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International apparel manufacturing and sourcing. If we don't make it, we can find it.

Archive for July, 2010

Product Testing: Navigating the complicated process to success

Tanya Crossman

Tanya Crossman

Last week David Dayton at Silk Road International wrote a post on testing procedures in China. It’s clear that his experiences have been frustrating, to say the least. Testing our products for lead content was a fairly simple matter (relatively speaking!) but in other industries the quality testing can be very difficult to complete.

He gives some good advice on how to improve your chances of getting testing completed correctly.

First, if at first you don’t succeed, try, try again! David’s experiences indicate that testing varies from factory to factory, so if your product fails the testing, it could be worth re-sending to another certified factory.

Three clients switched testing companies after products failed their first round of tests.  ALL three had the exact same products pass the tests after they switched to a different testing company! We pulled and sent all the SAME samples for ALL three clients and mailed them ourselves to the two different testing companies so I can personally testify that NOTHING changed in the samples between tests.  But the results were different—radically different.

If a mistake was made in the testing procedure, many places will re-test for free – but that would mean knowing that a mistake was made, and then getting the factory to admit it. Not easy!

If there are problems with the testing methodology you can get the tests redone for free (at least that’s the policy of the two companies that we’ve been working with).  The problem is, unless you get them to admit themselves that there is a mistake/problem, you’ll never know that maybe you could have either passed the tests or you could have your stuff retested again for free.  This is significant when testing for a single item can cost thousands of dollars.

Another big issue is that many Chinese suppliers do not understand the importance of product testing. With such a range of short cut options available, why pay so much money to test every product every time?

The fact that we are actually testing our own products when suppliers could either buy fake certificates of completed tests (ANY test you want: LHAMA, RohS, CPSIA, ASTM, etc., 1,500RMB) or just change the dates on older tests (“It’s all the same materials.”) was completely not understood.  In fact, the idea that we would be testing and were tying payments to test results made more than one factory very nervous.  We had one back out completely and two others expressed concerns along the lines of, “But we’re not sure if we can control all the materials.  What do we do if they don’t pass the tests?”  Which is precisely the point—you need to “control all the materials.”

David includes a snapshot of their process for getting testing done for products, and holding suppliers to those standards.

For us the processes usually goes something like this.  Contract out with the supplier for the testing sample process—these means that we pay for what is often free, but we get agreements (in Chinese) that we can enforce later when we have to make sure that production matches 100%.  Pull our own samples, send to independent third party testing company, sign new contracts and initiate PO’s with suppliers and then pull, test and repeat.

Of course, a good process doesn’t ensure a smooth run. While they may not understand the need for testing, suppliers understand the investment of time and money in the testing process. This investment, they realise, ties the buyer to them – to their product specifically.

Where it gets really frustrating for us is [when] suppliers realize…they now have the upper hand.  Since they are now “legit” they figure that can raise the price as much as they want (and request copies of our testing results) to release any goods. . .This type of problem is difficult, but usually resolvable; even though getting past these changes and into actual production can sometimes cost a lot (time, money, face, emotion).

What’s not resolvable is when a factory decides that they need to save money (aka: make more profit of this one order) and change either some of the raw materials or change part of the already approved production processes. If either of these things happens when doing both pre-production and in-line testing the supplier is going to get caught almost every time–but it still happens, often  Of course, now the entire production run will be rejected.  And if you didn’t have a fight on your hands before, you most likely will now.

As you can see, the testing process is long and difficult, on many levels. The bottom line is, though, that for many industries this testing is essential. No matter how difficult it is to monitor the process and ensure that what you receive from the supplier really does match the required quality standards, YOU as the importer, will be the one held accountable should there be a problem down the line.

After having gone through this process over the last 18 months with 4 different clients in completely different industries, I would be completely shocked if all the product in the US that is “CPSIA Certified” really is, in fact, certified.  There are just too many tantalizing options for individuals in the process to cut corners and take a huge one-off profit; there are too many people that just don’t understand how important testing standards are; and there are just too many people involved that will NOT be held accountable if, in 5 years, some component is found to not comply with the standards.

What about you? What are your experiences with product testing in China?

