Manufacturing in Asia: An insight from the Frontline
Russ Cohen has worked in Asia sourcing and managing production for 16 years, working with some major brands. In this blog he talks about his experiences and the key considerations for small businesses looking to source a product from a manufacturer in Asia.
After living in Asia for 16 years, people still ask me the same question as when I first came out here…. “what’s it like to live there?” My answers in the early years were full of exciting stories. Eating snakes, flying on unregistered airlines, driving for hours over mountains then sleeping on factory floors, enjoying banquets with Provincial Mayors and occasionally suffering from the odd tropical illness.
The main thing that has changed since then is the answer I give. Now, I tell the inquirer “I have a wife and child, he’s doing well at school. My mother in-law has been sick recently but we’re looking forward to summer holidays”.
I’m the same as any middle-aged guy working back home. I travel abroad a lot, but I’m not going to Paris or Hamburg. I’m heading to Guangzhou or Ningbo, Xiamen or Bangkok, Ho Chi Min or Zhejiang. I eat strange food, I travel hours on planes and in cars to get to factories. But it’s all just become part of my everyday life. Its normal.
It wasn’t until I started going back to the UK more for family holidays, while visiting with one of my friends who ran her own business doing Landscape Gardening & Interior Design that I realised that what I find normal is actually quite foreign to my fellow Brits.
She wanted to expand into selling product but the costs to produce in the UK was far too high and she was too scared about buying in China – “I tried it once, found a supplier on Alibaba, it went well for the first 500 order, so when I’d sold 100 units quickly, due to lead times and thinking I was on to a good thing, I re-ordered 2000 more. Then one got returned, then 2, then 10. Before I knew it, I was swamped with returns, I had to pull the product, return everyone’s money, pay to dispose of the goods and I still had 2000 probably faulty pieces about which I was getting daily emails from the producer asking me to pay the balance of the deposit as the goods were ready to ship. The factory couldn’t seem to understand what was wrong with the product at all. I lost a load of money and I lost my confidence. The stories you hear about manufacturing in Asia are true”
She’s part right. The stories are true. Manufacturing a product, on the other side of the world, with partners who’s don’t speak your language, who’s business culture and ethics are different to yours can be a minefield. It reminded me of that Atari video game from the 80’s – pitfall
First face the snake. Then make sure you don’t fall down the hole if you miss the ladder. If you get to the ladder there’s a scorpion to navigate past which will kill you with one touch. Take the other route which offers a lake full of crocodiles which are impossible to pass. But being successful in most types of things in life relies on hard work and practice to avoid all the pitfalls. Practice makes perfect and if you’ve done it a few times it gets a bit more familiar.
So in my 16 years out here I’ve learned there are key things that you need to get right when taking that step to source a manufacturer for your product on the other side of the world to ensure you don’t waste a lot of time and money. Here’s a 5-step guide.
- Find the right manufacturing partner. Most projects that fail will do so due to a failure in this relationship. This is the most important relationship you will have in your business career. You need to find a partner that aligns with not only your product, but your company and you as an individual.
- Project Set-up: Make sure you are very clear in your communication from the beginning of what you want and what you expect from the partnership. Don’t assume the factory understands your requirements by using adjectives. I’ve seen a lot of different standard products produced under the definition “good” quality. Get a good NDA in place so that you can share as much information as possible with the factory. Give them sales projections and timescales etc. Be honest and open with them about your concerns. Be organized and professional. You must ensure that everything is clear before you place any orders with the factory. Any changes later will cost you money and time and stress the relationship
- Product Costing – firstly, as above, make sure you have given all the information required to the factory to cost the product. Make sure your spec is finished. Any time you change what you want you are giving an opportunity for the factory to increase the product cost. Which they will. Secondly – make sure the cost works for you as a business going forward – don’t ever think “I’ll get the cost down later” – if you marginally cost you’re marginally dead.
- Ordering – Starting MOQ’s are a pain, and can be a killer. By ordering on a regular basis, same time, once a month or quarter, will allow the factory to bulk order materials with their other customers and help them give you lower MOQ’s. Set a schedule for your ordering, inform the factory and your distributors and stick to it.
- Brand Protection – To protect your business going forward, you must deliver a product of consistent quality. To do this build a Quality Assurance and Reliability testing program. Periodically test raw materials and semi-finished products. If you’re relying on QC, you’re too late.
So in short, sourcing a good manufacturer that can produce excellent quality products in China is highly possible, I’ve been doing it for many years!, but you do need to be careful, plan your project well and set out from the beginning with a considered and deliberate approach.
Russ Cohen has lived in South East Asia since 2000, working in Manufacturing, Supply Chain, Quality and Logistics for Raw Material Supply businesses and Brands such as Maclaren and Crumpler. He currently heads up a Manufacturing Services Agency providing support for small to medium size businesses for manufacturing in Greater China and South East Asia.