Chapter 11 – Choosing an Inspection Company

When verifying the quality of  goods imported from China you have three choices to consider.

  • Let the manufacturer perform a self inspection
  • Have someone in your company perform the inspection
  • Appoint a third party inspection agency to perform the inspection for you
Selection Considerations

If you really want to be on the safe side, I would not suggest letting any manufacturer check their own quality. It is much too risky and you will only find out after the goods have already arrived at your warehouse that something is wrong and by then it is too late.

Having someone from your company conduct the inspection is actually not a bad idea but prohibitively expensive if that person has to travel to China solely for that reason. What remains, is seeking out an experienced international inspection company with several local offices in China. Key office locations are Hong Kong, Shenzhen, Guangzhou, Shanghai, Ningbo, Xiamen etc.

Why is that important? If an inspection company has only one office in Hong Kong (southern China) but frequently needs to inspect goods for your company in Northern China, you will be charged for their travel expenses including the cost for the accommodation. Over time, the costs add up and it really makes no sense to work with such a company. The better option is relying on inspection agencies with offices throughout China. The travel charges are much lower because the inspectors only have to travel from their nearest office to the factory. Besides, they are usually familiar with the area and may even speak the local dialect, which makes the communication with the factory staff easier.

It is also obvious that they can visit your factory much faster because they are in the vicinity. This becomes important when an inspection has previously failed and the re-inspection needs to be conducted only1 or 2 days later. Usually the factory has to pay the re-inspection charges after failing an original inspection due to the factory’s own fault. If the re-inspection charges are too high because of extraordinary travel expenses from your inspection agency’s head office, you are in for lengthy negotiations with the factory. They will argue and try to avoid the payment. In other words, the practical decision is appointing an inspection agency that already has offices near major production centers.

Inspection Frequency

Depending on the size and importance of the order volume, you may want to consider more than a single inspection after production is complete. There are three primary inspection methods you can choose from.

Initial Production Inspection (IPI)

This inspection takes place when approximately 10-20% of the total order quantity is produced. It normally covers the following criteria:

  • Verification of the production schedule
  • Check of raw materials
  • Partially completed goods
  • Finished products and the packaging
  • Inspection for appearance, workmanship, color, measurements, quantity, packaging/packing details, compliance with directives etc.

This inspection method is used mostly when the order volume is very large and production needs to be closely monitored from the very beginning to assure the delivery deadline will be met. The benefits of an Initial Production Inspection are that the status of the production can be verified at every stage. If problems are found early, there is still time to take corrective action and prevent the early problems from affecting the entire order. Since the production is already in progress, you will have a clear picture of the factory’s performance at that time.

During Production Inspection (DPI)

This inspection takes place when approximately 40-60% of the total order quantity is produced. It should cover the following criteria:

  • Production status monitoring
  • Raw materials or key component validation
  • Quantity and performance checks on completed products
  • On-site tests
  • Finished products and their packaging
  • Inspection for appearance, workmanship, color, measurements, quantity, etc.
  • Verification of packaging material and details

The benefits of a During Production Inspection are that the status of the production can be verified at this stage. By performing this inspection you can verify that corrections have been implemented since the Initial Production Inspection. Additionally you will still have a chance to apply other corrective actions before the final inspection.

Final Random Inspection (FRI)

This is actually the most important of the three inspection categories. It is commonly used to safeguard the shipment when a consignment is 100% manufactured and at least 80% packed.

International sampling plans ANSI/ASQ Z1.4, ISO 1259, BS6001, GB 2828, or any client specific method will be used and a representative number of shipment samples will be randomly drawn for the visual evaluation.

It will at least cover the following criteria:

  • Total quantity of finished product
  • Cosmetic and workmanship check
  • Measurement and on-site test
  • Performance check of completed products
  • Inspection for appearance, workmanship, color, measurements, quantity, etc.
  • Verification of packaging material, labeling, barcodes, shipping marks, etc.