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Posted in : Business Ethics, Business in China, Export, International Business, Manufacturing

1 Country, 2 Systems: Compensation for Errors in the Chinese Manufacturing Industry

Danny Coyle

Danny Coyle

Chinese manufacturers know that foreigners do business differently. Some suppliers will try to use the Chinese method, but switch to the foreign method when that gives them a better deal.  Don’t get suckered into a 1 country, 2 systems business relationship.

The Chinese Way vs. the Western Way

As foreigners, we are so quick to think the western way is better, without really understanding the Chinese way.  Understanding the Chinese way helps you manage expectations and smoothes dealings with suppliers.

Delays are part of the game of manufacturing in whatever industry you are in.  Problems happen.  How we (foreigners) deal with those problems is what makes us different.  Not better, just different.

When a mistake is made, westerners generally expect immediate payback. When a problem happens in a Chinese factory, the payback rarely happens immediately. Compensation is not directly related to the problem itself.  The payback usually happens in the long term. While you may expect a discount on the order your factory made a mistake on, that does not always fit the Chinese model and may not happen.

I learned this more than ever last week.  We’ve had a few minor hiccups with one of our factories.  These problems were more annoying inconveniences than setbacks and deal breakers. If I was dealing with a foreign company, I’d probably ask for a discount on the invoice value.  I understood, however, that asking for monetary discounts or compensation on this order was not going to get the point across.  I realized that my payback was going to come on the next order.

Asking for an immediate response in the form of a discount would probably just insult the factory manager, and do more long term harm than good. So I’ll be content for the time being knowing that my return is coming on future orders.

BUT.

A Chinese factory may want to cheat the savvy foreigner over by combining the western and Chinese methods.   What we are talking about here is relationship (guanxi), so on my next order, I should experience an increase in ‘guanxi’.  That means he pushes my order to the front of the queue, or puts a few more laborers on our products and gives my order a little bit more time and attention.

If you are still getting a lack of attention, a high price, or further delays from the factory on the second order, then something’s wrong with the relationship. He took all the benefits of the Chinese way on the first order, and all the benefits of the western way on the second order.

The Conclusion

When the minor annoyances happened, I explained to my staff that we will pick only one way to deal with this problem. We will either do the Chinese way, or the Western way, but not both.  If he wants to give us a discount, great!  And if he wants to give us better service on the second order, fantastic.  But we must have one of those options (and preferably both) on future orders.

For China-savvy manufacturers: don’t let the “1 country, 2 systems” strategy infect your manufacturing processes!

Have you ever encountered a supplier trying to get the best of both worlds, at your expense?
What strategies do you employ when a mistake is made on your order?

Disclaimer:
I read an article that had a few sentences discussing the Chinese way of ‘payback on later orders’ idea on another blog; I think it was on Chinese Negotiation.  After my experience last week with our factory, I decided to write this article but can’t find the exact post I’d like to refer to.

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Posted in : Business Ethics, Business Relationships, Business in China, Manufacturing, Textile Industry

Creating and Enforcing Quality Standards

Tanya Crossman

Tanya Crossman

A quality standard is essential, no matter what you are manufacturing, or where you are manufacturing. Creating a quality standard that accurately reflects your requirements for the finished product is a very important step. Creating that standard is not enough, however. It must be communicated and then, most importantly, enforced.

Renaud at Quality Inspection Blog posted an article last week that is a great rundown on creating and enforcing quality standard for manufacturing, specifically in China.

He gives four steps to help in the process:

1)  Insist on getting a “perfect” sample

2) Define tolerances wherever applicable

3. Set a limit on the proportion of defects

4. A quality standard suffers no exception

The first three steps all happen before production begins. This is important to note. Doing your homework and putting quality systems in place must happen BEFORE you pay a deposit and production begins. Once you have built rapport with a factory over time, this may be less important, but for a new factory or a new product it is essential.

The “golden sample” is much talked about. Manufacturers in China will often produce a very good initial sample in order to clinch an order, knowing that final production will be of a different quality. It is hard to hold the factory to the original sample when final production is half done. Factories know it costs time and money to go back and correct the standard.

In China, and in South-East Asia in General, factories know that sending very nice samples is what helps them get orders. These perfect samples (prepared by experimented technicians who take their time) are usually better that what can be made in mass production.

