When manufacturing overseas, it’s wise to choose a contract manufacturing partner that has in-country personnel to oversee your project. This may sound basic and obvious, but not every contract manufacturer or North American support partner can guarantee that they have team members, or even close partnerships with facilities, in China. Here’s why it’s important.
- Quality Control
How do you know your product is being produced with the quality you expect? If you’re not personally in China, you obviously can’t check for yourself! Unless you want to fly halfway around the world every few months (and these days, spend weeks in quarantine upon arrival and return), you need a trusted partner who can address any hiccups in quality and alert you if there are serious concerns.
While China generally known for high-quality production, Sourcify warns that bidding too low on a project can have disastrous results. “’You get what you pay for’ is real when you deal with Chinese manufacturing. Be careful not to negotiate prices down too low because a reduction in price often leads to a similar reduction in the quality of the finished product. If the manufacturer isn’t paid enough to cover the production run, they are forced to make cuts that affect the design or production of your product.”
With trusted representation in-country, the risk of low-quality product is dramatically reduced. Local inspectors can audit individual production runs prior to the goods leaving the factory. This allows defects to be caught and repaired on-the-spot, eliminating rejected lots and line-down situations at the end customer.
- IP Protection
According to Kroll’s 2019 Global Fraud and Risk report, 24 percent of organizations were impacted by IP theft that year. China was presumed responsible for as much as 80 percent IP theft, according to a 2013 study, resulting $300 billion in losses to U.S. companies. While the Chinese government has begun penalizing offenders in recent years, it remains a tremendous threat to Western brands, entrepreneurs, and other product designers. No one wants to see their inventive idea stolen, then mass-produced and sold cheaply in internet marketplaces. It damages brand perception and value, sometimes irreparably.
Websites share stories of startups losing their original product ideas to their own manufacturing partners, and even big-name manufacturers seeing their US-patented products stolen by China-based rivals.
So, what can be done to prevent it?
Having in-country resources who speak, read and write Mandarin, Cantonese and/or one of the many other Chinese dialects is a great safeguard against IP theft. A partner you trust with boots on the ground in China can ensure that your contracts are in order, your facility is secure, and employees are honest and faithful. While there’s never a 100 percent guarantee against IP theft or other forms of espionage, having a team member that’s a familiar face on the factory floor can be an effective deterrent.
- Unauthorized Subcontracting
It happens too often: a company chooses its electronics manufacturing partner, confident they’ve made the right choice. However, when the final product comes back, quality is inconsistent. A full 50 percent of the items don’t work properly. Why?
In one local company’s case, they learned that their items had been subcontracted without their knowledge or consent. Circuit boards were being assembled not in their chosen partner’s facility – but on the dirt floors of workers’ homes.
This happens all too frequently. Companies like Kmart and British Airways have discovered too late that their products were being subcontracted, and while quality wasn’t the issue, optics were. Both companies learned their goods were the products of forced prison labour. Production had been subcontracted without their knowledge. In the case of Kmart, a consumer found a note pleading for help inside a Halloween decoration package.
So, how can you protect your business – while still enjoying the many benefits of manufacturing offshore?
Despite the risks, manufacturing in China is still an ideal option for many businesses across industries. With an established infrastructure, an enormous skilled labour source, and low prices, there are many reasons China should still be at the top of an organization’s list.
That said, proceed with caution. Companies new to manufacturing in China should work with an experienced and trusted partner – one who speaks the language and understands the business culture. And ideally, one who has “boots on the ground” in China.
The “boots on the ground” piece is especially important because not only will your onsite partner be able to ensure that any contracts are culturally appropriate – and strictly adhered to – but also that product quality and packaging meets expected standards. Even more importantly, your representative should be performing unannounced facilities visits and site checks to ensure that all protocols are being followed. The slightest hint of corporate espionage or unauthorized subcontracting can be caught early and addressed early on.
The benefits of local presence aren’t just limited to quality considerations. Sourcing personnel can identify, and negotiate with, the best component suppliers. On-time delivery can be ensured with an experienced Supply Chain team in the area. Technical/engineering employees can keep production and test equipment maintained or upgraded as needed.
While headquartered in Canada, Avnan not only partners closely with ISO-certified facilities in China, we have employees in China who speak the language and understand how business works there. Our team will ensure that your project is completed efficiently and affordably, and that the quality will exceed your expectations.
Contact us to learn more.