The Grim Reality of China Quality Control (QC)

International manufacturing lawyers

I have certain articles I send clients and potential clients in response to their questions about China manufacturing. One of my favorites (and the one I send when anyone asks a question relating to what it is like dealing with a Chinese factory) is Ok, so it doesn’t meet your standards….so what? because it so accurately describes the aggravations of dealing with Chinese factories.

In Sampling Strife,  JLMade vividly describes how difficult it is to get Chinese factories to make good product:

The sticky thing about controlling orders in China is that you can give the factory a list of 9,999 things to do and not to do, but they will still find something that’s NOT ON THE LIST!

You’ll see factories make decisions that, in a million years,  you would not have considered they would make.  Something random, such as change the color when no color change was ever discussed, mentioned or needed.

Their response:  “Well if you didn’t want it that way, then you should have told us.  You should have given us 10,000 points of control instead of 9,999!”

Dayton’s article starts out by quoting the response of the three Chinese factories when confronted about  their quality control problems:

  • “Sorry it is not the same as the sample. We hope you’ll accept it anyway.”
  • “Your QC is too strict. No one can expect to be 100%.”
  • “This is still within tolerance levels.” (No tolerance levels were ever given.)

Dayton then notes how all three factories then “moved to the dreaded show-down level of negotiations: “We won’t make it again. You can accept this standard or cancel (part of) your order.”

In one case, the Chinese factory completely backed down when Dayton refused to do so. The factory blamed the QC problems on a manager Dayton had never met but who had supposedly been in charge of the project. Per Dayton, the Chinese factory eventually fired this alleged manager to save face and then redid the project correctly “and the exchange was relatively pleasant and not too confrontational, all things considered. Of course they ended this round of negotiations with ‘OK, but next time the price has to go up'”

If you have never dealt with a Chinese factory, you no doubt are having a tough time believing this sort of thing goes on. But if you regularly deal with Chinese factories, this same sort of thing has no doubt happened to you countless times. I am not sure if I can remember a quality control problem that a Chinese factory did not blame on a non-existent person who they allegedly just fired or on an unidentified subcontractor that allegedly made the product. But as Dayton points out, the goal is to remedy the problem, not to make sure the Chinese company loses face.

Dayton then discusses how he oh so logically handles the “we didn’t really believe you when you said you were going to be this strict” line:

Whenever we hear this our questions are always the same, 1. If you can’t meet this standard in production, why did you sign a contract saying you could (and why did you repeatedly tell us you could)? 2. How come you can do it for a sample but not for production (and if it is a different process, why did you bid on one process but plan on using another).

Dayton concludes his post by noting how “few and far between are the factories that admit that they over-estimated their abilities and give you your money back”

My law firm’s international manufacturing lawyers just about every week hear from companies wanting to sue their Chinese product suppliers. We usually politely hear the foreign company out and then explain unless they have a well-crafted  China Manufacturing Contract that sets out the quality standards for the product, they probably do not have a good case.

What have you experienced?

24 responses to “The Grim Reality of China Quality Control (QC)”

  1. That’s exactly what I was doing. I was shaking my head yes because I have dealt with all of these excuses dozens of time.

  2. That’s exactly what I was doing. I was shaking my head yes because I have dealt with all of these excuses dozens of time.

  3. I wonder whether the factory intentionally low-ball the bid to get your business, then make adjustments to squeeze the profit.
    this reinforces my theory that Asians in business (or in general) will try to get away with doing what they did. perhaps honesty is rarely taught in schools (or society?)
    I recall people calling those who are honest and return lost&found items to original are naive and stupid…

  4. I don’t think it’s just Chinese factories because I’ve seen the same thing with US factories.
    The real important thing is to set up your business so that you have multiple suppliers and enough reserve so that you can go into “fix this now or else” mode. If it’s clear that you have them over a barrel, and they have to fix the problem or else they are dead, then you win. If it’s clear that they have you over a barrel, and you can’t force them to fix the problem without shooting yourself, then you are dead.
    The other thing that helps is “don’t always go for the lowest bidder.” If you go in blind and just choice the company with the lowest bid, you are practically guaranteeing yourself QC headaches.

  5. I wonder whether the factory intentionally low-ball the bid to get your business, then make adjustments to squeeze the profit.
    this reinforces my theory that Asians in business (or in general) will try to get away with doing what they did. perhaps honesty is rarely taught in schools (or society?)
    I recall people calling those who are honest and return lost&found items to original are naive and stupid…

  6. I think what David said on his Silk Road International Blog and what the JLMade Blog said on their blog is very true which I why I read them, same as you obviously do.