Renaud’s call to obtain a perfect sample works, however, because of his suggestion for what to do AFTER getting that perfect sample:

You should write a note about what has to be EXACTLY similar to the perfect sample (e.g. the overall outlook, the color, the function, etc.) and get your supplier to sign it.

This technique might not guarantee the factory sticks to the quality of the initial sample, but it is certainly better than nothing, and gives you leverage in any negotiations later on.
Renaud’s fourth and final point happens after production has begun, and quality inspections start. Having a quality standard meticulously outlined is of no use unless it is also enforced. Renaud starts with a hypothetical situation that is all too common in real life:
Let’s say a supplier is late, you negotiate a delay with your customers, and before shipment you notice that quality is less than desirable. You still prefer delivering the products, rather than cancelling the order. So you tell your supplier that he can ship out and that next time should be better. The problem is, the “exceptional tolerance” will become the de facto standard for the factory. Count on them to remember that you can accept less-than-perfect products.
The phrase “count on them to remember” really strikes me. By accepting products below your stated quality standard, you set a new standard. While sometimes the importance of shipping on time while outweigh the desire for top quality, make sure you take into consideration the possible implications on your long term relationship with the factory. Will accepting short term hassles save you problems in the future?
Chinese manufacturers tend to have a “can’t do” attitude after an order production has started. Two of their favorite expressions are “cha bu duo” (it’s off, but not by much, so you should accept it as is) and “mei ban fa” (there is nothing we can do about it now, no need to keep pressing this issue). You should fight their natural inclination. Ask for re-work and re-inspections, even if it costs you 10 days. This type of efforts pay off handsomely in the long term, as long as the factory can reasonable achieve your quality standard.

It’s important to note that final point: “as long as the factory can reasonably achieve your quality standard”. Creating and enforcing a quality standard only works as long as you check out the manufacturer before you begin, to make sure that they are capable of the standard to which you wish to hold them.

Read the full article here.

What tips do you have for creating quality standards?
How have you enforced your quality standard with manufacturers?

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Posted in : Business in China, Export, International Business, Knitwear, Manufacturing, Textile Industry

Building Relationships in a Cross-Cultural Work Environment through Storytelling

Tanya Crossman

Tanya Crossman

I have worked in our company’s Langfang office for two years. Langfang is a small city located halfway between Beijing and the port city of Tianjin.

Most of the staff have never lived anywhere bigger than Langfang; many live in villages outside town. Only one knows how to drive; the rest ride electric bicycles to work. Only one has ever been on an airplane.

The differences between their lives and mine are huge. I used to find those differences intimidating – how could I possibly connect with them in a meaningful way? Of course, as I discovered along the way, there are plenty of ways to connect.


Telling Stories

Storytelling has made a huge difference in my relationships with Chinese co-workers. I often feel awkward – afraid to step over cultural lines of propriety.  I’ve found that telling stories, however, softens them toward me as a person and encourages them to share their own stories in response.

One of my go-to conversation topics is family. I love my family and am proud of them – just like the ladies I work with. It doesn’t matter that my family lives in a different country and speaks a different language. When I talk about my sisters – what they’re doing, how proud I am – my co-workers listen and engage. This is something they understand.

Photos

Another tool I’ve used in building a friendly rapport with my Chinese colleagues is photos. The saying goes that “A picture paints a thousand words.” While I might be able to accurately describe a picture in a thousand English words, my Chinese is far from that level of eloquence. Photos also encourage questions, opening up interesting conversations about cultural differences. Photos I brought to work after returning from a wedding abroad, for example, began an interesting conversation about wedding traditions in different places.

My two goals in these storytelling endeavors are to focus on what our cultures have in common and promote understanding of the differences.

A story from my father’s first visit to Shanghai in 1983 illustrates this nicely. Seeing a mother with a young child, he took out a photo of me, indicating that he was also a parent. The photo soon made its way around a huge crowd of onlookers up and down the Bund! Their children looked different, but the role of a parent is universal – a shared similarity and a chance to understand differences – resulting in a moment of connection still remembered decades later.

I believe that this sort of storytelling has helped me be less the odd-foreigner-out. Instead, I’m just another person on the team.

