Archive for the ‘China Factory Visits’ Category

Why are the First Impressions of your Factory Visits in China very Important?

Immediately after arriving at the factory, you begin taking in information about how well it is or is not run. Of course, this is only the first impression but this is where the whole picture begins developing.

The Front Gate

Some larger factories have uniformed guards at the gates. Often the uniforms are nearly perfect replicas of the police. I mention it here because this can lead to confusion or a misunderstanding that the factory is involved with a police incident.

If you do not see any guards or only a single lonely guy guarding the entrance, you can bet that the factory is not paying much attention to security or wants to save money.

Finding waste material near the entrance area it is an indication that factory management is not concerned about cleanliness and tidiness. It can also indicate that they have not many customers visiting. Otherwise, the area would be cleaned up on a regular basis.

The Factory Grounds

You should be also concerned if you see finished goods stacked outside the factory building, especially if the goods are not even covered by a roof. The Southern China costal area is prone to frequent showers and you do not want your goods loaded into a shipping container with a wet outer carton.

After 4 weeks in the container, most of the products will be nothing but garbage. I am not exaggerating. Unfortunately, I have seen many such scenarios, which is why I mention the subject. To be clear, I am not talking of goods in the process of being loaded into a container but about goods that are being stored outside.

It is not just rain that damages unprotected goods. Sunshine bleaches the corrugated cardboard material and high humidity will soften it.

If you find both a lack of security and weather battered goods, you may already have as much information about the factory as you need.

Entering the Factory

Your next impression might be a surprise if you find that the factory is much smaller than expected. You could also find that the factory buildings are in a very bad condition. An indication that the factory lacks funds to modernize.

You can expect the guard to alert management of your arrival and somebody should be sent to pick you up. If that does not happen and they let you stroll around the factory area without anyone’s attention, it is another sign of poor management.

Some factories are very large and you will definitely need assistance to find the management office. The better organized and large factories have a separate reception desk to welcome visitors. You will sign a guest register and be given a visitor’s identification badge.

It should not be normal procedure for visitors to wander around the factory unaccompanied. If somebody visits your home, you would not appreciate finding him or her coming and going from you rooms without your knowledge.

The front desk staff can communicate in English. Normally, the larger the factory, the better the command of English. Once you are registered, the receptionist will contact the management office to send somebody for you.

Remember some factories cover an area exceeding 100,000 square meters. Without assistance you will be lost in no time.

If the factory is really well organized and experienced at receiving visitors frequently, everything will work like a breeze. They may even have a welcome sign on a reader board with your name and your company’s name on it. Something like a small marquee. Take a moment to admire and praise it, which will please your hosts. Taking a photo of it would be even better.

The Showroom or Conference Room

Your next stop will probably be the showroom or conference room, take your time to observe how the office is organized. If there are many empty cubicles, it is an indication that either the factory does not have enough employees or it is lacking in purchase orders.

You can also see whether the employees are playing computer games or chatting online. Hopefully they are really busy with purchase order related work. Of course you are not visiting the factory as their supervisor but it is always good to study as much as you can for your own good.

After a few factory visits this will all become routine for you.

Multiple Factory Visits in China will Save you substantial Money

For economic reasons and to collect more information it is advisable to visit several factories in the same area during you trip.

Gaining Competitive Knowledge

Factories keep track of details about their competitors due to the frequent change of engineers and managers. They usually stay in contact with previous colleagues and know exactly what is going on in their old factory long after they have left.

Over the years, you will receive frequent invitations from factory managers that have moved to new factories and want to regain you as a customer. It is often a good chance to obtain better prices as an incentive to buy from them.

You can only determine a factory’s quality and capacity by visiting the new factory and properly evaluating it. Keep in mind, a new factory manager can turn an inferior factory around, but you are better off waiting until that has happened before placing your purchase orders.

Start Planning You Travel Time in China

It can be tempting to invite managers from several factories to meet with you in the comfort of your hotel. However, it makes much more sense to visit your suppliers at their factory. You need to meet the full factory team and survey the operations.