The benefits of a Final Random Inspection are that usually the most serious defects or deviations from given specifications will be detected and any shipment can be stopped at this stage. However since this inspection is already close to the actual shipment date, there is a risk that the scheduled shipment date cannot be met which could cause serious problems if the requested re-work is impossible or takes considerable time. In other words, a Final Random Inspection alone prior to releasing a shipment may not prevent or uncover risks that might appear at earlier stages of the production process.

It is therefore highly recommended that higher risk products be subject to greater QA intervention such as product design review, supplier evaluation, prototype testing, and the execution of the Final Random Inspection in combination with the Initial Production Inspection and the During Production Inspection.

What the Inspection Agency Needs to Know

You now know the main inspection categories for verifying acceptable quality. But how is it done?

Purposely I have placed the chapter Choosing an Inspection Company after the sample evaluation chapter. Because without having received proper samples, which comply with your given specifications, you are not really on the safe side and should be very reluctant to make further commitments.

However, I assume that you and/or your staff did a very good job by giving the full information to your factory and that the factory also closely followed your requirements. Therefore, it is the right time to provide at least one sample together with all your specifications and requirements to the inspection company of your choice.

I will suggest some of the international inspection companies I have worked with for a long time at the end of this chapter. You can visit their websites, contact them and find out which is the most suitable for your needs.

Since this inspection company will act on your behalf as your savior in case of a non-compliant production, it is very obvious that you must feed them all the information you have to let them do the job. This is even more important when your product is more complex like home appliances and consumer electronic products.

Please consider that they can only follow the general inspection procedures and your specific requirements. If you do not inform the inspection agent about certain details, they will not take the necessary action and can’t be blamed.

Beginning the Inspection Process

What happens after they receive your sample(s) and your clear detailed instructions?

The inspection company prepares a checklist which you have to verify and at this stage you can still make corrections.

They inspection company will also take your sample(s) as reference sample(s) for their inspector and you will again realize how important it was to give clear instructions to the factory for their sample preparation process.

If you insist the inspection be conducted without a sample, do not be surprised later on, if the inspector’s findings do not match your expectations. The factory will always try to confuse the inspector because they have only one thing in mind, which is “ship out and receive your money as soon as possible”.

I do not go into all the inspection details, because my other eBooks thoroughly cover the detailed steps.  However, I would like to point out the  extent importers have changed the inspection requirements in the last few years.

Home appliances make a good example. Some years ago, Toasters were operated without any bread during the inspection. Nobody cared to test whether bread was toasted consistently from top to bottom and side to side. That has completely changed because end consumers have also become more demanding and don’t accept slices of toast bread where the top completely burned and the bottom is still white.

Some years ago coffee makers were operated without ground coffee and it was sufficient when the boiled water dripped into the glass jar proving the coffee maker was functioning properly. Today inspections are conducted with ground coffee along with paper or permanent filters in order to simulate a normal operation. Only then, can the inspector discover whether the coffee will run fast enough through the filter and coffee without overflowing.

You should get the point about how much effort is necessary to inspect products to make sure that they meet the consumer’s expectations for day-to-day use. Therefore, you will understand that only an experienced inspection company can cope with ever-changing requirements and directives. It makes no sense to employ someone without this experience but who may charge less.

After you have selected your inspection company and they have received your sample(s) you must provide them with a copy of your P/O. It is advisable to blank out the FOB prices because inspectors could be tempted to pass such information to competitors.

In general, you should know there are not many secrets in China. Inspectors frequently run into  counterparts from other companies when performing their job at several different factories. It may well be that they have lunch together (usually provided by the factory) and talk shop. And talk they will. Important information spreads faster than you can imagine. FOB prices are not necessarily something you want discussed among inspectors. Don’t give them the chance by showing it on your P/O copies.

More About the Inspection Process

The inspection company will include vital information from your P/O in the checklist along with other specifications received from you. Usually the checklist includes various digital photos of specific details the inspector needs to be familiar with. In general, the more detailed information you provide to the inspection company, including digital photos, the better the inspector can perform his duties.

