not just a word - it's a way of life"
China was once seen as an option for producing only relatively
simple products. Yet, significant improvements in Chinese
manufacturers’ sophistication, technology, and—most
importantly—product quality have made China much more popular for
Popularity, however, does not always guarantee an easy process.
Finding the right factory can be challenging. The steps below are
the minimum which we carry out on behalf of our clients, prior to
outsourcing to China.
Identify Product Manufacturers
The Internet is being used more readily by Chinese manufacturers as
restrictions on import and export rights are relaxed. In the past,
Chinese manufacturers used government-approved trading companies to
export, so manufacturers often did not have their own Web sites. As
restrictions have now almost disappeared, Chinese companies have
embraced the Internet as a tool, and there is now a wealth of
information for OEMs looking to build relationships with contract
manufacturers in China.
Chinese manufacturers are increasingly comfortable with
international companies. They often use English as their secondary
It is critical to conduct a survey based on local knowledge, as
business-to-business hosting sites, compile lists of Chinese
manufacturers and provide information on companies’ backgrounds,
products, and contacts. These hosted sites can be useful, but they
typically list only member companies, and many high-quality Chinese
manufacturers may not be listed. We will spend the necessary time to
locate the specialist company, specifically able to meet and exceed
Initial Planning and Communication
After compiling a list of potential manufacturers, we will contact
The time difference is often an unaccounted-for hurdle. Be sure to
factor in the time difference and allow both companies several
months to build trust. It is unrealistic to expect finalized results
after the initial calls and e-mails.
When contacting Chinese companies, one of the first and most obvious
questions to ask is whether they can manufacture the product to your
exact specifications. Some Chinese companies realize that their
products will not meet European standards, and they often say so
directly to avoid wasting time. However, it is critical to
understand that some may claim to be manufacturing the product while
making plans to purchase it from someone else, mark up the value,
and then sell it. This is where our offices and highly trained staff
in China become invaluable. we take nothing for granted and check
everything down to the most minute detail.
The price quote is not the only cost consideration needed to arrive
at a fully priced estimate. While the manufacturer’s unit price may
seem very low at first, this cost can balloon once international
freight forwarding, customs duties, and domestic shipping issues are
factored in. Additional costs can also arise from unexpected
sources, such as expenses related to travel, cultural differences,
language barriers, and time differences. These costs are difficult
to outline, but a general estimate should be calculated into the
Know the Difference: Factories versus
Relaxations on import and export regulations have led to an increase
in direct exporting from Chinese manufacturers. Trading companies,
however, are still common in China. Trading companies that act as
go-betweens for manufacturers and buyers usually have experience
with Chinese exporting. There are certain advantages to using
trading companies rather than going directly to the factories.
If your company is looking to outsource, then these trading
companies are a waste of time and should be avoided at all costs.
Building relationships with Chinese factories offers more
opportunities to develop company brands. It also allows companies to
be directly involved in the quality control process. Companies with
an in-house sourcing group may decide to work directly with a
manufacturer. Quality control issues for a factory require frequent
communication, and an in-house sourcing team can handle this
responsibility. Without such a team or significant resources from an
outside firm, however, it may be difficult to monitor issues as they
arise. Once again we handle this entire process for our clients.
Negotiate the Contract
Contracts with Chinese manufacturers should be concise. The
contracts should be similar to contracts with domestic companies,
but a few points deserve further attention.
A recognised Chinese Law firm is the only credible method. Our legal
department will assist in anything required to guide you through the
If the shipping terms negotiated in the contract are for FOB, the
buyer is, in effect, paying for the goods at a port in China but
will not inspect them until they reach the E.U. If there are quality
issues after the goods arrive, it may be possible to have a new
order sent or to cancel the order, but this will lead to costly
delays in delivery times. The best way to protect against such
problems is to have a thorough quality assurance system in place in
Our world renowned T.Q.M. system garantees that the product is
manufactured to exceed your Incoming Quality Control standards and
is automated to give remote - independent - inspection and
China represents a huge potential market OEMs—and that potential is
increasing. As China becomes more integrated into the world economy,
its manufacturers are becoming increasingly sophisticated and better
equipped to meet the needs of E.U. companies.
By using the steps outlined above as a starting point, it is
possible to avoid some of the pitfalls associated with outsourcing
manufacturing to China. China may seem exotic, or at the very least,
extremely foreign to E.U. OEMs. However, careful planning, thorough
research, and patience can help overcome the challenges that China
presents and reap the rewards it offers.
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