What are your tactics in bridging the cross-cultural divide?

What stories do you have of positive cross-cultural interaction?

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Posted in : Business Relationships, Business in China, International Business

Interview with Steve Crandall: SME business in China

Tanya Crossman

Tanya Crossman

Technomic Asia’s China Business Podcast posted a great interview with Steve Crandall this week. The focus is on SMEs working in China, and Steve shares some good insights.  Listen to the interview here.

Steve comes to us with a long history in China, starting in the 1980s when he was a student here.  Steve went on to set up the first foreign owned car dealership in China when he set up Crandall Ford up in Tianjin (Steve comes from several generations of Ford dealers back in Ohio).  He then went on to start up several manufacturing and sales operations for SMEs in China, incubating them until the client was ready to take over.

Here are some highlights from the interview:

About the “China market”

  • China’s population numbers alone don’t tell you what market you could sell to
  • There is no “China market” – different regions act differently
  • This means opportunity – one market might be unaccessible, while another is open

Being successful elsewhere may not transfer to China

  • Just because you did it “this way” in your home country, doesn’t mean it works that way in China!
  • It’s important to think things through rather than relying on your “gut feeling”
  • Be aware of the different culture, including when you put together a team – what you need may be different
  • Understanding the language is not enough – must understand the cultural understanding behind it

SME vs Big Business

  • Both are facing the same problems (cash flow, IP, complicated situations) but SMEs have less resources to deal with them
  • SMEs should take a phased approach: start small and once you succeed, add another level
  • Building excellence is not enough – “build it and they will come” does not work
  • Anecdotes and individual stories don’t give you the full picture
  • Be humble – build a good staff and lean on their understanding of China to inform your decisions

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Posted in : Business in China, Entrepreneurs

Emotions and E-mails: Maintaining Good Communication in Long-Distance Business


Danny Coyle

Danny Coyle

With our headquarters in China and our customers overseas, face-to-face meetings are virtually impossible. Therefore, the main lines of communication are e-mails and phone calls, leaving a great deal of room for miscommunication.

Here are a few communication lessons we’ve learned:

1. Email is best for facts. If it needs a lengthy explanation, pick up the phone.

We find that if the explanation can be given in a few sentences or bullet points, e-mail works great. This method saves both time and effort in communicating. However, when the details are based on opinion or need a lengthy explanation, too much information is left open to interpretation. At this point, it is best to pick up the phone, which ultimately saves both time and effort.

2. Learn to read the emotions in an e-mail.

An important skill is reading the emotions of your customer (or supplier)—recognizing, for instance, when they are getting frustrated or are not understanding your details. If you can pick up on these nuances, you can save yourself—and them—future problems or setbacks. Also, if you sense they are getting frustrated, pick up the phone.

3. When emotions are hot, only use e-mail to establish understanding of the other side (not to defend your position).

When a customer or supplier is already angry, it will be difficult for him to see your side of the situation. When the other party is angry, e-mail (as with any other communication tool) should only be used to understand their point of view (by asking questions, clarifying, etc). Don’t try to defend yourself (it will make matters worse). First try to understand. Then, having established understanding, you will have a better idea of how to proceed. And then, remember point one—try a phone call!

A quick story of how these skills have paid off for us.

We hired an independent consultant for a job. Things started out well (via phone, actually), but as time progressed, we kept having trouble communicating expectations (via email). We came close to firing the consultant because the exchange of e-mails was starting to spiral out of control. Emotions ran high, tensions rose, and trust was deteriorating. We decided not to continue the discussion by e-mail, but instead to wait a few days until our next scheduled phone call. By that time, emotions had settled somewhat and we could speak in a more matter-of-fact way. We presented our expectations, he accepted responsibility for his mistakes, and we were back on track again. Just hearing his tone of voice told us that emotions and e-mails had caused the situation to seem like a much bigger deal than it really was.

Be the leader in your business relationships. If communication is breaking down, avoid taking the easy way out. Instead of shooting back an email in the hope he’ll see it your way, pick up the phone and deal with the situation effectively.

How do you maintain clear lines of communication with business partners in different places?
How do you prevent emotions from muddying the waters?

