All too often, importers select their Chinese manufacturer based on feelings, rather than informed decisions. In many cases, small businesses make a factory selection based on completely irrelevant factors, such as how their website looks, or vague (and unverified) promises made by a sales agent. In this article, we explain what makes a qualified and reliable manufacturer in China.
This list refers largely to technical factors that a manufacturer must be able to meet, in order to manufacture a product in compliance with legal regulations, and your quality requirements. A manufacturer that cannot meet one or more of the following, is unlikely to be fit as a long term partner.
#1: Main product
What matters the most when selecting a Chinese manufacturer, is their capability, expertise and experience manufacturing the very same product you intend to purchase – and that is not to be taken for granted.
Browse Alibaba for a few minutes and you’ll find many suppliers, often registered as manufacturers, offering products that are very different in nature. This is necessarily not a warning sign. There are plenty of reliable manufacturers selling related products (e.g. watch manufacturers selling nylon straps). I’d say around 50 – 60% of the suppliers listed on Alibaba fall within this category. That said, if you are looking specifically for watch straps, go find a watch strap manufacturer rather than a watch case manufacturer, selling straps as a side business.
Then there are the opportunistic (and disorganized) traders selling whatever goods they get hold of. Such suppliers tend to be very small trading companies, lacking both product knowledge and long term planning. These are the suppliers that you often find on “small volume sets”, selling anything from phone chargers to makeup brushes. These traders are rarely, if ever, able to offer a long term product supply, not to mention compliance with foreign product safety standards and substance regulations. I’ll get back to that in a bit.
#2: Main export markets
A reliable Chinese manufacturer is not necessarily a manufacturer primarily exporting products to the United States, Europe, Japan and Australia. There are plenty of manufacturers that are really good at what they do, but focusing on markets in Asia, Africa and South America – or the domestic Chinese market. That said, the exporting rate to developed market is a major benchmark, even for buyers located in developing markets such as Nigeria and India.
Manufacturers with a main focus on developed markets tend to maintain a higher quality standard, keep defect rates low and offer compliance with foreign product safety standards.
#3: Product safety compliance
Buyers based in the United States, Europe, Japan and Australia need to ensure that their imported items are compliant with one or more product standards (e.g. CE and CPSIA). There are various types of product safety standards and regulations to keep track of, such as:
- Electrical safety regulations (e.g. CE EMC)
- Chemical and substance regulations (e.g. REACH and FHSA)
- Product packaging regulations (e.g. PPPA)
- Physical and mechanical regulations (e.g. ASTM and EN ISO)
- Toys and children’s product regulations (e.g. EN 71 and CPSIA)
- Textiles regulations (e.g. OTEXA)
- Labeling regulations (e.g. Tariff Act of 1930)
Confirming which standards and regulations are applicable to your product is a major challenge. What certainly isn’t making things easier is the fact that less than 5% of China’s manufacturers are able to show compliance with foreign product safety standards. Thus, previous compliance is a critical factor when making a supplier selection. That said, a supplier without previous compliance may still be able to manufacture compliant items – but the risk is much higher.
Compliance is critical when importing from China. Importing noncompliant items may result in a forced recall, or having the cargo seized by the customs authorities. You may also be forced to pay millions of dollars (or euros) in damages, in case your product cause personal injury. However, while compliance is not providing you with legal immunity in case anyone would get injured, there’s still a reason product safety standards (and serious noncompliance penalties) are put in place.
A CE compliant laptop charger is much less likely to become a fire hazard, compared to a low end charger without built in electrical safety mechanisms. Click here to find out how we can help you ensure compliance when buying from Chinese manufacturers.
#4: Substance control
Certain substances, such as Phthalates, Lead, Cadmium and Formaldehyde are either banned or strictly regulated in most markets – especially when used in toys and other children’s products. That said, many regulations also restrict substances in textiles, jewelry and a wide range of other consumer products.
In the European Union, chemicals and substances are regulated by the REACH directive. In the United States, the legal situation is more fragmented – and flexible. In California, substances in consumer products are regulated by California Proposition 65. However, products that contain regulated substances are still allowed to be sold in the state – under the condition that a warning label is attached to the product, or its packaging.
But, warning labels advertising that the consumer might become impotent or get cancer by your product, is not good for business. Thus, most importers prefer to ensure compliance with applicable substance regulations. What most importers are not aware of, is that only a minority of Chinese manufacturers is aware of the chemical content in their products. Those who are, also tend to be those who can show previous compliance with product safety directives.
The root cause of this issue lies not with the final assembly manufacturer, but with its sub suppliers of raw materials and components.
#5: Quality standard
Most would assume that the definition of a “good manufacturer” is one spitting out high quality items. That’s not always the case. H&M can’t compete with Dior in terms of quality and design, but based on the formers soaring share price in the last decade, few dare to say that H&M is a “bad company”.
This also applies in the world of Chinese manufacturing. There are reliable and highly sophisticated manufacturers specializing the low market segment. Nothing wrong with that, but make sure the supplier is able and willing to manufacture products matching your quality requirements before you put money on the table.
