Chapter 9 – Visiting and Inspecting Their Subcontractors

As you visit each of the factory’s various departments, you may learn a portion of the production is subcontracted to other factories. Unless special circumstances apply, the subcontractors are usually near by.

The factories find this to be a sensitive issue and may be reluctant to disclose it.

They may try and pretend the other factory belongs to them and is an extension of the production of the factory you are in. There is probably nothing further from the truth. Often, relatives of your factory’s owner run the other factories and they are doing each other favors. It is very common in China.

The problem you are looking to uncover is if the subcontractor has a totally different quality standard (if they have one at all). That means whatever quality assurance the factory has given to you may be in contradiction or jeopardized through their cooperation with subcontractors.

The main reasons factories use subcontractors are:

  1. To save money by squeezing the subcontractor to accept lower prices than they are capable of achieving themselves
  2. To overcome a temporary production capacity shortage
  3. To do a favor for a friend or relative that does not have enough orders to run their factory efficiently
  4. Cover-up labor rights violations
  5. Access to production equipment such as injection machines, spray-painting, and mold shops that they do not have

The problem is you have no idea how well or poorly the subcontractor’s factory is managed without a visit. Your factory might not make this visit easy but you should insist.

It is possible your factory has several subcontractors. The more subcontractors, the more risk you will be taking that some of them have quality problems. It is therefore a very good idea that you insist on visiting them.

You cannot simply go wandering into the subcontractor’s factory. You are going to need cooperation from your factory. Most likely, one of their staff will accompany you and your visit will probably be limited to the area of the subcontractor’s factory that is performing work for your factory.

Be sure to apply the same stringent quality and performance requirements as you did to your own factory. It is the only way you can protect your own business interests and to assure the quality of your imports from China.