Q: What can a new importer expect when buying from China in terms of product quality?

A: What they can expect is certainly to have a complete change in the environment, and the culture, and the way to deal with the clients, and also the way to deal with the manufacturing, and the quality processes.

Certainly, a lot of importers...I have learned the hard way...receive goods that did not conform to what they expected or what they thought they ordered. What they can expect is surely a lot of disappointment and financial losses if they don't take the appropriate steps.

Q: Can you describe some of those steps?

A: First of all, you should always have at least three factories bidding on the same product. From the different offers from each of the factories, you can learn from one and then improve your specification requirements on the other two, and then put them in competition. Not only on price but also on the product definition.

Second, it is much better to visit the factories or at least to do a factory audit, which gives you an idea of how the factory is, and if the factory capacity, for example, meets your requirements. Because one of the Asian specialties is they get the order first and after they always find a solution to make it. So, you believe you are ordering 100,000 pieces produced in this factory, but it happens that this factory is able only to produce 20,000 pieces, and they outsource the rest of the production to four or five other factories which are not at all under your control.

And then, what we advise -- and that's the business of Asia Inspection -- that you make a product quality inspection on all your shipments. Not only with a new supplier of new product, but it's a very good thing to systematically put on your P/O that they will be inspected, that there will be a quality inspection. It's very important to send such a message to the factory -- when they get the order, they know they will be inspected.

Then we send inspectors during the production or just before the shipment to check the goods, and whether the product quality passes or not will determine their ability to ship, and then to get paid. So, put in a process of quality inspection, leverage your bargaining power over the factory, because they know they are going to be inspected, and they know if they failed they will have the goods on hand and will not get paid.

For example, a very classical way to protect yourself is when you open an L/C, among the documents to be remitted for L/C payment clearance are, of course, invoice, packing lists and shipping documents. But you can add a quality certificate, for example from Asia Inspection or others. If they don't trigger the product quality certificate, they can never get paid from the L/C, so you are protected and you have the final word.

Basically, quality inspection is a classical way to control before shipment, because it's much better to stop goods or cargo before it's shipped to your country than to realize once you get the goods, you have paid, and they've cleared customs, that they are not usable. Not only does it cost less, but you have 30 or 45 days more to find another solution.

Q: What are some classic warning signals importers should be alert for when evaluating new suppliers?

A: Well, a very classical way to proceed is to make a product sample. Until you have a product sample which corresponds to your specifications, don't go ahead, and try not to pay any deposit. Usually, you pay 10% to do the product sample, and once the sample is OK you go to the 30% they require, and after they launch the production, you pay (the remaining) 70% on shipment. A factory who asks for a very high deposit, you don't know, maybe the factory will take some advantage of the situation.

But you can ask them whether they've been audited before. If they say no, then set an audit; if they say yes, ask to have a look at the audit. If they are unable to provide it, that's not very good. You ask for their clients, and you can ask them if they have worked with a quality inspection company. If yes, which one?

Q: What should importers keep in mind when communicating their requirements to suppliers, and how can they avoid misunderstandings?

A: When you send a P/O saying I want to buy 125 screens or chairs or stationery or anything, with a very brief description, it works in the western world. Because you've seen a catalog, and you just put in the reference number, and you know you will get that. It's just not the way to talk (in Asia). You have to be extremely detailed, precise, with a lot of explanations, pictures, drawings. Anything that is vague will be -- at a minimum -- used against you in a negotiation, because they will say, "Oh sorry, they are not clear enough. Now that you want the logo to be printed, it will cost you that much more."

Of course the most important thing is that, if you don't provide a detailed description of your product, you very likely will not get the product sample right at the beginning, (and then) waste a lot of time in making it right, delivering it late, and getting the cargo rejected. That's why it's good to do what we call an IPC -- an initial production check -- which is where you send an inspector at the beginning of production to make sure everything is understood. The inspection helps you to anticipate, as early as possible, any product quality problem to occur.

Many problems come from too vague definition/specifications. In the same way, when you hire an inspection company, you must have very clear specifications and definitions of your product. That's how you get the best from the inspection company. If you just say, "OK, inspect this product," the inspection companies will do their best, but they will never understand what's important for you on this product. So not only to your factory, but also to your inspection company, please give very clear specifications of what you expect and what's important for you, and which features are important to check on the product you are inspecting.

Q: Do you find that many new importers are not used to detailing their requirements to that level?

A: Not to that level, absolutely, that's what we have found. Very classic, they just don't know. Because of their habits, their mindset, the way they work now in their domestic market. They work with the wholesalers in their country, and the product quality standards are much higher, so they don't need to know. But the prices are also much higher well.

Q: Do you have an example that lustrates some of the risks a new importer needs to be alert for?

A: Yes, I have one. It was a marketing company in the UK, made a promotion campaign, and they imported from China 400,000 salt and pepper sets. It was a five-week campaign and each week you receive part of the salt and pepper sets, to be assembled at the end of the campaign. So, you get the top one week, then you get the grinder, and then different parts. So they ordered 400,000. They all fell into the five parts, all shipped out, and when they received them, each part looks very good. They shipped it out, but when you put them all together and assembled them, they were not fitting. That means they were not working. So, each part was working well by itself, but the whole set wasn't working. Nobody checked or inspected the assembly and made a function test before shipment. They lost about 400,000 euros. They not only need to pay compensation to their client, and then you have your image, your reputation. It's a big nightmare.

We perform 25,000 inspections a year, and we have 5,000 around 20% that fail, one out of five. Among the 20%, we have about one-third that are for a critical reason, and another third that are major reason. A lot of the problems that are spotted before at least allow the importer to anticipate and then deal with the issue. The earlier you know the issue, the better it is for you.

Q: What options does an importer have if a problem is discovered with the products after delivery, that is, after the products have already gone through inspection?

A: If they think something has gone wrong, the option they have is to prove through the inspection report that something is wrong, and ask the factory to rework the goods. If the factory is able to produce replacement goods, then it's fine. But then you have another problem -- the delay in delivery. Then you have to negotiate with the factory to pay for the air shipment, which is sometimes quite tough. The later you realize something's wrong, the more constraints you will have.

That's why you need to send the message when you book an order that you will make an inspection, and in anticipation, put very useful additional pressure (on the supplier). The quality inspection costs you around 1% of your FOB value, which is nothing compared to the risks you have in terms of financial risk and image.

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Readers have left 2 comments.

 1. owner
Stratford-Smith R.M., Unregistered

Useful and succinct. In my limited experience I have found digital photography to be very useful.

 Posted 2008-02-18 23:41:58

 2. Hello
Nuhaquard, Unregistered

I'm new here, just wanted to say hello and introduce myself.

 Posted 2008-08-16 15:06:14

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