10 Errors to Avoid When Getting Goods Manufactured in Asia

North American and Chinese commercial cultures differ because of several traditions, habits and standards that an inexperienced buyer or manufacturer can encounter

One of the main aspects to consider is the relation between quality and cost. Take the example of a client who asks his supplier to lower the price of his product or service—otherwise the client refuses to place an order. In North America, the supplier will most likely lower the price at the expense of profit. In China, on the contrary, even though this is not always the case, the supplier might lower the quality of the product to meet the price the client is willing to pay.

Commissioning the manufacturing of goods, and synchronizing production, quality control and quality assurance is a completely different matter that must be taken into account. The best example is that of Chinese New Year. This festival, which usually starts between the end of January and mid-February, involves a long holiday that lasts from ten to thirty days in China. Seasoned clients know that the shipment of goods in the two weeks prior to Chinese New Year is complete madness since container carriers are overloaded, and logistic services are virtually paralyzed.

What’s more, the production or manufacturing scheduled right after the Chinese workers return to the plants after that holiday will be subject to longer processing times; plants that reopen take up to a month before they reach cruising speed again. It is often not possible to include China or Vietnam in a Just in Time (JIT) manufacturing and procurement process.

Quality standards in manufacturing are more or less the same for businesses operating in the same line of business, and in the same geographical region. For instance, when a Canadian client commissions a U.S. Company for the manufacturing of parts that require a corrosion-proof coating, he can expect, without explanation, that the supplier will perform a quality control and clean the parts prior to applying the coating so that the latter bonds to the material for improved resistance to Canadian winters.

But these are steps that need to be detailed when doing business with a manufacturer in China or Vietnam; the Canadian winter doesn’t ring a bell to them! This is not necessarily a cultural difference; it is rather a work methodology, according to which if a service is not requested then it shouldn’t be provided. And thus, everything has a price, including finishing or inspection stages.

Ensuring a presence, in person or by proxy, is essential in a business relationship with an Asian manufacturer, whether it is in China, Vietnam or another country.

When you know someone at a foreign manufacturing plant, that person may be a liaison officer who might pose as the owner of the plant. The client abroad who ignores this “minor detail” may get inadequate responses and be left with a product unfit for use. An actual, physical presence provides an opportunity to meet with the right people at the right time.

One of the notable advantages of ensuring a presence on site is the ability to inspect the plant, processes and manufactured products at virtually any moment. Faced with such a practice, the manufacturer will have no option but to show diligence across the production line.

Besides, surrounding yourself with a trustworthy person who will act on your behalf and for your benefit on the site is crucial. Thanks to that individual, you will be able to monitor production and quality via video or audio files sent to you, and make decisions in a timely manner with videoconferencing, for small and big problems that arise.

This mistake is self-explanatory. Let’s just say that with the rise of automation and 4.0 integration in numerous Western production plants, manufacturers from everywhere around the world can rival with Chinese plants in regard to processing and turnaround times, and quality of manufactured products. Understanding import-related costs is all that’s required to make an informed decision.

Despite all that, some products are almost invariably best manufactured in Asia. Take the example of products requiring specialized labour that is often hard or almost impossible to find elsewhere.

When we think of import, we are often limited to costs associated with freight or cargo. That said, many other factors impact costs related to import from China or Vietnam:

• - Human resources allocated to production
• - Production volume to be processed by the supplier
• - Complexity of the components
• - Duty and tax rates by product category
• - Packaging and handling

Let’s just say this: Southeast Asia is way hotter than Canada, regardless of the season. When goods leave China of Vietnam in the winter, thermometers in containers read temperatures over 40 degrees Celsius. When they arrive in North America, they are subjected to temperatures in the range of -20 degrees Celsius, and a 100% humidity rate. Not great.

In addition, since carriers want to save space and avoid less than load, containers are full to capacity. As a result, the bottom boxes sometimes get crushed under the weight of other goods placed on top. The stacking by cranes also contributes to the crushing of cargo since goods are sometimes loaded rather rudely.

It’s not unusual to see part of a shipment completely destroyed because of the hazards of international shipping.

Plants in China and Vietnam focus their activities on clients who order large quantities of products or goods. If your production volume is too low, manufacturers might put your file at the bottom of the pile and pay more attention to major players instead. Without necessarily resulting in the cancellation of your order, this could have a greater impact on procurement and reception times.

Like mentioned before, everything has a price. And quality is no exception. Ideally, the client should have the opportunity to compare the prices and output quality of several manufacturers in order to make an informed decision. Unfortunately, this is not always possible when we know little about the producer market.

We often turn to the cheapest manufacturer. But watch out! If the price is very low, maybe too low, there may be something fishy going on. Is it a missing step in the manufacturing process? Or a neglected aspect that you overlooked?

In short, choosing a supplier with cost being the sole reason for your decision is very risky. You should review the whole process with the manufacturer, or compare the price to that of other plants or other individuals who commission the manufacturing of goods in China or Vietnam.

Regardless of the producing country (China, United States, Korea, Vietnam, etc.), errors will be found on the production line, and fine-tuning will be required during the production and import stages. It’s almost inevitable. That’s why a replacement structure—or plan B—should be put in place.

And so, if you find yourself with a product batch that shows problems or manufacturing defects, or if a matter requires your immediate attention, you can turn to your plan B and continue your procurement process.

With the major import tariffs implemented by the last U.S. administration against Chine, many business doers turned to Vietnam as an alternative solution for their production needs. Yet, Vietnam now faces an investigation regarding the valuation of its currency, and the import and use of timber that is illegally harvested or traded.

However, even if this political situation had not taken place, note that Vietnam does not have the human and material resources allowing it to produce like China does. Vietnam is at its first steps toward industrialization, and very few high-quality suppliers can be found there. The manufacturing of mass consumption goods is mainly hand processed. Although rare, there are plants that produce high-quality items in Vietnam.

In short, in the next ten or fifteen years, Vietnam could very well play the role China has been playing in regard to international expertise in manufacturing. It is a country that deserves your full attention.