habits of Your Chinese Suppliers You’ll Have to Get Used To
Expats living in China tend to be bothered by many aspects of the local culture. Here are a few common questions I was asked many times: How can they be so self-centered and so unaware of what happens around them when they drive, walk, etc.? Can you believe some factories even make fake eggs and fake rice?? Why are they so cynical about what we consider 'best practices'? I just finished a book that lists and dissects a long list of these Chinese tendencies that we find … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 4: Training Sessions on Supplier Development (In Guangzhou & Shenzhen)
This week and next week I am holding a training session on this topic: Half-Day Training: How To Set Up a Supplier Improvement Program Practical Tools for Quality and Procurement Professionals Dates and places: 30 Nov. in Guangzhou – see details here. 5 Dec. in Shenzhen – see details here. The European Chamber of Commerce in China is doing a great job helping us organize these events. Here are more details. Context: As the buyer you need to contain cost increases, … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 5: How Likely Are Your China Suppliers To Be Shut Down?
The number of Chinese factories that are shut down by the government because of their environmental impact keeps growing. More and more supply chains get disrupted. Some companies that relied mostly/solely on one source are dying. So the question is, is this going to happen to your suppliers? The response often lies outside of your direct suppliers' walls, as they depend on their own suppliers. If one of the components or subassemblies is suddenly unavailable, production might have to stop … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 6: China Suppliers Lack Transparency… What Implications for Buyers?
This email was forwarded to me without identifiers about the supplier or the customer. I thought it was interesting for our readers. I was told it was written by a project manager in a Western-owned trading company. The buyer was pushing for a certain level of transparency (who are the sub-suppliers, what is the cost of components, what is the cost of manufacturing, etc.), and the supplier's response is below. It is actually a pretty good description of usual business practices, straight … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 7: Dangers of Subcontracting and Losing your Core Competencies
In the rush of the 2000's to outsource production to Chinese suppliers, many American and European companies have lost some of their core competencies... And they can no longer in-source those activities. I came across this passage in a book written by the always interesting Clayton Christensen that I reproduced below. It illustrates this risk pretty well. Asus came to Dell and said, “We’ve done a good job fabricating these motherboards for you. Why don’t you let us assemble the whole … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 8: After You Order, Your Chinese Factory Announces a 2 Months Delay?
By Fabien Gaussorgues Last week, an American buyer shared his frustration about their contract manufacturer in Shenzhen with me. The manufacturer has to delay production for 2 months because the raw material factory will be closed for that duration. In substance, the buyer is told "you have to wait, it's not our fault". He can't believe this excuse. After all, everything is possible in China, right? If they really look for a solution, they will find one, right? Foreign buyers tend to … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 9: Managing China’s Unique Production Challenges
As China's economy matures and their infrastructures get better, some severe production challenges are not going away. They are actually getting more acute! This article is not about the challenges of dealing with Chinese suppliers & factories, but rather about the 4 main issues they have to deal with in their operating environment. 1. Sudden changes in rule enforcement, resulting in factory closures A client told me about serious issues in Nanchang city. The two main fabric mills … [Read more...]
How To Cooperate With Your Chinese Supplier, Part 10: Jewels Plating Problems: Can You Trust Chinese Factories?
By Fabien Gaussorgues We have worked with jewels and plating factories for years. With time, I realized that their knowledge is far below what one would expect from industry experts. And that lack of understanding can lead to terrible problems for the customer. Many of the relatively inexpensive jewels are made of brass and plated with yellow or white gold. Poor plating can lead to fading color, or, worse, to a greenish effect on the user's skin. Everybody recognizes it as poor … [Read more...]