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. I purposely placed it after the factory tour because now you are in a position to ask. If you did not see equipment needed to manufacture some of the parts going into the final assemblies, now is the time to ask where they are manufactured at. Although the factory is reluctant to disclose this information, it is almost impossible for them to avoid it at this point.
They may try pretending 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 the other factories are run by relatives of your factory’s owner 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).
The main reasons factories use subcontractors are:
- To save money by squeezing the subcontractor to accept lower prices than they are capable of achieving themselves
- Overcome a temporary production capacity shortage
- To do a favor for a friend or relative that does not have enough orders to run their factory efficiently
- Cover-up labor rights violations
- 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 visiting. Your factory might not make this visit easy but you should insist.
Possibly your factory has several subcontractors. The more subcontractors, the more risk you will be taking that some of them have quality problems. This is a very good reason to insist on visiting them.
You cannot simply going wandering into the subcontractor’s factory. You are going to need cooperation from your factory. Most likely one of the 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.