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Posted in : Business Relationships, Business in China, International Business

Rising Labor Costs in China – How it Affects Manufacturing Exports


Tanya Crossman

Tanya Crossman

There’s been a lot of talk around the world about rising labor costs in China. There is no longer an unending stream of workers prepared to accept the low wages which sufficed in previous decades.

Factories are offering better salaries and improving working conditions in order to entice the workers they need to fulfill production, and still coming up short. These additional costs are being passed onto buyers abroad, and therefore a “Made in China” tag is more expensive than ever.

Here’s a few articles on the subject that we’ve found helpful:

How Rising Wages are Changing the Game in China (BusinessWeek)

Doesn’t China have an inexhaustible supply of cheap labor? Not any longer. From the textile and toy factories of the south to the corporate headquarters and research labs in Beijing and Shanghai, the No. 1 challenge today is finding and keeping good workers. Turnover in some low-tech industries approaches 50%, according to the Institute of Contemporary Observation, a Shenzhen labor research group. Guangdong Province says it has 2.5 million jobs that remain unfilled, while Jiangsu, Zhejiang, and Shandong provinces say they, too, face shortages of qualified workers. “Before, people talked about China’s unlimited labor supply,” says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences in Beijing. “We should revise that: China is facing a limited supply of labor.”

This is not all bad news. Yes, it means the costs for companies exporting are going up, that international buyers will have to pay more for goods made in China. It also means, however, a strengthening of the domestic market. There are opportunities for those importing to and selling in China.

We here at Imports Oriental are very pleased to see worker salaries going up. It may not be good for the bottom line of exporters like us, but it’s good for the workers we all rely on. Factory workers are not as expendable as they once were, which should raise their value and result in better conditions. We’re glad to see the people of China gaining a share of the wealth being created here.

Made in China Remade (Project Syndicate)

Rising labor costs are inevitable. China’s government introduced tough labor laws and a minimum wage in 2008. Recent policies to improve rural economic conditions have slowed the flow of migrants from the countryside. Workers are demanding higher compensation to match the fast-rising cost of living in China’s cities, as manifested in an ongoing and high-profile labor strike at a Honda plant based in Guangdong. Salary was the major point of contention.

One of the reasons for the labor shortage is that some people who once would have traveled to the city to seek work are staying closer to home in the interior provinces, as opportunities are growing there. We’re also glad to see this – it means fewer families split in half, with parents working in the city and children staying back with grandparents to attend school, seeing their parents only once or twice a year.

In a macro view, changes that improve the lives of workers here are good for the country as a whole and, we believe, for those of us who engage in business here.

China’s Rising Labour Costs (Euromonitor International)

The Chinese work force now varies between highly-skilled technical workers and low-level manual labourers, ensuring that all types of labour requirements can be met. This has allowed China to become a major manufacturing centre, with products ranging from textiles, to basic manufacturing and high-end electronic goods.

Manufacturing in China is maturing. While price is one of the major reasons companies choose China for their manufacturing needs, it is not the only reason. Countries such as Vietnam, India and Bangladesh, to name a few, also provide low-cost manufacturing, yet China remains the location of choice for many businesses. China has more to offer than cost.

Rising Labor Costs In China (Fibre2Fashion)

China possess high skill level, and quality fabrics. The country has good familiarity with the American retailers. Whilst these factors are beneficial to them, high import duties, and rising labor costs does not favor them from the views of apparel manufacturers. . .China might not lose its manufacturing base owing to its huge domestic market, but there may be a perceptible shift towards high-end goods.

Other countries may undercut on price when it comes to low quality garments, but China is still the place to source high quality items on a budget.

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Posted in : Business in China, Export, Manufacturing

A Beginners Guide to Manufacturing Knitwear in China – Peak Season: Part 2

Danny Coyle

Danny Coyle

Steven Weng

Steven Weng

In part 1 we looked at the three main areas of knitwear production (sampling, yarn dyeing, and knitting) and the delays often encountered during peak season. Now let’s take a look at some other ways that knitwear orders are commonly delayed, and some ways to keep your order on track.

(For points 1-3, please see part 1)

4.  After Service

After care includes a range of services such as washing, ironing, inspection, labeling, and packaging. Each of these after care processes is important for adjusting the hand-feel, size measurements, and minimizing defects. For small factories, these steps will be done at a different location to the knitting process.

