As the US-China trade war intensifies, many American importers are looking for alternatives. They often look at Vietnam, Thailand, Indonesia, India, Mexico, etc. But what about Taiwan? There is sometimes an opportunity to start sourcing products from there, especially in electronics. … [Read more...]
Why Your Ground Agent in China is NOT Helping Cut Costs
From time to time, I hear from a company that works with a ground agent in China, and they basically tell me two things: The agent did a relatively good job lining up suppliers, communicating requirements, and generally ironing out most issues. (That makes sense -- otherwise, the importer switches to another agent or to another approach.) After the initial burst, the agent feels entitled to a commission of X% and is resting on her laurels, not challenging factories, not looking for new … [Read more...]
Sourcing from China 101, Part 2: How to Identify Potential Chinese Suppliers?
Now I am assuming that you have decided to source in China by yourself, but how to identify potential Chinese suppliers who will do a great job? One key point I want to communicate is this: you need to follow a process. You CANNOT browse a website, send a few emails, respond, and see where it takes you. If you want a written checklist that you can adapt and follow, you will find an example here. It deals with sourcing, development, production, and transportation (but it is not applicable … [Read more...]
China Supplier Vetting Part 11: Wrapping It Up
This article is a wrap-up of the series of articles that we have published over the past few months, on the topic of the verification & qualification of Chinese suppliers. Here is the list of articles: Background Checks Questions to Ask Before a Visit Evaluating Engineering Capability On-site, subjective evaluations On-Site Factory Quality Audits On-Site Social Compliance Audits Factory Process & System Audit Factory Testing Facilities In-Depth Due … [Read more...]
China Supplier Vetting Part 10: Pricing, Negotiation, Contracts
This is the 10th part in our China supplier vetting series. We’ll cover requests for quotations, negotiations, and contracts. By now we covered pretty much all sorts of due diligence a paranoid importer might go through! And yet it’s not over. While I am no expert in this stage of the buying process, there are a few important considerations that I want to address. Organized RFQ (Request For Quotation) One thing you want to check is whether the supplier you end up working with is … [Read more...]
China Supplier Vetting Part 9: In-Depth Due Diligence
If you are about to select one Chinese supplier, and you know you will be tied to them for the foreseeable future, it is in your interest to spend some time and money to vet them. Here are a couple of examples: A company is about to work with a manufacturer on a complex, custom-developed, product. If things go well, production will start in 4-6 months. Finding out many issues later will mean very serious delays. An end customer has to approve the facility or it has to be certified to a … [Read more...]
China Supplier Vetting Part 8: Factory Testing Facilities
If you have conducted inspections at your suppliers' facilities in China, you have probably found that many of the testing equipment necessary to check your product's quality is not available on site. The question, of course, is 'how can they be sure production is good, if they are unable to check it?' The reality is simple. A factory that is missing the necessary testing facilities does NOT have the capability of producing consistent quality products. That's why an important aspect of … [Read more...]
China Supplier Vetting Part 7: Factory Process & System Audit
In a previous article I described why and how a factory’s quality system can be audited. However, if you want to confirm a factory's reliability with high certainly, you might have to dig deeper. A quality audit will only focus on the quality systems. And chances are, the auditor is not familiar with the factory's production processes, so he won't look at the process controls that really matter. I wrote about it in this article before. The key here is to evaluate the maturity of the … [Read more...]
China Supplier Vetting, Part 6: On-Site Social Compliance Audits
This is another article in our "supplier vetting" series. So you vetted a potential supplier through background checks and a factory quality audit. Great. You might also have to check their social & environmental policies if you are in one of these cases: One of your customers require you to work with responsible manufacturers; Your brand might be tarnished if a negative story comes up in the press; Your brand promises certain things that are not to be taken for granted (e.g. … [Read more...]
China Supplier Vetting, Part 5: On-Site Factory Quality Audits
This is another article in our "supplier vetting" series. So you asked potential suppliers a number of questions, then you visited them and noted your subjective evaluations... If you want to move further in the direction of working with them, the next step is generally a factory quality audit. Working with a manufacturer that has a strong quality system ensures that 'very bad surprises in production' are less likely to come up than with an average factory. I am going to explain why … [Read more...]