China Factory Visit

Are China factory visits a waste of money?

Lets assume that your company is about to place an order to a factory in China...   Do you think that visiting your suppliers in China may be a waste of money? Then think again.  To put it in context, would you personally spend thousands of dollars to buy something from someone you never met? Do you really think that nothing will go wrong?

ODM recommends a regular visitation to your China factories. We feel that always worrying about Murphy's Law"Anything that can go wrong will go wrong", is the only way to do business in China.
Short term prevention costs can avoid long term unexpected expenses that may cost more than flight and hotel for visiting.

China Factory Visit

Why is a China factory visit is important?

It is a measure you can take to protect the interest of your company. Importers are liable if something happens with the products they import to their countries.  Once products leave the factory door in China, this is typically where the liability for the supplier is assumed to finish. When it comes to a legal suit, it is important to prove that you have taken all necessary precautions, which includes China factory inspection. Although there may be charges by the court, they will not be able to hold you liable based on negligence. Negligence may lead to punitive damages or even criminal liability which can outweigh other costs.

Another reason is to build relationship with your suppliers. The Chinese are typically did business based on long-term oriented relationships.   Guanxi connections are still tremendously important and are worth taking the time to build.   If you do not have these built up already, then DO NOT assume that factories will make massive efforts on the first order in order to build future long term relations.  This is a common mistake. 

Having personal contacts with the factory is important in building relationship with them. Meeting them at the factory is one of the preferred method, but this is best before there are problems.

Here are some important reasons why you make a factory visit:
  1. Meet and show the people you entrust with your important order that you are committed to long term business.  
  2. Evaluate factory management and decide if trustworthy and competent.  Our company will often take pictures of the managers and get their personal details.  It is important to know who you are dealing with, and going above the account managers head is sometimes required.
  3. Examine the technical standards and quality management standards implemented.  Check out the machines and production capacity.
  4. Other companies the factory supplys - get idea of quality and workmanship..
  5. Compare the factory's actual production capacity with their promises.   There is a lot of outsourcing and this needs to be controlled.   This can be seen.
  6. Does factory is comply with the Chinese Labour Laws.  Social Accountability audits show that safe  work environment is maintained.  Forced & Child Labour, overtime & other details must be checked.
  7. Check out the sampling room to see what else the factory makes.   Check the raw materials and product storage areas.

Planning your China factory visit

Each China Factory visit is different.   Most of the time we see suppliers at the Canton or Yiwu Fairs or we find them online & through referral - there is usually a lot of interaction even before the first visit.

Most factories start work early morning to beat the daytime heat.  Plan where you are going to stay during your factory visit and try to get a hotel which is close

Most factories in China begin their production from 7:00 AM. Lunch break usually starts at 11:30 AM or latest at noon. This will last for an hour. During lunch time most factories with shut down completely, though if there are rushed orders you can have some staff manning the processes where there are production bottlenecks.. 

Lunch time is usually around 12-2PM if there are guests and this entertainment really eats into the work day, but is important.  For this reason, when you get to the factory go full steam ahead into seeing what needs to be done and focus on your order.   

China Factory - checking different manufacturing zones

Your first meeting will give you a good impression of whether this supplier can be trusted with your project or not. 

Raw Material
Inspect their quality control standard to see whether they take quality control seriously or not. Quality control can be done at random samples or piece-by-piece (100% inspection). Quality control inspection should be conducted by a specially trained QC staff.

You need to check if there is an established and effective system on carrying out the QC on raw materials upon arrival. Ask the factory to bring you to QC area to observe their practices. A piece-by-piece (100%) inspection should be performed on critical components.

If the factory made excuses such as they only buy from trusted vendors with a long established relationship, do not buy into this rational. It is their opinion that a piece-by-piece inspection is not necessary.

Rejected Materials and Components

To examine whether the factory has done a good job on QC, you can ask them to bring you to where the rejected materials/components are kept before being returned to the vendor. It is impossible for the factory not to have any rejected materials or components over an extended period of time. Every shipment should have a few rejects.

According to ISO 9001, rejected materials have to be segregated from approved production material, to prevent it from entering into the production stream. In fact, these materials should be locked up and stored in a separate storage area.

Final point that should go without saying.   If you travel all this distance to visit 1 factory, you might as well visit another one.   In China many factories are clustered around some key manufacturing zones.    Visit a few factories and draw up a list of pros & cons.   Then choose wisely....

Buyer Diary

For more tips on China factory visit, follow ODM's series of Buyer Diary. The Buyer Diary is a journal of one of our clients who made a visit to their factories in China.