After everything is clear, you will book your inspection(s) with your inspection company. This is usually done by filling out an online application form. Follow this link to view a sample booking form for the major Hong Kong quality control company Hong Kong Standards and Testing Centre

Booking the inspection must be arranged at least 5-7 working days prior to the estimated date of production completion or at least the date when 80% of your production will have been completed. It is very important to know, that the inspector will refuse to perform an inspection if the total completed production quantity is less than 80% and if the products have not been packed in their sales packaging and export cartons. The factory will be charged for the inspector’s expense for the failed inspection.

After having received your inspection booking, the inspection company contacts the factory and verifies the inspection date because they have to coordinate the manpower and will try to allocate their inspectors to several factory locations in the same area.

Depending on the order quantity, the inspector will randomly inspect a predetermined number of products and file an inspection report with his findings. If you want to know the quantities that will be inspected to comply with the requested inspection standard, use the following link from SQC Online Company. The information is free although you have to register with them to access their service. The Sampling Plans Calculator provides you with fast results.

Following this link provides more details about the sampling plan procedure:

The international standard presently used for most inspections is ISO 2859-1, a civilian standard derived from the American Military Standard 105D and 105E.

The Inspection Report

After the inspection is performed, you will receive an inspection report by e-mail. Usually no more than one working day after the inspection date.

This inspection report is nearly identical with the inspector’s checklist along with his findings and additional photos taken by the inspector as evidence and for your decision making. The inspection company is employed by you as a third party. They do not have decision-making authority to release of the inspected goods for shipment. They have an advisory function and you must make the decision.

Most inspection companies have expended effort simplifying inspection reports to make them easier to understand. Importers are seldom technically trained or engineers. Importers need clear and concise information. Therefore, most inspection reports show only two conclusions:

  1. Rejected
  2. Passed

That is easy to understand and usually you do not need to take further action when the result is “Passed”.  I can however tell you, that unfortunately you will have more “Rejected” results than “Passed”.

Rejected Goods

Be very careful about making a decision releasing rejected goods for shipment. Once the shipment is on its way, there is not much what you can do to protect your own interests. As mentioned before, manufacturers will always try to convince you that the cause for the rejection was a minor one and you should not worry. The factory may also offer you a compensation payment (minor price reduction) to convince you. It is up to you to accept it but please be aware that the labor cost in your home country is much higher than in China and if you are faced with a claim from your customers, the small compensation will not even cover your own cost.

Since rejected inspections do occur, you have to take them into consideration when planning the shipment date and of course when planning and confirming promotions to your customers at home. Anything else would be asking for trouble. The problem always becomes serious if you have placed yourself under too much pressure, with a too tight of shipment schedule, leaving no room for any unexpected events.

The normal procedure is for the factory to rework the rejected goods within a couple of days and a re-inspection will be called for. The re-inspection is always on the manufacturer’s account because they created the problem by lack of performance.

There could be many disputes about the reasons for the rejection if you did not provide clear information about your requested specifications, standards, and specific requirements. Be aware that you immediately change the rules when you release goods with a lower than requested quality standard. The factory will take note, that an on-time delivery is more important to you than the quality and act accordingly during the next production run. A strict position towards quality issues is your best protection against inferior products. A properly planned shipment schedule will give the factory enough time for the rework and you more negotiating power.

Other Advantages Working With an Inspection Company

When working with an inspection company you gain one very important advantage. In your P/O and your L/C you can specify that a shipment will be only released after you have received an Inspection Certificate from your inspection company. The Inspection certificate is of course only issued when the order has a “Passed” result, which could mean after a successful re-work.

The good thing is that the factory has to comply because if they ship goods without having received the Inspection Certificate (this happens sometimes) they will not be paid from your bank if you included such clause in your L/C. You would be then in a much stronger negotiation position because it would be up to you when the factory would receive their payment.

I believe I have covered the most important points and you will find more in my other eBooks, for instance How to assure Quality of imports from China.

Here are the links to the major International Inspection Companies:

Asia Pacific Inspection Hong Kong
Bureau Veritas Hong
HKIC Hong Kong
Intertek Hong Kong
PRO QC Hong Kong
SGS Hong Kong
TUV Rheinland Group China

Most have offices in other Chinese or Asian cities and will provide an excellent service for you.

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