Then, after the goods arrive and have been distributed, you find out the merchandise has serious quality issues. What could have happened and who's to blame?

QC inspectors in the Asian manufacturing world are bribed everyday. If you've ever been to China on a buying trip, you most likely have experienced the often overbearing hospitality that your Chinese hosts will bestow on you. From lavish meals to forced drinking and partying, it is this aggressive relationship-building characteristic of Chinese culture that allows for the wide-spread bribery of QC inspectors.

Why?
Economies at Play - The average value of a 40' container of consumer goods ranges from $20,000 to $100,000. The average salary of a local QC inspector is about $500 per month. $500 is nothing to a factory that needs to get $50,000 worth of product out the door.

Turbulent Trade Atmosphere - Loyalty does not count for much in the buying from China game. This, coupled with an unbalanced consumer product supply chain driven by mega-retailer's buying habits, has left many China factories either out of business or feeling helpless. Desperate times are often the cause of irrational decisions...

Factory's Interest - Maybe they think that the customer won't notice; maybe they have let all their employees go for vacation and don't have the manpower to re-work the goods; maybe re-work of the goods would require a large MOQ purchase of raw materials which they can not afford. In any case, to them it seems much easier to put a $500 envelope in the hand of the inspector than to negotiate the issue with the client.

What can you do to prevent this happening to your shipment?

1. Question your 3rd party QC company about the measures they take to prevent such activity. When the respond to you, listen for the following in their answers:

Do they have an implemented Code of Ethics? (Click here for an example of 3rd party QC company Code of Ethics) Do they rotate QC inspectors around from factory to factory? - This strategy is used by professional QC companies in order to not let any one inspector become too "comfortable" with any one factory Do they have their own internal auditing system, where senior staff discreetly follows and performs spot-checks on the initial inspection? Do they talk about how long junior staff receive training before being allowed to attend a factory on their own? Does they employ their own drivers or do they rely on the factories to provide transportation for the inspectors? - Companies that have their own drivers are more reputable. If a factory provides the inspector transportation then the inspector can literally be "held hostage" for a ride home. Do they have an explicit policy on allowing inspectors to eat, drink and attend social outings with factory representatives? - The most trustworthy 3rd party QC companies strictly forbid such behavior.

2. Communicate clearly to your factory, agent, and/or trading company, by email and by phone, that any bribery or gift giving to your 3rd party inspection company is strictly prohibited, and would be reason to end all business activities with the parties involved. Have all parties come back to you in writing confirming their understanding.
3. Ensure that the QC Company has clear and accurate criteria on which to base the inspection. They should definitely provide you a QC checklist which is specific to your item. The more detailed this document is, the better. Clear guidelines for what is and is not acceptable decreases the grey area that so often allows for corruption.
4. Request a sample inspection report and take a good look at it well before your inspection. If you feel there is data that you would like to know about the inspection result which is not included in the report format, have your 3rd party QC company modify the report format to your liking. An inspection report will almost always include photos, and if you want to see photos of something specific then make sure this is communicated clearly. Thorough and clear reporting increases the transparency of the inspection process and therefore makes it more difficult for an inspector to request or take a bribe.

Who's liable when a QC Inspector gets bribed?
The factory is. Bribery is illegal in China the same as in the western world. Although your QC, either in-house or 3rd party, is guilty of poor judgment and not carrying out their duties properly, your claim against them will likely go so far as a severance of business relations. Your true claim will be against the factory that is guilty of both producing shoddy goods and bribery. But that claim of bribery will be very difficult to pursue in a Chinese court of law. And it doesn't solve the problem that you're sitting on bad product. Knowing the difficulty of getting remedy after the fact, your best bet is to avoid ever getting into a situation that requires legal remedy. Working with a strong QC company that has processes in place to ensure its inspectors won't be bribed, and to ensure bad product won't be shipped, is an important step in avoiding such problems.

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One person has commented on this article.

 1. President
Sylvia Marcus, Unregistered

Question: Does the factory ever take back damaged merchandise?
Is there such a book on Doing Business In
China?
Where are you located in China? We have
many questions and we usually go to China
for the trade shows, at least twice a year.
We are most interested in the subject of Quality Control. Looking forward to hearing from you.

 Posted 2008-11-25 06:38:25

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