Good China products are not cheap

There are many people looking at buying or importing goods from China, due to the competitive price. However, they are mostly unaware or ignorant about the fact that there are common issues and problems that comes with the discount.

Why are goods from China cheaper from other countries? Other than cheaper material cost in some areas, the main reason is the cheap labour. As of last 2 years, the lowest income for a Chinese worker who just arrived to the city to see a job is close to 900 RMB, which is about $130 USD a month. This is about the one-day’s pay for the average middle-class American, similar to the other large cities around the world. A supervisor’s pay in the range of 2,000 to 3,000 RMB a month, or between about $290 to 430 USD a month. The lack of motivation due to the lower pay is one of the reasons that result in poor quality products. You are essentially getting what you have paid for, products from a low-paid, unmotivated workforce.

Any company who wishes to remove this man-in-the-loop to improve their factory productivity or product quality, would have to put in additional costs to their final product selling price.

From the procurement point of view, if the procurement strategy is to seek the lowest priced possible, then it would be foolish to expect consistent quality products in a mass production order.

Some procurement project managers would think that by viewing the prototype or samples are sufficient to ensure that the final mass-produced products would be the same. It does not happen this way. A sample or prototype that is approved will only help to state the exact requirements for the supplier or manufacturer to follow. Whether they are truly motivated, or willing to put in the measures to make it happen for the mass production, is another question mark. In fact, this is the same that applies to any manufacturers, in that there is a need to put in place a quality assurance plan to ensure that the production process is capable of delivering 100, 5,000 or more of that approved sample. These quality control measures will result in increased cost of the final product.

Due to the concerns of product quality, companies who wish to buy from China should do the following:

1) Seek out only well-established company who are listed in the major trade portal.

2) Ensure that they are not newly listed company, with no addresses, track records or pictures of their factory/production plant.

3) Pay them a visit, and conduct a factory audit to verify that they have the machineries, trained workforce, process and quality control measures in place. This will including process workflow, control of non-conforming components, in-process quality control procedures, and daily records, etc. A qualified quality engineer would be able to evaluate and provide a report on whether the factory is capable to producing a product within an acceptable (AQL) quality level.

4) Ensure that before the mass production is started, a FAI (First Article Inspection) is conducted.

There are many mis-informed expat managers who does not understand the difference between a First Article and Prototype. A prototype is a deliverable during the product development phase. There can be many prototypes during the development, until the final one is approved. Some would call this a “design review”.

After a prototype is approved, then the mass production starts. However, there is more to saying “Ok, this is approved, lets get the machines rolling tomorrow”. The quality control documentation has to be put in place, which would result in a final product inspection plan covering all the specific checks in a list (hence, some called this a checklist). The First Article would normally refer to the first batch produced under the newly established, focused quality control system for the specific product. Unlike subsequent mass produced products, the first article batch must be inspected 100%. This means that there is no such thing as AQL in the first batch. If there are failures, a review has to be conducted to evaluate the production process and introduce tighter measures to reduce the possibility of recurrence in future.

There are much more details that could not be covered within this article. The above should help to explain why when you order a product from China, do not simply look at the price. In most cases, the ordered products would be delivered, however, whether the quality is acceptable is another. The cost of rejects, rework and resubmission will add to the final cost of the products. So if you think they are cheap, we recommend that you set aside a higher budget to deal with the problems that comes with cheap products. There is no free lunch.

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