  7. Really enjoyed reading Dayton’s blog post and had a smile on my face, knowing that this is the standard. Many issues related to tolerances etc (=> strict QC requirements) can be counter-checked beforehand by conducting a factory evaluation and paying attention to the machines used for production. Talk to line managers, production managers, not only to the sales team, and ask them directly about the machinery. Most of the time they will not have studied “no problem, yes we can”-typical sales-explanations before.
    However, there’s one question that Dayton mentions, which he asks suppliers if they come up wthh their excuse that only a sample could have been produced in the neat way we’re all looking for:
    “2. How come you can do it for a sample but not for production (and if it is a different process, why did you bid on one process but plan on using another).”
    This question could actually backfire, as suppliers always have answers, even reasonable answers to it! A sample is done in a sampling room, it’s not mass production. Samplin room technicians are highly skilled, they spend hours on a sample, whereas the product might just take 2minutes of mass-production to be produced. Sampling labor is more expensive, he could also put them on the assembly line but the price of the product would go through the roof etc.etc…
    I would say:
    1. Try to not pay any deposits – opt for payment against documents or L/C.
    2. If you’re going to produce a reasonable quantity, arrange a pre-production test run with a few hundred pcs, monitor the outcome before letting the factory finish 100% of the order.
    This should allow you to find out about potential problems before everything’s been produced and it should keep your money under your control.
    Cheers
    Aladin

  8. I don’t think it’s just Chinese factories because I’ve seen the same thing with US factories.
    The real important thing is to set up your business so that you have multiple suppliers and enough reserve so that you can go into “fix this now or else” mode. If it’s clear that you have them over a barrel, and they have to fix the problem or else they are dead, then you win. If it’s clear that they have you over a barrel, and you can’t force them to fix the problem without shooting yourself, then you are dead.
    The other thing that helps is “don’t always go for the lowest bidder.” If you go in blind and just choice the company with the lowest bid, you are practically guaranteeing yourself QC headaches.

  9. I think what David said on his Silk Road International Blog and what the JLMade Blog said on their blog is very true which I why I read them, same as you obviously do.

  10. Dayton’s question can be easily answered.
    1. If you can’t meet this standard in production, why did you sign a contract saying you could (and why did you repeatedly tell us you could)?
    – in the hypercompetitive environment of OEMs, its tempting to agree to the order first and work out problems later; essentially they are taking a chance, better than saying they can’t do the order and taking no chance.
    – also in some cases, the sales people agreeing to the order aren’t fully informed about the latest happenings on the production line, and production issues are someone’s problem. As long as they seal the deal, they go home happy.
    2. How come you can do it for a sample but not for production?
    – The amount of man hours that go into a few samples/prototype is VERY different to those of batch production under a tight schedule. Of course there are differences in quality.
    At the end of the day, you get what you pay for, a few top OEMs in Guangdong pay over 2500rmb/month for each worker so they can retain skills and sustain top production quality. Western firms opting for the lowest bidders will naturally get crap.

  11. Really enjoyed reading Dayton’s blog post and had a smile on my face, knowing that this is the standard. Many issues related to tolerances etc (=> strict QC requirements) can be counter-checked beforehand by conducting a factory evaluation and paying attention to the machines used for production. Talk to line managers, production managers, not only to the sales team, and ask them directly about the machinery. Most of the time they will not have studied “no problem, yes we can”-typical sales-explanations before.
    However, there’s one question that Dayton mentions, which he asks suppliers if they come up wthh their excuse that only a sample could have been produced in the neat way we’re all looking for:
    “2. How come you can do it for a sample but not for production (and if it is a different process, why did you bid on one process but plan on using another).”
    This question could actually backfire, as suppliers always have answers, even reasonable answers to it! A sample is done in a sampling room, it’s not mass production. Samplin room technicians are highly skilled, they spend hours on a sample, whereas the product might just take 2minutes of mass-production to be produced. Sampling labor is more expensive, he could also put them on the assembly line but the price of the product would go through the roof etc.etc…
    I would say:
    1. Try to not pay any deposits – opt for payment against documents or L/C.
    2. If you’re going to produce a reasonable quantity, arrange a pre-production test run with a few hundred pcs, monitor the outcome before letting the factory finish 100% of the order.
    This should allow you to find out about potential problems before everything’s been produced and it should keep your money under your control.
    Cheers
    Aladin

  12. Dayton’s question can be easily answered.
    1. If you can’t meet this standard in production, why did you sign a contract saying you could (and why did you repeatedly tell us you could)?
    – in the hypercompetitive environment of OEMs, its tempting to agree to the order first and work out problems later; essentially they are taking a chance, better than saying they can’t do the order and taking no chance.
    – also in some cases, the sales people agreeing to the order aren’t fully informed about the latest happenings on the production line, and production issues are someone’s problem. As long as they seal the deal, they go home happy.
    2. How come you can do it for a sample but not for production?
    – The amount of man hours that go into a few samples/prototype is VERY different to those of batch production under a tight schedule. Of course there are differences in quality.
    At the end of the day, you get what you pay for, a few top OEMs in Guangdong pay over 2500rmb/month for each worker so they can retain skills and sustain top production quality. Western firms opting for the lowest bidders will naturally get crap.

