Many importers do not realize that quality control starts long before production actually begins. In fact, an importer’s quality control begins with the evaluation and selection of their supplier in China.
Let me give you an example of how it usually works. You visit one of the impressive Trade Fairs in Hong Kong, Guangzhou, Shanghai, or Ningbo and talk to as many exhibitors as possible. You come upon one company that has a nice booth, friendly staff, and one of the products you have been searching for. On top of that, their prices are much cheaper than the rest of the exhibitors.
You ask for a catalog along with the company representative’s business card and you ask them to note their price quote on the business card. Since you are in a hurry because you still want to meet many more companies that day and other businesspeople are queuing behind you, you tell the booth representative that your company will contact them as soon as you return home.
You are very happy that you had a successful day and found a new trustworthy supplier.
Unfortunately, you already made a big mistake.
Unreasonably Low Price Quotes
Never accept prices that have been quoted to you during a Trade Fair, for granted. Especially if they are much lower than those from other suppliers. When something seems to be too good to be true, it surely will not be true.
This should certainly be applied to manufacturers in China. If one thing can be said about the Chinese people, it is that they know how to accurately calculate prices.
All you need to do is ask yourself why are the other companies unable to quote you a similarly low price? Simply put, they can’t because they have calculated their prices based on their BOM (bill of material) and know exactly what their total cost is. If someone offers you a much lower price, they either did not do their homework properly or are simply not playing fair.
Now let’s continue with the story. Back home, you proudly present your great discovery to your sales managers. Together you decide to go ahead with this terrific new product at a bargain price.
Now you have made the next big mistake. Never make a final decision before you receive proper samples from the supplier. Next, the samples must be tested and approved by your Quality Control (QC) staff. At a minimum, the samples must comply with the legal requirements of your country. They should also meet your own high quality standards that you give to the supplier before the samples are made.
You have probably figured out where this story is going but let’s continue. Your sales managers do their jobs and begin offering the new product to your customers based on the very competitive price that was quoted to you at the Trade Fair booth.
You company has just made another big mistake by offering something to your customers based on a quotation from an unknown supplier.
My intention is not to scare you too much, but during my long professional career in China, I have seen cases like these over and over again.
How can you make sure that your company does not become the victim of an incompetent supplier and their sales staff?
The first thing you want to do, if you have not done so already, is to establish your own in-house quality control department. That is the first step to making sure that your company has the means to control the quality of all incoming samples or any other quality issues before you place any purchase orders.
Alternatively, you can employ one of the existing quality control labs in your home country. The main point being that it is imperative that quality controls be in place. However, I would consider outsourcing quality control only as a temporary solution if you plan to expand your import business in the future.
It is worth noting that these labs are not shy about charging you extensively for their services. Depending on your import volume, their cost may prove simply too expensive for you to achieve the profit you are expecting.
I suggest that you only consider them for specific tests that are required by your national or local authorities. Another reasonable use is to obtain third party certificates or testimonials that you may need if you have a customer claim needing to be solved with your China supplier.
Having your own quality control department can give your company an edge over your competitors that do not have in-house quality control capability. If your competitors already have this service and you do not, starting a quality control department will level the playing field.
Customers hate filing claims and the extra costs related to quality issues. They prefer to buy goods from a source that provides reliable quality assurance. You should consider the cost of setting up a QC department as an investment in the future of your company.
At the beginning, you do not want to start with a department that is too large, because you will be learning from experience. Efficiency should be more important to you than size.
The composition of your department depends very much on the nature of your import products. If you are in the textile business, you may want to hire a textile engineer plus one or two assistants. If you are in electrical or electronic products, you need to hire an electronics engineer plus one or two technicians.
To perform their quality tests properly, your specialists will need suitable technical equipment. A note of caution: do not jump the gun by establishing a fully equipped lab at this early stage. That would prove very expensive. The easiest way to determine the kind of technical equipment that is needed is to heavily rely on your engineers after they are hired. They will know what is needed and where to get it. A discussion about equipping the test lab can easily be included in the interview process for the engineers. This is the most reasonable way to establish your own functioning quality control department at an affordable cost and in the least amount of time.