Made In China
If your company is considering contacting factories in China to find a manufacturing partner to produce products you can sell in the digital marketplace, then it is imperative that you approach this process with your eyes wide open.
It can be very enticing to try and increase your profit margins by actually going to the “source” of a hot selling product. However, for it to be worth that effort…you must be smart, savvy and a bit cynical in securing a manufacturing partner behind the Great Wall.
It is quite common today to develop your own manufacturing conduit from the international marketplace. Many companies will tell you that once they decided to bypass a middle-man who “brokered,” their product orders, profits increased as expected. What you may not hear quite as often is that if they had it to do over again….they may have reconsidered such an endeavor.
Profit is no Prophet!
The obvious reason to go directly to the factory that makes a specific product you are selling is to increase your profit margin by cutting out a layer between you (as the reseller) and the factory as the manufacturer. However, the process of managing that direct relationship can come with so much baggage that it may not be worth the additional points in your pocket.
In other words, you must be prepared to deal with the fact that the level of additional profit you make on the product is not indicative of how much additional effort you may be required to provide to keep the project on track. There is a reason not every company is dealing factory direct with manufacturers out of China.
There is an old saying that goes, “…time is money.” In China the translation of that saying is “…time will make money.” This is the belief that the longer a process can be drawn out through tireless negotiation, the more likely the party more committed to that process will benefit.
Tips & Tricks…
You must enter this process with the following assumption in place. There are good, honest manufacturers in China and there are bad, dishonest manufacturers in China. There are even good, dishonest manufacturers in China. Mitigate your expectations on easily locating the good, honest ones as you will no doubt have to sift through the rest first.
Below are some tips and tricks you may want to consider trying to avoid wasting time and becoming frustrated with this effort.
- Start With References! When you get ready to talk to a manufacturer in China, you should be looking for a couple of common denominators. First, they need to have active relationships (over 2 years) with other U.S. based companies…AND they must be willing to provide you those references as needed. CALL THOSE REFERENCES and don’t take for granted they must be good if they are provided. Even good references may share “issues” with you.
- If they don’t have someone on staff who speaks fluent English, move on! It is imperative that you are able to have detailed, direct, accurate conversations with someone at the factory. If you don’t speak Mandarin… then it falls upon the factory to speak English. You will find many factory representatives that speak “Chinglish.” This is a form of broken English that gets worse when the subject gets more pointed. In other words, they may understand everything you are saying when discussing the weather, but, oddly they develop language issues when discussing your invoicing, scheduling delays, pricing and technical issues.
- Contract with an outside QC Inspection company. You will need to contract with a Chinese based Quality Control inspection company to review your products before they are shipped to you. This company should represent your interests with the factory regarding the production of your products. They can help you increase the quality of your product as well as help control costs associated with returns and warranty issues.
- Be prepared to have to eventually visit the factory personally. This may not be as big a requirement if you are having small “widgets,” manufactured as opposed to more technologically advanced products that are intricate and costly in nature. However, developing a personal relationship with project managers and factory owners can only help as your project matures moving forward.
The Bottom Line…
You may find that the few points of profit that you paid your middle man (broker) to manage the process and the relationship with the factory was a bargain at the end of the day. However, you may decide that addressing the ongoing accounting issues, constantly renegotiating the production schedules and QC requirements and overseeing the shipping logistics are more than worth it if your profit margin widens from those efforts.
At MosaicaFX we can help protect your profits developed from international transactions. We also can assist your business in many other areas. Don’t waste another minute and set up a meeting with one of our Executive Account Managers today.
Manufacturing in China may be the key to growing your bottom line. Counting on someone like MosaicaFX to help navigate this challenging process could be the key to your success.