What to do with golden samples from Chinese suppliers?

by Renaud Anjoran on 28 August 2009

The importance of samples to get new orders

How do buyers select a Chinese supplier? Most often, they compare quotations and samples. Other considerations, such as reactivity or manufacturing capability, are taken into account by a minority of importers.

Hence the importance of the sample. A bad sample will probably not help in getting orders. Chinese suppliers are famous for promising anything they can to get a P/O, and trying to figure out what to do with it later. I heard it is also common in other Asian countries.

It seemed to be the opposite, for example, in the first company where I worked, back in France. Salespeople were complaining that the samples sent to their prospect customers were not as good as the delivered products. That company was being overly cautious about its reputation on the marketplace. I guess Chinese suppliers would have a good laugh if they heard about it.

Back to China sourcing… David Dayton just wrote a very thoughtful post entitled Over-Promise, Under-Deliver and the realities of the Chinese Market where he describes the hypocrisy and the games around samples:

Everyone that has ever worked in China and raised questions about quality has no doubt heard the line “No one can match sample 100%” or something similar.

Implications for quality control

The fun part begins when somebody has to enforce quality standards. For many product categories, a list of written specifications is not enough for an inspector to estimate whether conformity is achieved or not. Remember, professional inspectors in QC firms usually have very thin product knowledge.

To use the same example as in Dayton’s article, is an inspector capable of checking whether there are 3 layers of paint and 1 layer of lacquer on a piece of wood? Or is it better to show him an approved sample and ask if it looks and feels the same? The second option is better, for sure. But, for large and heavy items, how can the importer send a sample to the inspector? This is a frequent problem. Photos are usually not a bad substitute, fortunately.

Some large buyers ask the factories to keep a “golden sample” they have approved and sent back under seal. In this case, there is often no list of check points for the inspector… The golden sample and the packaging claims are the only sources of information regarding the product’s conformity.

Another problem is that, if the inspector notices a discrepancy and signals it, the factory will almost certainly invoke a technical reason that nobody can verify. If the buyer has no product experience, she may have a hard time taking decisions.

The importers’ responsibility

I observed that many small buyers are very focused on price, to the point where they are afraid of upsetting the supplier. They know that prices and delays tend to increase (even after the order has been issued) when they pressure the factory to improve quality. Sometimes the buyer gives the feeling that he knows he won’t get what is promised, only to become more demanding once the factory is a weaker position.

Some buyers are actually quite experienced at playing this kind of games, and they think they can outsmart their Chinese suppliers most of the time. If they are in a position where they can cancel orders at the last minute (by using an L/C and not pre-selling anything to their own customers), it is actually realistic. But these sort-term gains give them a bad reputation among Chinese suppliers, especially if the products in question are made in one or two cities only.

What can importers do?

The obvious solution is to force the factory to make a few pieces in the workshop, under the same conditions as bulk production. But many factories refuse it because it increases material waste and decreases labor productivity. And it is close to impossible for certain products.

Another solution would be to sit down with the supplier, go over the details of the sample, and write what is acceptable and what is not. It may be OK if the finishing is not perfect at the back, for instance. But how to describe these tolerances clearly? Is it possible to take photos of what is OK and what is unsellable? This can be a real challenge.

If the buyer indeed wants “the real thing”, he’d better be crystal clear about it. An option would be: “We’ll send an inspection company, and they will refuse anything that is not perfectly conform to the sample. They are very strict”. This type of conversation should take place before orders are issued and deposits are wired, and there would still be some risks. For large orders, a very clear list of specifications and a contract would be a good idea.

David Dayton seems to opt for the last solution:

I suggest to new buyers that they proactively let factories know what to expect.  For example, we try to lay out very clearly before we pay deposits that we really are going to be VERY strict and we’re expecting to follow our agreements and standards exactly.  We spend a lot of money and time to get people into factories BEFORE we pay any monies just to make these things clear to multiple levels of factory management.  We want factories to know that we are not going to under-deliver in anyway on our promises to be really strict when it comes to QC and getting everything as close to 100% as physically possible.  I figure I may be a pain in the butt, but at least I’m going to be honest and upfront about it.

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