Risk Control While Contract Manufacturing in China

As we know, China is the “world factory” for manufacturing nearly every products. As China has matured manufacturing technology, experienced worker, and supply chain, which manufactures almost the same quality of products like US or Europe companies.

Needless to say, contract manufacturing in China is still the best choice for small and medium size oversea companies in US or Europe.

 

However, it could be a little risk if you lack of experience in working Chinese contract manufacturers. Why? Because there are lots of process from project initiation to goods receiving. Some of companies might think of finding a sourcing broker or the third part of agency to help them. Yes, it could be a good choice. But for most of startups who don’t want to spend more cost on middle man. We can share some experience on how to avoid risk or scams as below:

 

1. Try to find real manufacturer, instead of broker.

 

In China, there are ton of trading companies or individual who pretended to be a manufacturer. Actually they don’t have real manufacturing site. Most of time, a foreign clients would only visit their cooperative factory. In this case, some of brokers might cheated clients with bad quality or even scam. (but most of brokers would not do it like this way). Except for this, a broker might not be control product quality and lead-time as good as a real manufacturer. Anyway, if you are startup or newer to work with a contract manufacturer in China, you are strongly recommend to avoid working with those brokers.

 

When you evaluate contract manufacturers, you should always checkout their company name, business registration license, and factory address that they promoted to you. Making sure they are same, otherwise they might be a broker.

2. Evaluate contract manufacturer’s capabilities

 

Because there are different level of contract manufacturers in China, you should always evaluate the manufacturer’s capabilities before doing business with you. As it will directly determines your manufacturing cost, quality, and lead-time. For example, a large contract manufacturer(like Foxconn, Flextronics, Jabil, etc)  hires high skilled workers, better facility, and better management team.  Of course, those factory will bring their cost much higher than a small manufacturer. But a large manufacturer would definitely deliver higher quality with high manufacturing efficiency than a small one. On opposite, a small contract manufacturer has less manufacturing facility, few workers, and less expense. So they will offer you a better price. But might be good quality?

 

In this condition, you should evaluate the manufacturers carefully before working with them. For a startups, it’s better to work with a medium size contract manufacturer who has enough experience and capabilities to finish your job successfully. If a small manufacturer, you might take your project at high risk because a small manufacturer could be not so professional, less experience, and worse quality control. Normally a professional contract manufacturer should at least have assembly line, mold making shop, injection molding shop, SMT shop, or metal parts manufacturing facility in house. Meanwhile, a quality control department is an essential.

3. Specify your specification and requirement by written documents

After determined working with a contract manufacturer, you should define your product specification, lead-time, quality criteria, and other related requirements. Here below are a useful checklist to follow:

  • NDA and manufacturing contract is a must before cooperation
  • 2D, 3D drawing(defining 3d module, 2D dimension with tolerance)
  • BOM(defining part material, color, finish, quantity, assembly relationship)
  • ECN(any engineering changes will be recorded by different reversion)
  • Quality standard(including Product function, packaging, shipping terms, test methods)
  • Lead-time

4. Control quality by signing Golden sample and review finished sample

 

Even though there are lots of quality control policy and plan, however signing a golden sample to your contract manufacturer is still the most practical and efficient way when controlling your production quality. If any deviation or mistake to happen, you can quickly compare with your golden sample. This is also a good way to avoid excuse when there is a quality issue. Meanwhile, you can request a finished sample to be reviewed before your manufacturer ship the whole lot of finished products. If any defects or mistakes found, you still have time to correct or rework.

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