The Rise of the Dragon

In 2007, one of the most public recalls in history occurred with Mattel recalling over 20 million toys. There are very important lessons learned from this toy recall to make sure the same does not happen to you.

Mattel made two fatal assumption that is very common with those inexperienced with the Chinese market. First, they handed over the responsibility of their usual independent quality checks over to the factory. Second, they got greedy by trying to pay less for manufacturing their products with the assumption of receiving equal quality for higher priced manufacturing. These unrealistic goals coupled with insufficient knowledge of doing business in China lead to increased risk of poor products. This has ultimately come back to haunt them.

Unfortunately, Mattel is not the only company who has made these mistakes. According to the Consumer Product Safety Commission, 60% of all product recalls are from product made in China.

The following tips will help you avoid the chance of poor quality manufacturing when going to China:

• Have a Taste Test. By providing a working sample, there will less confusion of what your product supposed to look like and how it supposed to perform. Drawing and illustrations are helpful, but are typically not enough.
• Get Down And Dirty. Don’t leave any room for questions; know exactly what you want! Make the necessary preparations with drawings, charts, etc. to make sure everything is decided upon before selecting a manufacturer.
• Get Real. Don’t expect to get high quality products by paying pennies for them. Manufacturing in China is beneficial only if you plan on purchasing in bulk. Depending on the product, bulk purchases are typically not as large as it may sound. Like many products you purchase, you get what you pay for. If you expect to only pay pennies for a product, then that’s what it is going to be worth.
• Do Your Homework. Just like the U.S., there are good and bad businesses in China. Would you purchase the first car you test drove from the very first car dealer you met? Probably not. Contact at least 3 different manufacturers before making a decision. Make sure you find out about their quality control procedures, privacy policy, and production processes before making a decision.
• Do You Understand The Words Coming Out Of My Mouth? With China hosting the 2008 Summer Olympics, there has been a huge push for everyone to learn English. Most of the factories you speak with will have staff members who “speak” English. However, their English ability is not enough when you are trying to communicate detailed, many times complex, parts to your manufacturer in English. Would you trust someone who has taken a couple of years of Spanish in high school to negotiate for you on a business deal in Mexico? Most likely not. If you do not have “native” speakers of Chinese, consider using a consulting firm with the language and cultural expertise to help you. Doing business in China is not like doing business in the United States.
• Use Protection. Even though this saying is typically quoted in other contexts, it applies perfectly with China sourcing. Another popular saying from the same social issue, “It only takes once”. Protect your product, if it can be protected, by applying for a patent or trademark before you start your search for a factory. Use non-disclosure and confidentiality agreements to protect your idea. When working with factories, sign contracts. Make sure all written legal agreements are translated in Chinese!