China is a vast country. You will want to visit several factories in the region you are visiting. It is common for people to underestimate the travel time between their hotel and the factories as well as from one factory to another. Here are some general travel times for you to use as you begin planning a trip:

Greater Ningbo Area

After arriving at the Ningbo International Airport you can expect at least another 1 hour by car to reach your first factory. Take this in to consideration so that you do not waste precious time in a car. Further on, I will give you some tips to maximize the use of your travel time. Car travel is generally the only way you can reach factories in this area.

Foshan/Shunde Area

This is another industrial area, which is located in the Southern China Guangdong province. You can reach it conveniently by ferry from Hong Kong. Upon arrival, you still need to ride 30-45 minutes by car to reach your first factory. Knowing that the ferry takes 2 1/4 hours lets you easily calculate that it is impossible to visit more than 2 factories per day if you want to evaluate them thoroughly.

Since travel occupies a lot of your time, it is advisable that you make enquiries with each factory ahead of time. Learn their exact locations and ask for scheduling suggestions. Following their suggestions will save substantial travel time that is better spent in meetings and evaluating the factories. Another tip is for you to ask the factory to arrange for your ground travel including onward travel to the next factory. They are usually happy to accommodate you.

How to make the right Trip Preparations for your Factory Visits in China

Thorough trip preparations help you improve your chances for a successful visit. Although it depends very much on the main goals of your visit the following general preparations will fit most of them.

Will the Electricity Be On During Your Visit?

Chinese factories are forced by the government not to use electric power one or two days per week. This government imposed outage rotates between industries and factories during the week (including Saturdays and Sundays) because demand outstrips supply. Heavy penalties are imposed if they break the rules. Most factories have purchased electric power generators to overcome the shortage thereby avoiding production interruptions. Still, be sure the power will be on when you visit or you will not be able to see production operations first hand.

Business Cards are Critical!

They are lightweight and can be used long after your visit to China so bring considerably more than you would normally think is necessary. In China everybody expects you to give him at least one business card and if you are meeting with several people, you may handout a dozen or more at a time.

About Cell Phones

I suggest you check with your cell phone provider at home to see if your phone will work in Hong Kong and China. Give your cell phone number to any supplier that you prearranged to meet.

The call charges to Mainland china are very high and many visitors buy a SIM card from a China Mobile retail outlet upon arrival to reduce phone costs. The call charges in Hong Kong are cheaper but you can also buy a SIM card from one of the local service providers.

You Will Need a Digital Camera

A digital camera is one of the most important tools you will need during your visit. You will have many opportunities to shoot photos of products, production operations, and quality control operations. These will include close-up photos from details which cannot be seen in a catalogue. Do not forget to bring a spare battery with you because you probably will not have a chance to recharge the battery while traveling between factories. You may also need another memory card if you do not have already one of those 2-5 GB cards in your digital camera.

You Need a Notebook Computer

If you have a notebook computer, bring it to every meeting. If you do not have one, consider purchasing one. That purchase will be worth the money you spend for it.

Your notebook computer provides you with the necessary information for your business negotiations, plus allows you to show background information about your company, and the packaging concept for your products. You can also input vital information during your discussions without the need to take hand written notes. At the end of each day you can send this information together with the matching photos to the head office.

Colleagues at home can in that way interact and ask for additional information if something important was missed.

I suggest a large capacity battery for your notebook computer. One that lasts up to 6 hours or more. If that battery type is not available for your model, bring another fully charged battery along.

Your Company’s Catalogue

If you have your own company catalogue, bring a few sets along with you for the meetings with your suppliers. From my experience, it makes a good impression and helps to cement the relationship with your supplier if you hand over one set during the most important meetings. Remember you are your company’s ambassador and want to show your company in the best possible light.

Your Corporate Identity Artwork Concept

Creating your own corporate identity concept is very important. After spending a lot of effort on it at home, it would be a very good idea to bring it along with you to show it to the suppliers during your meetings. It enhances the impression you make and helps suppliers better understand your needs.

Sketches, Drawings, and Photos are Perfect Tools to Inform Suppliers

You should also bring along any sketches, drawings, or photos clarifying what you are looking for from your suppliers. Sometimes suppliers will tell you where you can find products and help save a lot of time.

Your Specifications

What is a specific requirement? A specific requirement could be a more complex sales packaging or an instruction manual in several languages that are often needed for Europe.