Many of these after-service factories are linked with the output of the knitting factories. They can usually scale their production up and down quite easily since the processes are less technical and less time-consuming. This means you are less likely to get stuck in a queue behind other orders being processed.

The main reason delays occur at this point in the process is when accessory suppliers nominated by the customer are slow to deliver. After-service accessories for knitwear products include care labels, hang tags, polybags, and outer cartons. If the accessory supplier does not deliver the pieces in a timely fashion, the entire order will be delayed. For this reason it is extremely important to think ahead when planning your order.

These minor pieces can easily be left to the last minute since they are such a small part of the order.  However, entire shipments can be rejected because of minor problems with these accessories.

5. Small Quantities

The dyeing factories are so busy during the peak season that they are often unwilling to waste time on small jobs. For dyeing yarn, you may need to accept a color from the factory’s range of stock yarn colors, or face being shunted to the back of the queue.   For knitting, it may be best to wait until the busy season has finished.  The factory will be more likely to process your order quickly, and he will be happy to get an order when there aren’t many orders in the market at that time.

6. Customer Approval

If a customer falls behind schedule on his approvals, so will production.  This is common sense, but something to plan for when schedules are put together. Make sure to allow enough time for samples to be sent wherever they need to go and add a few days extra since the customer may want to send you something back that is closer to the handfeel, color, or style that they are looking for.   It is rare that the samples will be totally confirmed on the first try.

7. Chinese Holidays

The busy season for knitwear is not during the major Chinese New Year holiday, so you won’t have to compete with other orders and a difficult holiday schedule at the same time. If you are doing production during the slow season, however, this is a consideration to keep in mind.

The Solution

1.  Get in early

The most important thing is to place your order well in advance. This will put you toward the front of each queue and lower the risk of significant delays. The downside, of course, is that it requires you to be well prepared well in advance.

Negotiate the details of the order long before production needs to begin. Three things should be sorted out right at the beginning: approval of the prototype samples, price negotiations, and quality specifications. (The lab-dips, PP samples and accessories can be approved later, when production is ready to commence.) When these three things are settled you need to confirm the order. A deposit payment will usually be required at this early stage to guarantee your place at the front of the queue.

Manage the process

When it comes to scheduling during the busy season, pay close attention to each phase of production (see part 1 for more details on these processes).  After-service still requires attention to the scheduling, but not nearly as much as knitting and yarn dyeing.

Plan for delays

Some of these delays are inevitable and unforeseeable.  The best way to solve them is to plan them into your production schedule from the very beginning or hire someone who is familiar with the problems you are facing. Understanding that you will face delays – where in the process they will come and how long they will be – will help you to create a production schedule that can stay on time.

Planning ahead gives you the luxury of time. If you expect and plan for delays they won’t be so stressful when they (inevitably) happen.

Imports Oriental has great contacts, good guanxi, and a wealth of experience in dealing with these delays.  If you need assistance navigating your orders through these murky waters, please feel free to contact us.

4 Comments

Posted in : Business in China, Knitwear, Manufacturing, Textile Industry

15 Warning Signs That Your Business Sucks

Tanya Crossman

Tanya Crossman

This week we have been thinking on an article by Neil Patel over on QuickSprout called 15 signs that your business sucks.

An attention-grabbing headline, and the content keeps your attention. As Neil states at the beginning, there is no exact science to tell you whether your business will succeed or fail, but he brings up 15 factors that contribute to the failures of many start-ups.

1. You’re not making a profit
2. You haven’t talked to a potential customer
3. You don’t love what you do
4. You can’t take criticism
5. You don’t care about your customers
6. People don’t talk about your company
7. You’re not agile enough
8. You aren’t cheap
9. You don’t know when to spend money
10. You don’t have a good lawyer
11. You hate to delegate
12. You keep on making the same mistakes
13. You hate taking risks
14. You’re on your first business
15. You can’t focus

I’m sure any business out there will find a few areas from this list that could use some attention. We certainly found a few that apply to us.

Do any of the items on Neil’s list ring a bell for you?
What other factors do you think are important in running a successful business?

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Posted in : Entrepreneurs

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