Over our over ten-year experience of sourcing in China, we have come across some manufacturing nightmares that have happened in China. Here are 6 common mistakes we want to share with you.
1) Picking your partner based solely on price
This is by far the most common and most disastrous mistake we see. And it’s easy to see why. In a world where incremental margin shifts can literally make or break profitability, it’s important to be price sensitive. But it’s also important to be price-savvy. Extremely low prices should generally serve more as a red flag than as an enticement. Cheap prices are often accompanied by cheap products, unresponsive vendors, or defective or hazardous materials. This is what many jaded entrepreneurs and small business owners have termed as, “The China Cost of Doing Business.”
2) Failing to verify your partner’s experience
When searching out a knowledgeable and reliable sourcing partner, be sure to do your due diligence. Ensure that your partners speak Chinese fluently and maintain facilities there. Check with other importers or trade associations in your industry. Ask to speak with some of your sourcing partner’s other clients.
3) Believing that a Chinese contract holds the same weight as an American contract
Similar to mistake #1, this blunder generally occurs when an eager customer tries to lock in a cheap price or tries to save money by circumventing a middleman and dealing directly with Chinese factories. We regularly see Chinese suppliers commit to unrealistic prices in order to secure a deposit. Once a customer has committed, the price goes up. Unfortunately, many such customers not only face losing their deposit, but they also lose critical lead time and risk losing valuable assets such as moulds or machinery. In such instances, there is very little legal recourse for the customer.
4) Expecting that things will run smoothly
Every project has its unique set of challenges and opportunities that need to be anticipated and dealt with accordingly. By recognizing and accepting the reality of occasional hiccups, you will be more apt to seek out partners that will actually navigate and resolve issues instead of abandoning you at the first sign of miscalculation or trouble. With more than a decade of experience in China sourcing, we have learned to eliminate many of the pitfalls in sourcing and manufacturing—but there are invariable challenges that arise no matter how much experience or preparation you have. Experience has shown that it is exponentially more important to plan for obstacles and avoid them, than to expect that they will never arise.
5) Assuming that the end product will match the prototype
A less common but equally disappointing mistake occurs when businesses ship off prototypes or mock-ups to Chinese manufacturers and assume that the factory or sourcing partner will be able to replicate everything to a T. The reality is that anytime a product makes the transition from prototype to production; there will be differences in the final product because the manufacturing processes are different than the prototyping processes. Each manufacturing process involves unique advantages and limitations. For instance, injection-molded parts will have injection gates on the parts—it’s simply part of the process. Conversely, milled parts have no gates. Milling is often used in prototyping whereas injection molding is used for large-scale manufacturing. By choosing a partner that shows sensitivity and awareness to such differences, you can work collaboratively to select processes that are both feasible and economical.
6) Assuming that your partner will honor their estimate
This mistake is similar to mistake #3 in that, as a customer, you have very little legal recourse when it comes to Chinese vendors, contracts, and estimates. Certainly, you can always take your business elsewhere, but, as discussed earlier, there are often serious drawbacks and repercussions associated with pulling out after you’ve committed. The best option is to choose the right partner from the outset. Even if your product must ultimately be outsourced by your partner, the right partner plays a critical role in maintaining leverage over the supplier. Not only will a quality partner have established contacts with reputable manufacturers and suppliers, but those companies will also have much more to lose than just your business if they renege on your contract or unjustifiably alter pricing.