Thursday, February 24, 2011

Smoke and Mirrors in China Sourcing

Working for a big name client?
Would they approve of this factory and its conditions?

Just because you walked around the Canton Trade Fair in Guangzhou, collected name cards and catalogues, doesn’t mean you are really clear on what’s going on with your sourcing. 

 When it comes to sourcing low-cost goods, the overseas importer is still largely dealing in “smoke and mirror” tactics.

China works in-depth, in multiple layers and intricate labyrinths of “now you see me, now you don’t”.  All of which can play havoc on your production quality and hinder the service and timing you work hard to provide your client.   A few scenarios…

Sales Office Outside the Factory:  If your supplier tells you that the factory is a few hours away from the office, let this bring up red flags.   We had a factory this week tell us their office is 4 hours away from the production facility and that they couldn’t guarantee the quality.  

Do I expect all suppliers to work inside their factories?  No, JLmade doesn’t work inside our factories, but we’re not telling our buyers that we cannot control the quality either.  The factory rep, should be on their production line, controlling their order.  Many times during our orders, we’re doing more than the factory in controlling processes.

Setting Up Your Own Office:  Overseas companies get the bright idea to set up their own offices in China.  This is great…if you know what you are doing or if you are willing to put the time, energy, blood, sweat, tears in to making it work. 

Many “foreign” companies, come here, set the office up, hire some local staff and think, “that was easy”.  But if the overseas companies don’t leave representatives in China to train and supervise, it is the same as not opening the office.  Without the proper training the local staff is not taking you to the best suppliers.  They’re not taking you factory direct when you need to be going factory direct.  They will source the easiest, quickest way, which is what you could have done from abroad and saved time and energy in opening this office.  Many times overseas companies’ offices contact JLmade, asking us to help them in their sourcing.   “Um…er….I thought that was what you opened your own office for….to go direct?  I tell you…this sourcing “ain’t kids’ stuff”. “

Another note on opening your office and then leaving the local staff to run it.  If  you don’t have figureheads from your home country running, training and setting up the operation, very high probability your teammates are adding on a few cents over the price and getting kick-backs….just sayin’…    

Company Overseas Saying Office in China:  This “smoke and mirrors” tactic isn’t only used by the Chinese companies; I’ve noticed it from overseas companies as well.  It’s amazing how many distributor and supplier sites say they have offices in China, contacts in China…whatever.  That normally translates into “We’ve been to the Guangzhou fair and when you send us an inquiry, we’ll do our best to find it on Alibaba”.  It seems the hip thing to say in this day and age to nail some of the larger quantities, but the truth is, they don’t have actual facilities working on their behalf, only re-outsourcing the job.

One higher-end operation works as a umbrella over a loose network in China.  They collect the inquiries from the States and send them over to the persons in China.  The persons in China as independent sales agents work to source and quote the job.  The China-team doesn’t have any direct contact with the USA side, there is no formal training, no control from the States.  They even have local USA phone numbers, that when dialed, ring up agents in China acting as if they’re in a USA office. 

Large percentage not concerned with
quality, transparency, safety, but fast-turnover production
China works in multiple relational layers:  You may think you’re working with one company, but they really passed the work over to their cousin who has a similar operation…”but don’t worry about it, they’ve got everything under control”.  Jobs get passed off, factories will outsource some of their order volume and it can get hard to pin down who is doing what. 

Keep in mind, that sales contact you met at the Canton Fair, who you thought spoke very good English, was only hired to stand in the booth during fair-week.  They don’t work there.  

Don’t get me started on certified, safe material.  I can get any document you need….how do you know said document is official and covers the material used in the production?     

The negative in all this: your quality.  If you cannot control the processes, stay in touch with the proper folks, quality is not being controlled.  

It’s inefficient;  remember that game where you whisper something in one kid’s ear and they whisper it around the circle… imagine how that message comes out once it goes from you (in English) to your contact, to their contact, to the factory, to the factory owner’s cousin who owns a similar factory to his production line?

Every time I see product recall or safety scare on the overseas news, I wonder if "China produces bad quality, or do folks order from bad suppliers"...   

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