By Renaud Anjoran
Last month, on China Success Stories, I explained how importers can reduce quality risks with a better organization. I got an interesting comment pointing that practices that work in other countries should be adapted when it comes to buying in China. My opinion is that importers should put in place a stronger quality assurance system for their China procurement, but not necessarily different.
First, why is it necessary to have a strong QA system when sourcing in China?
- Very high risk of miscommunication between buyer and supplier, and all the way to operators on the factory floor. Buyers should repeatedly ask for feedback and samples.
- Poor (or nonexistent) quality systems in many Chinese factories, where widespread defects can go unnoticed until shipment. Buyers are advised to send inspectors to confirm whether production is up to their standard.
- Dishonest acts on the part of some suppliers, who buy substandard components, take shortcuts in production, and/or subcontract the job to inferior workshops. Product inspections and lab-tests, if used wisely, can put these behaviors in evidence.
- Checking quality after production is usually not enough. In many instances, shipment is already late and the buyer cannot wait any longer without upsetting his own customers. The factories know it, and they will often out-wait the importer until the goods have to be shipped out. The solution lies in checking quality earlier.
Unfortunately, thousands of small- and medium-size companies import from China without any QA system. There are mainly two reasons for that:
- It is possible for small companies to buy products in China. They feel like they are on equal footing with larger importers. Finding a supplier (on a trade show or online), approving a sample, arranging payment, and appointing a forwarder can be done in a few weeks for most product categories. Small importers sometimes don’t even have an in-house QC department.
- It is very easy to source in China. Suppliers will take care of materials, processes, and even packaging. It gives buyers the feeling that they don’t need to follow production. It might be true for off-the-shelf computer equipment that involves no customization, but it just does not work for most product categories.
So, how should a QA system that works in other countries be adapted for buying in China? I like to compare it with driving a car.
If you already know how to drive safely in your country, can you get on a car and drive in China? First, you will need a local driving license. That’s the equivalent of consulting with a lawyer (for IP registration, enforceable contracts, etc.). Then, you will be extra cautious for the first few weeks, and you will observe how other drivers behave. Over time, you will be aware of the main dangers and you will specifically watch for them.
First-time buyers should be extra careful, too. They often put a QA system in place after their first bad experiences. They should do the reverse: make sure the factory understands the requirements, inspect every batch during production and before shipment, and then gradually release pressure on the suppliers.
Many sourcing consultants are long on horror stories. Sometimes their description of culture differences is just a smoke screen that helps them frighten importers and get business. But, in substance, they are right. Sourcing risks are higher in China than in most other countries. Ethical standards are different. Having a good technician on the ground (or working closely with a good quality control provider) during the first production run of a new product is helpful in reducing risks.
The most important takeaway for inexperienced buyers is that they should start planning for quality control (including factory selection, product inspections, and internal organization) from the very beginning—even before coming to China to meet with potential suppliers.