  13. I read your story on China food safety and then I read this and together they convinced me there will be no solution until Chinese companies decide they are better off not doing things that might kill people. Right now, they are doing a cost benefit anaylsis and determining that they can get away with this sort of thing and they mostly are right.

  14. I read your story on China food safety and then I read this and together they convinced me there will be no solution until Chinese companies decide they are better off not doing things that might kill people. Right now, they are doing a cost benefit anaylsis and determining that they can get away with this sort of thing and they mostly are right.

  15. I’m continually amazed, when I read your QC articles, that any purchasers anywhere expect to get product meeting needs that they themselves don’t bother to specify.
    Maybe I don’t understand the SOPs of their industries – all of my experience is in high tech. Hasn’t anyone read Deming? Taguchi? Tom Peters, for pity sake? There is a large body of knowledge on how to get quality from your vendors.

  16. I’m continually amazed, when I read your QC articles, that any purchasers anywhere expect to get product meeting needs that they themselves don’t bother to specify.
    Maybe I don’t understand the SOPs of their industries – all of my experience is in high tech. Hasn’t anyone read Deming? Taguchi? Tom Peters, for pity sake? There is a large body of knowledge on how to get quality from your vendors.

  17. It is a useful / necessary strategy to keep expenses low in case the manufactured products don’t fulfill the specification.
    The first line, the manufacturer should provide a test report from their quality control before delivery. If the manufacturer himself is not convinced of the quality of his products, it is very likely that the products are sub-standard.
    Second line, organize your own quality control in China. When products have left China, it will be expensive (custom clearance!) to send them back.
    In manufacture there are no dimensions without tolerances. If the buyer does not specify the tolerances, he can not blame the manufacturer if he applies standards that are beneficial for him.
    Colour indeed is a very critical issue. Two batches of the same products will hardly have the same colour, whereever in the world it is produced.
    It is possible to define objective criteria and tolerances for colour, but this requires very expensive equipment and expertise that in most cases neither the manufacturer nor the buyer have.
    One method is that the manufacturer reserves a drum of paint just for you. This will guarantee are rather stable colour.
    What I dislike is the attitude that Chinese companies tend to be unfair. We are dealing with quite a lot of suppliers in Guangdong, an area that has a reputation for unfair business. We had a lot of cases where the manufacturer told us, sorry, we can not do that. Or our machinery can only guarantee this tolerance, can you accept that?
    If a manufacturer blames a sub-contractor for quality problems, don’t think this is an excuse, it many cases it is a reality. I know many Chinese manufacturers who have excellent machinery and know-how, but a weak purchasing department. So if you need something that does not belong to the core-business of the manufacturer, this may cause problems.
    A work-around is to look for a reliable sub-contractor yourself. This costs time and money, but it may be worth to do so.

  18. It is a useful / necessary strategy to keep expenses low in case the manufactured products don’t fulfill the specification.
    The first line, the manufacturer should provide a test report from their quality control before delivery. If the manufacturer himself is not convinced of the quality of his products, it is very likely that the products are sub-standard.
    Second line, organize your own quality control in China. When products have left China, it will be expensive (custom clearance!) to send them back.
    In manufacture there are no dimensions without tolerances. If the buyer does not specify the tolerances, he can not blame the manufacturer if he applies standards that are beneficial for him.
    Colour indeed is a very critical issue. Two batches of the same products will hardly have the same colour, whereever in the world it is produced.
    It is possible to define objective criteria and tolerances for colour, but this requires very expensive equipment and expertise that in most cases neither the manufacturer nor the buyer have.
    One method is that the manufacturer reserves a drum of paint just for you. This will guarantee are rather stable colour.
    What I dislike is the attitude that Chinese companies tend to be unfair. We are dealing with quite a lot of suppliers in Guangdong, an area that has a reputation for unfair business. We had a lot of cases where the manufacturer told us, sorry, we can not do that. Or our machinery can only guarantee this tolerance, can you accept that?
    If a manufacturer blames a sub-contractor for quality problems, don’t think this is an excuse, it many cases it is a reality. I know many Chinese manufacturers who have excellent machinery and know-how, but a weak purchasing department. So if you need something that does not belong to the core-business of the manufacturer, this may cause problems.
    A work-around is to look for a reliable sub-contractor yourself. This costs time and money, but it may be worth to do so.

  19. I think part of the reasons is most chinese factory don’t keep good file of order, and don’t keep it as standard all the times, so things are changing offen. Chinese workers deem to work by told instead of thinking how to do.

  20. I think part of the reasons is most chinese factory don’t keep good file of order, and don’t keep it as standard all the times, so things are changing offen. Chinese workers deem to work by told instead of thinking how to do.

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