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THE SOURCE CODE BLOG
As a company who helps others source from China. We know being successful in receiving a quality product saleable for the western world requires significant commitment from our customers. Our biggest challenge, other than the inevitable stigma associated with Chinese products, is the upfront work needed by all parties involved (customer, supplier, ourselves). However once the work is complete and production begins to flow our customer immediately begin to realize there’s a major difference between sourcing at their own risk vs.
One of the main questions surrounding industrial product sourcing from China remains, how do I return substandard product? Buyers want the benefits achieved through reduced product costs but are gun shy at pulling the trigger on their sourcing venture for fear of being stuck with unusable material and nowhere to turn for support.
Unfortunately there is no official policy for returning defective products back to China. The system is intended to make the process costly and difficult for oversea buyers even if support from the factory and a clear paper trial are present.
Receiving consistent quality from Chinese manufactures is a never ending battle for organizations sourcing products from overseas. However there are steps you can take to mitigate the continual risk of receiving full containers of unusable material.
Keep in mind this is an intensive process which requires full company commitment and is best engaged by buyers that fully understand their products.
Deciding to switch your supplier requires analysis of many statistical factors before drawing a conclusion of go or no go. In this case, deciding to move to Chinese supply, many differences can be significant. Therefore it is the manager’s job to decide what differences are important vs. cosmetic. It is an important distinction because if you focus on the wrong factors or get bogged down in the minute details you might confuse aspects of quality decisions vs. business decisions.
As summer officially starts today, this is the perfect time to shed some light on China’s expected summer power shortage. Power consumption has steadily risen as a result of economic growth and reluctance from coal-fired plants to increase their output (due to increased costs and diminishing returns) which coupled together has tightened power supply across the board. It is predicted China’s more developed regions, the eastern and southern coasts, will endure the greatest impact from the summer brownouts and blackouts.
One of the most time consuming aspects of industrial product sourcing is negotiation. Specifically when it involves months of back and forth, formulation adjustments and product testing then finally when you believe you’ve arrived at a price and product that will work for everyone, the PO is released and all parties move on. Now as long and arduous as this process can be, 95 percent of the time it has a happy ending. The months of prep work pay off and the products are delivered as required. However the other 5 percent is an entirely different story.
Purchasing from China and other parts of Asia isn’t exactly a cake walk. We know that. Even after the work is completed locating and developing a factory which can produce the product you require (consistently). You now have to bring that merchandise home. And after spending thousands of dollars securing quality and supply, it’s critical these goods can be transported reliably.
There’s a movement taking place among companies who source their products from offshore. In the past, labor was abundant and therefore interchangeable. Meaning companies would base their sourcing decisions on available factory capacity. Continually migrating their operation to where they could receive the most amount of product at the best rate.
Last week I was reading how the Chinese tax department internally grades its organizations they review. Not unlike North America, there are companies who cause more problems than others. To help clarify the ones they should pay more attention to, they created categories which indicate the level of controls and monitoring that need to be in place. Obviously those who have caused the most problems require the strictest controls and most frequent monitoring. The next group is comprised of companies who have committed errors but don’t necessitate the strictest level of controls.
As an importer of industrial products, we are continually striving to find better ways to control our lead times from China. Not only is it important we supply our customers with high quality products they’re use to receiving from domestic suppliers. We also need to deliver them in their designated time frame. This is where it starts to get tricky. And you know if you’ve done any purchasing from China, directly or through an importing company/agent that delays happen, a lot.