China Risk Management - China Import Services

You will get burnt in China if you don't get involved in your manufacturers quality management systems- we are serious!
A factory quality management system includes a range of activities: most importantly, having quality control systems and inspection procedures to test the performance, features, reliability, serviceability and the perceived quality of a product. Whilst there will inevitably always be quality faults, these can be kept to a minimum through good practice and inspection. In Chinese factories, quality management varies from highly sophisticated to poor and non-existent.

Quality issues
Picture: Human errors in the production supply chain can be intentional, or inadvertent; caused by misunderstanding, forgetfulness, inadequate skills, slowness, non- supervision or surprise. What predictable errors do you think may occur in this production line?

When making the decision to have your goods developed in China, you need to have a clear understanding of the factories’ quality management processes, and put in place additional checks and measures to oversee these processes. It is not sufficient to rely on your supplier to ensure quality standards.

Quality management tools you have available to you include: risk management plans, inspections, contracts and warranties, insurance and testing – all of which should be undertaken whilst in China. The trap most importers fall into is assuming this is their supplier’s responsibility, or relying on their supplier to manage these issues. Importers also face the challenge of remotely managing these quality issues, and are confused about what is necessary and what is not, usually traveling to China at the completion of a production run to undertake an inspection themselves.

By outsourcing your quality management oversight, you will improve the likely saleable quantity of your goods. China Blueprint provides on the ground support in China and Australia. It’s like having your own team of eyes and ears on the ground.

Picture: The following pie chart shows how China Blueprint services have the potential to improve your sales volume. By putting in place a quality management system, you potentially could be increasing your saleable volume from 60% to 95%. If your profit on 10,000 units was $10each, and you could only sell 6,000, your profit margin would be $60,000. Whereas if your saleable items were 95%, your potential profit would be $95,000.

The primary problem with Chinese manufacturing operations is that many factory managers rely on their workers and department leaders to manage the details of the actual work. Their organization structure is usually flat, rather than functionally organized, causing each department to operate independently rather than cooperatively. Chinese department managers are more focused on meeting deadlines than finding new or improved ways of doing things! This is why communications from the buyer are so important. If undertaken effectively, they can fulfill the missing role of operations manager. Many importers do not understand manufacturing operations, nor perceive them as overly important. Lisa Goodhand

Price advantages in China come, in part, from low labour costs. This increases the risk of quality issues, as many factories do not have quality management practices in place to inspect the final products. To be successful, importers need to adopt, and integrate into their import strategy, quality management systems to oversee the production and final completion of their goods. China Blueprint is experienced in this field, and works with you to put these checks and balances in place and find solutions when problems arise.

If you are facing a China challenge or wish to start a new China based project, then speak with one of our expert consultants to find out how we can help you.

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