For electrical products, the plug is a substantial cost factor. The British BS plugs is more expensive than the US plug.

Quality Requirements

Your quality requirements are a very important cost factor. The requested quality standard is defined by your requested Acceptable Quality Level (AQL) that sets the limits for the satisfactory process average.

License and Royalty Fees

Other important cost factors are license and royalty fees that have to be negotiated with certain suppliers. DVD players/recorders, MP3 Players etc. are examples.

Your Shopping List

To avoid being distracted, you have to prepare your shopping list of the products you want to source. This list should include at least the following details:

  • Product description
  • Target Fob price in US$
  • Quantity of the first shipment
  • If possible an estimate of your yearly quantities
  • Requested earliest delivery date
  • Destination port
  • Packaging information of other than standard
  • Number of samples needed

What are the Major Reasons for Factory Visits in China?

You are having quality and/or delivery problems and want to know what the root cause is. You will also want to know if the problems have been satisfactory resolved or if it can be resolved before it costs a lot of profit or time.

The reasons and solutions given by factory management may not be the full story. In fact, the biggest problems may not have been identified to you at all. There could even be a cover-up going on. You want to get these resolved in short time. Visiting the factory to directly apply your skills, digging deeper is often the best answer. This is a good time to bring your own interpreter along. You probably want to talk directly with the factory’s engineers. They often have the best background information and possibly already know the best solution.

Negotiate Terms and Prices for New Large Volume Orders

If you are placing large volume orders, most likely you visited this factory this factory before and know their background.

When you have large volume orders in your hands, you have stronger bargaining powers. Factories like large volume orders for several reasons. For one, they can buy raw material and components at reduced bulk prices. A long production run means less frequent production line changes. Also, tooling costs can be spread over the larger quantities.

Once the goods are engineered and in production, it means less engineering effort is needed. Often, long production runs reduce the frequency that production workers need to be trained how to manufacture new products

Keep this in mind during your negotiations.

In my opinion, this is one of the few opportunities to negotiate better terms and pricing. While still remaining competitive with other factories, the fact is increasing costs for raw materials and components makes negotiating the price for smaller order quantities difficult. Another fact to keep in mind is these same increasing raw material and component costs mean the factory will not place orders with their suppliers until your L/C is received. However, in exchange for the large order they will pass some of their cost savings on to you.

As an importer, you are liable if something happens with your products. If it comes to a legal battle it is essential that you can prove to the court that you took all necessary precautions, including evaluating the factories on regular basis.

It is just as an important task as inspecting goods before shipment and inspecting them again upon arrival at your warehouse.

How to Inspect Manufacturing Areas during your Factory Visits in China

Would you send a substantial amount of your hard earned money to someone you have not met before with only a hope that everything will be fine later? Of course not! So why are you doing this with your newly hired factories in China? To make a fine point, visiting your Chinese factories on a regular basis is a must for all importers if you you want to minimize your risks.

After you got your first impressions of the factory upon arrival and learned more at the first meeting. Next, your job will be to look at the different production and storage areas in detail to find out if the factory complies with your company’s quality expectations.

Quality Control for Incoming Material and Components

A busy factory will receive materials on a daily basis. These include raw materials, components, packing materials, and anything needed from different vendors to support the production.

Your task is to check whether the factory has established a systematic and effective incoming material/components quality control system.Ask your factory representative to take you to the incoming area to observe the Q.C. staff conducting the incoming inspection.

Rejected Materials and Components

Here is another way to check up on the factory’s incoming Q.C. process. If they try to tell you that they do not have any rejected materials or components, you can be sure that the Q.C. staff is either not being thorough enough or they are lying and they don’t have an incoming Q.C. process. Normally, every delivery will have at least a few rejects.

Visiting the Q.C. Department and Testing Equipment

This department is vital for maintaining a high quality level during production. Do not ever skip a visit to this department in order to save time. The Q.C. department is management’s method for constantly monitoring the production quality of the factory. Here, you really want to find out if you are in good hands or not. Every time goods have to be reworked or remade it costs the factory a substantial amount of money. Only constant monitoring of internal quality standards assures the factory that a major rework or remake will be avoided.

