Many of you will say the analogy of the home and importing from China can come from anywhere in the world. That in fact, this happens even in America as well as London to Russia and Brazil. Yes it does, it isn’t just a China challenge, it is your challenge when you invest in a product and find a supplier to generate your orders into shipments. It is your opportunity to work with such a supplier to generate the profits you so desire at the margins that led you to come from all over the world to China. It is your due diligence that will either make you vastly successful or vastly in debt if not wondering how you ever got into the situation you did.

The smart and successful companies and people that import from China know (like the Chinese home buyer who is investing either their time or their money on a trusted partner) that everything needs to be managed and that means everything. Yes there is a cost to managing everything in time and expense, but in the end the time and money you save by not having to deal with crisis situations to substitute materials will far outweigh the time and money you invested!

And in case you’re wondering what the final apartment looks like…

Responsibility for Quality Lies with Importers The Heparin Scandal

Paul Midler of The China Game has a blog post titled Heparin Case: China Says Responsibility For Quality Lies With Importing Nations which introduced us to the Heparin scandal. For those not yet in the know, Heparin is at the heart of a scandal where an unlicensed factory in China is reportedly responsible for causing 4 deaths and over 300 allergic reactions.

Heparin is a drug made from hog intestines and is vital when used in the dialysis process. There are two companies making Heparin, ATP and Baxter. Baxter has been outsourcing part of the production to China and it turns out this factory was unlicensed. Watch this video by Today’s Machining World explaining the situation.

The FDA has been tasked with inspecting the factory involved in Changzhou.

Karen Riley said that the agency’s inspection team has completed their inspection of the China facility and a “number of potentially objectionable conditions” were identified relating to the firm’s manufacturing process.

While it’s terrible that people died and that others were injured in this unfortunate incident, there is a lesson to be learned here. As the global economy has grown so fast, it’s clear government agencies have not kept up, neither on the China side nor the US side. While government may play a role, it’s up to the purchaser and importer to ensure safety for the products they develop and sell. Only personal responsibility, sometimes even at an additional cost, will provide people with safe products. Read more

Does China Have a Return Policy?

In most developed countries, returning a product purchased at a retail location is not a problem. In fact it’s so easy that people often will purchase a product when they’re not even sure if they will keep it. For example, when a customer purchases a product from Walmart, the world’s largest retailer, they are assured that Walmart will take almost anything back, for almost any reason. An excerpt from their return policy reads as follows:

To return a purchase to a store, take the following articles to Customer Service at your local Wal-Mart:

* The item you wish to return
* The invoice for that item
* All original packaging and accessories

For all payment methods except Bill Me Later®, an associate will issue an immediate credit to the original payment method or provide a store credit for the cost of the item and the sales tax, if applicable.

But what happens when Walmart (or your company!) receives defective or substandard goods from a factory in China? Does China have a return policy? The Silk Road International Blog has an interesting article titled Returning Products to a Factory in China where David provides insight into what the reality is on the ground and what your legitimate concerns should be when deciding to request a return of product.

In summary, David points out that if you’re receiving defective/substandard products and you’re just finding out about it when it hits the dock at your landed destination, you failed to perform the necessary quality checkpoints that simply are required when working with Chinese factories.

So what’s the solution? DON’T EVER SHIP BEFORE YOU (YOU PERSONALLY OR SOMEONE OTHER THAN THE FACTORY) APPROVE IT. It doesn’t matter how “good” your relationship with the factory is. It doesn’t matter if you’ve shipped the same thing a dozen times before. It doesn’t matter how big your order is or how many other future orders rely on this shipment.

If you’ve got product in your home country (and you’ve already paid for it) it’s too late to be finding find problems.

However, accidents do happen, schedules are tight, small companies can be inexperienced, etc. In addition to the obvious issues involved with requesting a refund such as potentionally damaging your relationship with the factory, here are 2 points out of the 6 that we consider vital to consider:

2. You may not get the product back into the country-especially if it’s defective or already opened because of import restrictions. There are limits to what China (and all countries) will allow into their country. Rejected product and or second hand items are often not allowed into China. You need to confirm with a freight forwarder before you start negotiations with your supplier that this is really an option.

You may also find yourself with an IP (Intellectual Property) issue:

5. You will see the returned product again, somewhere. If the product is usable and if you can send it back into China and if you are getting a second order for free I can guarantee you that the factory will sell the stuff to cover their costs. They don’t care about your reputation in the industry-they are concerned about their bottom line, first and foremost. Be prepared for customer service calls from Karachi.

Check out the entire article and as always, do your due diligence to prevent problems from happening once it’s too late!

Quality Rating Systems – Single A through 5A

There is still a stigma in many peoples’ minds about the quality of goods produced in China. With recent events leading to news about toys, it is understandably a very important topic. What you need to know is that many manufacturers utilize a rating system for their products. This rating system can give you a gauge for your products’ quality and also give you a better understanding of reasons for product cost. This is very important when comparing similar products from various sources.

While this system, for the most part, is governed on the “honor” system, you can inquire with the manufacturer about what makes a particular product fall into a specific rated category. There isn’t a standard rating system in place and the manufacturer typically determines what qualifies a product for each level. Some of the differences between ratings involve levels of material quality (plastics construction/thickness), life of the product, number of uses, thickness of coatings/finishes and components. On a side note, this does not mean that Mattel (the toy company) has been selecting a lower quality rated product that includes utilizing lead paint. This issue is caused when the factory isn’t properly informed of where or how they sourced their raw materials (or in the worst circumstances didn’t know or care).

Single “A” though “5A”
The rating system is comprised of “A” rating indicators, the more of them, the higher the quality and cost. Every country typically has a particular acceptable “A” rating for a product and the manufacturer is usually familiar with the details of each country’s requirements.

Let us use kitchen and bath faucets to explain this point further. “AAAA” and “AAAAA” are acceptable quality grades for faucets utilized in the US. The differences in these two grades are great and so is the cost. The “AAAA” product might have a typical lifespan of 10,000 uses (turning the faucet on/off), is constructed with a plastic valve and has a lower quality finish. In comparison, the “AAAAA” product has a lifetime warranty, includes a ceramic valve and high quality finish. Many times you can mix components from different grades to match the requirements of your market, consumer, or grade.

Do not always go for the higher rated product just because of the higher rating. Just as any smart consumer would do, get all the specifications and ask the right questions. Working with a manufacturer that has implemented a rating system like this means they are organized. Organization is key when there are so many variables that can mean the difference of having a profitable landed cost or not.

The time of China only producing cheap knock-off goods, toys or furniture has long since passed. This is an era where high quality goods are available if you look in the right places. As an example, I was able to source an identical “waterfall” roman tub style faucet/fixture to that of an item sold at Home Depot Expo ($1,200) for 7% of retail (FOB) with a “AAAA” rating.

dylan@sourcejuice.com