#6: Quality Management System
Manufacturing is not a science. It’s not a matter of “if” there will be defective items, but how many. In order to minimize the number of defective units, the manufacturer must monitor quality before, during and after production. This procedure is called a Quality Management System, or QMS. Roughly, the setup looks something like this:
Step A: Inspection of materials and components supplied by subcontractors
Step B: Checkpoints performing visual inspection (to spot cosmetic defects) and functional testing (to spot functional defects) during production.
Step C: Visual inspection and functional testing of fully assembled units.
A Quality Management System shall also specify how defective units shall be dealt with. Records shall also be kept, for future reference and as statistics.
When it comes to QMS compliance in China, there are three categories of manufacturers:
- Those who can’t care less about applying a quality management system, and are honest about it (85 – 90%)
- Those who claim to be compliant, and are happy to show a certificate supporting this claim – but don’t apply the actual quality management procedure. (10 – 15%)
- Those who actually implement a quality management system. (5 – 10%)
The most common QMS used by Chinese manufacturers is ISO 9001. A compliant supplier shall be able to show an ISO certificate, and records from previous inspections. In my opinion, what really matters is not the type of QMS (unless a specific protocol is legally required for a certain product), but that they provide a detailed explanation of how their QMS is set up – and support such claims with records.
#7: Registered capital
The registered capital is, at least so far, specified on a Chinese business license. The amount of registered capital is a very good indicator of a manufacturer’s scale of operations. In fact, a company with a small amount is rather unlikely to be a manufacturer at all. What is considered to a sufficient amount of capital varies between different industries, and a judgement is made based on a comparison to the “industry average”.
For a watch manufacturer, RMB 1,000,000 is a decent amount, while I would think twice about working with an electronics manufacturer with anything less than ten times that amount.
Surprised that I didn’t put pricing as top priority? Let me explain. Pricing is important, but only when attached to a product that is compliant with applicable product safety standards, in your country. Thus, it’s a complete waste of time to negotiate prices with a manufacturer that’s unable, or unwilling, to comply with product safety standards in your country.
A low price is not always what is seems. Many suppliers deliberately quote low prices in order to get the buyer’s attention, with the intention to either increase the price moments before the order (at this point it’s too late for most importers to step aside and source a new supplier) or use cheap and substandard materials.
Soft factors are more than bonuses. While a manufacturer may have the technical capability to produce your items, such capability is of little use if the supplier is not fully cooperating with your product development efforts. The same thing can be said about allowing third party inspectors into the manufacturing facility, and signing a sales agreement for the purpose of fair terms and clarity regarding quality requirements.
Manufacturers that don’t allow a quality inspection or factory audit always got something to hide. In order to weed out unreliable manufacturers early in the process, I suggest that you tell them about upcoming quality inspections and sample testing as soon as possible. This tactic tends to scare away scammers and low end factories, while saving you a ton of time and money!
Announcing that you will not transfer money before a sales agreement is signed and stamped is also important. Chinese manufacturers refusing to sign sales agreements generally have a reason not to. Click here to read more about sales contracts and why they are critical when buying from manufacturers in China.
A serious manufacturer shall also not hesitate to provide access to their documentation, including their business license, QMS certification, product certification and laboratory test reports. Manufacturers refusing to give you access to the mention documents either don’t want you to see them, or simply don’t have any! No matter what reason they come up with, always stay away from such suppliers.
You shouldn’t need to wait for two weeks to get your emails replied. Manufacturers that lack interest in your order are not worth your time. Some Chinese suppliers also tend to avoid answering certain questions. If they deliberately avoid answering critical questions related to compliance, manufacturing capabilities and quality – dump them and go to the next supplier.
That said, don’t overestimate their English proficiency, and communication between different time zones makes things slower for obvious reasons. Besides, communication goes both ways. It’s absolutely critical that you provide your manufacturer with clear and consistent product specifications and quality requirements. Never assume that the manufacturer “should know” anything.
China is a big country, but most industries are highly concentrated in certain cities or provinces. Below follows an overview:
- Shenzhen: Electronics
- Xuzhou: Glassware
- Xiamen: Textiles
- Yongkang: Auto parts
- Shantou: Toys
- Dongguan: Plastic products
- Wenzhou: Eyewear
- Suzhou: Wedding dresses
Manufacturers based in such industrial clusters have better access to components, logistics services and qualified workers.
#4: Design service
Product design must always be adjusted to a manufacturer’s production capability, in terms of dimensions, materials, components and tolerances. Disorganized manufacturers tend to lack such an overview, and are thus unable to provide you with information about certain technical limitations that your product design must be adjusted to.
It’s critical that a manufacturer can tell you what they can do, and what they can’t, before put money on the table. However, some suppliers take this a step further, and offer in house design support to their customers – assisting with product labeling design, product packaging artwork and more.
#5: Trade fairs
Attending trade fairs, especially in Europe and the United States, shows that the manufacturer management has higher ambitions than the average, rather short sighted, factory boss. Click here to read more about trade fairs and what you need to know before attending one.
#6: Logistics options
Chinese manufacturers don’t tend to differ much, in terms of the freight costs and shipping options they can offer. Reliable manufacturers already have established logistics companies taking are of exporting procedures and shipping. Thus, it’s up to you to decide if you want to manage the shipment through your own agent, or let your manufacturer take care of it for you. Click here to read more about shipping from China.