The average factory has a separate room with testing equipment and of one or more engineers to running it. When you enter this room, take note of how well they have organized themselves. You may find anything. It could be a complete mess or well laid out testing room.

Separate Q.C. Rooms for the Customers Inspectors

It is common for customers to send their own inspectors or hire an outside inspection company to perform at least a random final inspection before the goods ship. The factory is expected to provide separate Q.C. rooms for these inspectors.

If the factory does not have separate Q.C. rooms for customer inspectors, you have to refrain from working with them because they certainly do not meet the minimum requirements for quality control.

Visit the Factory’s Mold Shop

Larger factories usually have their own mold shops where different types of molds are made.

I assume that you are not an engineer and therefore maybe not very familiar with mold design and construction. It should be adequate for you to see if the factory has a mold shop at all and learn a little something about the technical equipment they are using. Since product quality depends heavily on the precision of the mold, you should be very concerned if the mold shop is using old and outdated equipment.

Metal Punching Area

Similar to the mold shop, not every factory will have or need this equipment. If they have it, it helps them control another part of their cost equation. If the factory is using as 20 or more of these extremely expensive machines, you can imagine that their volume must be quite high, otherwise they would not have invested the money.

The Injection Molding Department

After you have seen the mold shop and learned how molds for the injection machines are made, you can now see them in operation. Injection machines are also very expensive and some of them are as big as a large truck if very large plastic parts need to be injected. It is important that you understand the factory’s injection molding capacity. Often the injection capacity defines the factory’s total capacity.

Spray Painting Department

Spray painting must be done in a spray booth that can control the emissions of particles and solvents.You may find during your factory visits that some workers in the spray booths are not wearing a protective mask at all.

Solvents such as toluene and xylene are considered to be air toxic, and could cause health problems in humans.

If you don’t want to work with companies using child labor or forced labor, you really should not want to work with factories that do not care about their workers health.

Production and Assembly Lines

This part of the factory tour is preferred by most visitors. There is so much to see including the lot of beautiful girls from all the different provinces in China.

Check if production is arranged in a logical order. Common sense applies here but factories do not always follow common sense.

Workers are not typically allowed to talk to each other when working at the conveyor belt. If they are talking or arguing with each other and nobody intervenes, it is another sign of poor management.

You may come across ongoing production of goods for other companies, even your competitors. It is a good idea to take notes and photos because this information can be important for your sales managers back home.

How Often Must You Visit Your Factories In China?

This is often an economic decision because overseas trips are expensive. I would say that you should visit each of your factories at least once a year. Combining it with Trade Fair visits helps you save on costs.

Certainly, it also depends on the current quality and performance of your factory. A factory continuously causing problems for you should be abandoned. If you can’t walk away from them because they have unique products that you must have, you will have to visit them more frequently.

A Cost Effective Alternative to You Personally Visiting

Another choice which I suggest to you is using a Consultancy Service. Problems are often created by the language barrier and cultural differences which can be easily overcome by a face to face meeting. Your Consultancy Service is already in Asia and can take quick action to protect your interests. It is often essential to make fast decisions and they can provide the information needed.

Fast Paced Change at Chinese Factories

Do not try to convince yourself that a single visit to your factory is enough. China is changing so fast, that you would be surprised how much change occurs at the factories in a year.

A new factory manager can turn an inferior factory around and make it more competitive. The opposite can happen when a good factory manager leaves your factory and the successor fails to maintain control of operations.

Sometimes a factory experiences huge problems when a complete team of engineers leaves. The problem is twofold because both the manufacturing and QC process are seriously compromised. A factory’s sales often plummets when their engineering or management team moves on to a competitor.

Unfortunately, this happens more often than you would expect. Usually the only way to find out is either to wait until the effects are felt or be proactive by finding out during your factory visits.

This knowledge is essential to you because your business and reputation will suffer if you are unaware of the changes. You can always inform your customers at home about problems you are facing but if you let them down it will likely cost you serious money.

Since you will be visiting several factories during your trip, it is very likely that one of your factories will hint about other struggling factories. Rumors spread very fast in China but they will not reach you if you stay at your home country all the time.

In other words “been there, done that” would be a totally wrong approach since everything could have changed in the meantime.