by Fredrik Grönkvist
Go to any major supplier directory and you’ll find hundreds of millions of, what we call, factory designed products – or simply ‘factory products’. Sounds great, doesn’t it? Select a product, pay up and sit back waiting for a call from your freight forwarder. Yet, a quick Google search reveals an almost endless number of stories, told by importers, receiving items that didn’t really match the description. In this article, we explain what a factory product really is, and why quality assurance is just as important as ever, when buying such items.
The products you see, when browsing supplier directories such as Globalsources.com are reference products, advertised by manufacturers and traders. A factory product may be developed by the supplier itself, or an OEM product, previously contracted to them by an overseas buyer. What many importers fail to understand, is that these products are just references – not off shelf items, ready to be shipped to the next buyer. Even factory products are manufactured upon order, thus the items are yet to be assembled, at the time the order is placed.
There are various reasons a buyer may prefer to purchase factory designed items, rather than develop new products from scratch. Product development is costly, not to mention time consuming. In addition, there’s already a huge supply of factory designed products, that can be customized to a limited degree, and branded, for an increased degree of variation.
Factory designed items may also be the only option for certain buyers, especially those buying electronics, machinery – and other products which customization requires a high level of technical expertise.
Yet, why is quality assurance necessary when buying a factory design product? I can take my Google Nexus phone as an example. When I purchased my Nexus, I could be safe to assume that my device would be exactly the same as all other units placed on the market. The logical assumption is therefore that Chinese manufacturers maintain a fixed quality standard when manufacturing factory designed products, ensuring that a certain quality standard is maintained. That is, however, an incorrect assumption, that is often the cause of severe quality issues.
A Chinese manufacturer may, to a varying degree, adhere to a specific set of technical specifications, for a given factory designed item. For electronics, and other complex product, this is often the case. As such, one batch is often identical to the other. Yet, for most other products, such as toys, clothing and accessories, suppliers rarely maintain a strict set of technical specifications, which are followed on every order. Therefore, any of the following scenarios may occur:
All too often, this catches importers off guard. Indeed, in a perfect world, Chinese suppliers should maintain a certain quality standard, and refrain from replacing materials and components – especially without notifying the buyer. Yet, the mindset among suppliers is that they are free to ‘fill in the gaps’ for the buyer, and preferably to their own advantage.
There is a simple explanation to this. Chinese manufacturers are, in their core, OEM manufacturers, expecting the buyer to provide them with a ready made design. The supplier is just the one putting the pieces together, nothing more, nothing less. When it comes to factory products, some suppliers are very good at communicating the technical details of a product before the order is placed, while others are not.
I tend to think of factory designed products as ‘templates’. Half the work is done, but it’s still your job to identify the gaps, and then fill them in before the supplier. Once again, we come back to the importance of clear product specifications.
When developing OEM products, the buyer is expected to provide everything the suppliers need to manufacture the item, including design drafts, dimensions, tolerances, materials, components and functions. When buying factory designed products, the approach is very different. Instead of actually developing the product, the focus remains on confirming the various options, that apply to a certain product specification. I know that sounds a bit abstract, but take a look at the table below. This is what it may look like for a wrist watch:
|Specifications||Option A||Option B||Option C|
|Product ID||AR 102||AR 102||AR 102|
|Case Material||Stainless Steel 304L||Stainless Steel 316||Zinc Alloy|
|Case Thickness||6.3 mm||7.6 mm||9.8 mm|
|Movement||Miyota 8215||RONDA Z Series||Chinese standard|
|Strap||Stainless steel||Italian leather||Chinese leather|
As illustrated by the table, even factory designed products are customized, to a limited degree. However, before you can begin your research and confirm the various material and component options available, you must identify which specifications define the product. Keep in mind that nothing is ‘too small’ or ‘unimportant’ to be neglected. If you miss any piece of information that defines the quality and functions, the supplier is forced to fill in the gap for you.
Overseas buyers, particularly those based in the United States, EU and Australia, must ensure compliance with applicable product regulations, and standards. For obvious reasons, different regulations apply to different products. While it’s your job to confirm applicable product regulations, and labelling requirements, the supplier may already be able to show compliance documents, such as the following:
Yet, such a document is only valid for the specific product, or a group of products, submitted to the testing company. Thus, you must verify that the compliance documents are valid for the factory designed product you intend to buy – not for the manufacturers as a whole.
However, skipping compliance testing, even when buying factory designed products, is not something I’d recommend. It’s often very hard, sometimes impossible, to be entirely sure that ‘your product’ is made of exactly the same materials and components, as the sample which, perhaps several years prior to your order, passed the testing. Replace one, or more, materials and components, and the item is rendered non-compliant.
In the United States, The Consumer Product Safety Improvement Act (CPSIA), requires importers of toys and children’s products, to provide new compliance documents, whenever the product specification changes. For some products, compliance testing on every single batch, even those adhering to an already tested specification, must be tested.
Importing factory designed items is not as straight forward as one might think. While the quality assurance process can be simplified, it’s not to be neglected. Blind reliance on a supplier, regardless of how ‘good’ they look on paper, is highly likely to result in severe quality issues.
Fredrik Grönkvist is the co-founder of ScandinAsian Enterprise in Shanghai. Since 2010, he and his team have helped hundreds of companies worldwide, primarily in the EU and US, to develop and manufacture products in China. He is also the main contributor on www.chinaimportal.com, a leading knowledge base for small- to medium-sized enterprises importing from Asia. For further questions, you can contact him on www.chinaimportal.com/contact-us/.