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Developing a new product is always a challenge, but much more so when samples and prototypes are manufactured on the other side of the planet. This is one, of many reasons, why the product development process is a true minefield, riddled with potential disasters, and the top time killer for small businesses, outsourcing production to China, and other Asian countries.
In this article, we explain how Chinese manufacturers operate, and how this has a direct impact on how the product development process must be managed. We also explain why you should never rely on your OEM manufacturer to manage the product development procedure for you. Keep reading, and learn how to avoid some of the most common, and disastrous, mistakes made by importers during the most critical phase of the whole importing procedure.
#1: Making a Supplier Selection Without Prior Qualification
In a perfect world, suppliers can be divided into two categories: ‘The good’, and ‘The bad’. But in reality, it’s not all that simple. Instead, I see suppliers as divided into three categories: ‘The good’, ‘the bad’ – and suppliers which are ‘good’, yet not technically qualified to take on the project. The latter category is the one I’ll shed some light on here.
What makes a ‘good manufacturer’? They are, at least able to deliver on time, and of course manufacturing according to the buyers technical specifications. That said, a manufacturer can be great at what they do, but just not able to manufacture an item according to your product specification. To a varying degree, manufacturers are always specialized.
As such, a manufacturer that is really good at making cheap polyester shirts, may not be a wise choice when what you need is organic Oxford cotton. I keep saying it, but product development always begins with a clearly defined list of technical specifications. Without it, you cannot decide on the factors of which a supplier is to be judged as qualified, or unqualified. Indeed, compliance with applicable regulations (e.g. FCC and CPSIA) in the target market is another factors of which the supplier selection shall be made – perhaps the most important of them all.
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#2: Relying On the Supplier to Fill in the Specification Gaps
There are many things that really bugs me in this industry. Being far away from old friends and family for large durations of the year is one thing I put on that list. But if I have to choose one thing that frustrates me the most, then it’s clients expecting us, and the supplier, to magically turn their vague visions into a physical product.
Chinese manufacturers don’t employ psychics – they just can’t read the buyer’s mind. Yet, so many purchasers drop a PDF file with a few images and bullet points, expecting the supplier to somehow ‘sort out of the rest’. In other words, develop the product for them. This is not the way things work. Chinese manufacturers are, as it may sound, manufacturers, not product development agencies.
It’s not their responsibility to put in the time and money required to turn your concept into something that can be sent down to the men and women down on the production lines. That responsibility is yours.
Chinese manufacturers are entirely accustomed to manufacturing products according to the buyer’s specifications. So, what is needed to produce an item? Take clothing, for example, the following is needed:
Design drafts (including dimensions per size, parts, labels, print areas)
Oh, so you didn’t bother to specify that the washing label should be 20 x 42 mm, folded and centered in the neck? This happens all too often. No, the supplier is not ‘supposed to understand’. It’s entirely up to you, as the importer, to properly specify everything that defines the products design and quality. Leave something out, and you essentially force the supplier to make a qualified guess. Based on my own experience, this is the biggest reason why small to medium sized businesses run into severe quality issues in China.
What if a Chinese supplier took on extensive product development work from anyone who sent them an inquiry? First, it would force them to hire a whole team of product developers, which is all but free. As a result, they would be forced to increase their prices. The buyer, now supplied with a finished product design, starts wondering why this supplier is a dollar or two more expensive than their competition, and takes the design to the next best supplier. The one not burdened by offering free product design services. It doesn’t make much sense at all, does it?
So, is this saying that Chinese suppliers are entirely operating like robots? No, most are more than willing to answer the questions you need answered in order to complete your product specifications. Many are also able to add their “final touch” to your designs (e.g., revise dimensions on a CAD file), but they will never make the design for you. Supplying incomplete, or vague, specifications are the safest way to shoot down any project. Yet, I see this happening on an almost weekly basis, by businesses of all sizes.
#3: Basing a Design on Specifications the Supplier Can’t Reach
As important as a comprehensive specification is, it may be worthless if it’s not based on what the supplier can actually comply with. As such, you must be somewhat flexible in terms of design, dimensions, components and materials. Take a fabric for example. What you really wanted was 96% cotton, 4% lycra. However, the supplier is only able to deliver a fabric made of 98% cotton, 2% lycra. Minor difference, one might think.
That said, before you send a specification that goes into production, you need to get clear confirmation from the supplier, on whether they are able to comply with all of them. If not, which are the exceptions? What can they offer instead?
Another thing to consider is product customization. A product can be customized to a varying degree. You want to make a customized wristwatch, based on your own case design, but is it really that necessary to have the crown, strap and hands customized? It’s not rocket science to make OEM parts, but it does increase the tooling costs – which the buyer is expected to pay.
You need to find a balance somewhere in between buying a product based entirely on the suppliers design, and one based entirely on your own. First, you need to decide on which components must be based on your own OEM design, and which must not. Again, let’s take the wristwatch as an example. This is what an ‘open ended’ specification may look like:
Watch case: OEM design
Case backplate: OEM design
Clock face: OEM design
Glass: OEM design
Crown: Factory standard part
Hands: Factory standard part
Movement: Factory standard part
Strap: Factory standard part
#4: Betting on Just One Supplier too Early
Making an informed supplier selection, prior to engaging in a product development process, is a pre-condition for a successful outcome. Yet, checking company data, and buyer references, will only take you as far as to provide you with enough of a basis to make that initial supplier selection. What you cannot be certain of, is whether the supplier is truly able to deliver on your quality requirements before you have a physical sample in your hand.
A very common mistake made by importers is to place their bet on only one supplier, before a first prototype has been realized. When later turns out that the supplier is indeed unable to comply with said quality requirements, it’s already far too late. The buyer has, at this stage, invested time and money on one supplier, that simply is not qualified to manufacture the item ‘the way they wanted it’.
A few years ago we ended up exactly in such a situation. A buyer decided to only contract the sample production on one manufacturer. On paper, everything looked great, but as time passed – and one batch of samples became four – it was painfully clear that this supplier just couldn’t comply with the buyers quality requirements.
That time it regarded textile products, and somehow they couldn’t get the material, seams or embroideries right. In the end, we were forced to drop them and start all over – after wasting almost 6 months, and thousands of dollars on a supplier that was not qualified from the very beginning.
So, what should have been done differently? Never make a final supplier selection too early. Instead, order product samples, regardless of whether you develop an OEM or ODM product, from at least three to five suppliers. Considering that at least half of them are likely to fall out at this stage, you need as many cards at hand as possible.
Indeed, ordering samples from several suppliers simultaneously is more costly than buying from just one. However, the benefit of being able to move on, even if most suppliers fail at this stage, is immense – to any company developing products on a tight schedule.
The Bottom Line
Chinese manufacturers are essentially to be considered as workshops. They provide the labor, machinery and (hopefully) the technical expertise required to manufacture your designs. That said, it’s not their job to actually design the products for your company. As such, the product specification is to be provided by the buyer.
Yet, even the most comprehensive specification is of little use, unless it’s tweaked to match the manufacturers actual capabilities, which in turn is based on their ‘in house’ resources, and materials / components offered by their subcontractors. Always work together with the supplier to ensure which parts of the specification they can reach, and what must be adjusted.
Last, but not least, work simultaneously with at least a handful of suppliers, and avoid making a final selection, until you have satisfactory prototypes on your office bench. Good luck and good hunting!
Free Consultation (30 Min): Ask Questions About the Importing Process
Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
Hey there, I’m Fredrik!
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