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Product Development: Partnering with factories in China

Strategy

Renaud Anjoran from Quality Inspection Blog simplifies the Chinese manufacturing landscape by distinguishing between three types of factories in China and he goes on to offer some sage advice for when dealing with each type.

Most Chinese factories are very good at reproducing a physical sample…and not as good at respecting a blueprint or a set of written specifications.

Importers often waste a lot of time to get to a “perfect sample“, before production has even started. However this step is crucial and should not be rushed:

  • For new products, a lot of attention is needed to avoid design flaws.
  • For a new manufacturer making an existing product, the buyer should still ensure that it will be made correctly in mass production.

So, are all Chinese factories inept at helping importers with product development? I don’t think so. One can distinguish three types of Chinese factories, when it comes to design and prototyping.

1. Only good at copying

I guess about 90% of Chinese exporters (whether manufacturers or traders) are in this category. The attitude is “tell us what to do”.

So, how do product developments work? Buyers either bring their own samples, or go to a showroom and make a selection. They might require small changes on the product, or they might only ask for a customized logo/labeling/packing.

If they want to do substantial changes to the product itself, they’d better have a clear idea of what they want and how to do it. The factory will usually provide no guidance, and in the best case they ask a lot of questions.

I remember a morning, two months ago, when I was helping a friend visit a supplier of in-store displays in Shenzhen. They had made a sample based on drawings from my friend, with a couple of mistakes. These mistakes showed clearly that they had not understood the real use of that display. They had simply translated the notes and given the drawings to a technician, without asking any question.

That’s probably what Dan Harris, from the China Law Blog, has in mind when he mentions “the dozens of times [his] firm’s clients have essentially told [him] that they have been shocked at how little help they have received from their Chinese factories on how to manufacture their products.”

To make things even more difficult, sometimes these suppliers accept an order even though they don’t know how to produce it yet. The idea is to find someone else who can do it for a price low enough to leave some profit margin. Needless to say, this is a reason for importers to have a good look at the factory beforehand, and to check production early.

2. Good understanding of drawings, specs, or intended function(s)

After that poor meeting in the morning, my friend and I went to see another supplier of displays. This time the meeting was in a factory building instead of an office. The merchandisers were quick to understand and to explain any point. The technicians could calculate quotations instantly, based on possible changes to bring on the product. The sample they had prepared for us was perfect because they had guessed right in the two or three areas where my friend’s drawings were not clear.

But the key advantage is that they gave us some advice based on what their other customers do, and in a way that was relevant to the intended function of the product.

More and more suppliers have this capability–after all, it only takes a good technician and a smart salesperson. I bet they tend to grow faster that their competitors, simply because it is much easier for them to get orders (regardless of what production will look like). Buyers, but also product managers of the buying organizations, save considerable time and headaches when dealing with such suppliers.

I know several manufacturers of lingerie who pay designer(s) to pump out fresh designs. Sometimes they simply use a new lace or a cute bow that they noticed on the market. Sometimes it is based on a drawing inspired from a big brand’s new collection. They regularly send photos/samples to their good customers, and get new orders this way. But this is risky for importers, who might unknowingly purchase the copy of a competitor’s new style… And have big problems.

So most of the time it starts with a request from a customer. See, for example, how Barnes & Nobles e-reader (the Nook) was developed: “Sources in China are reporting that they assembled a small focused team, and brought the product from a concept sketch into production in about a year. Compare that to Amazon and Sony that took three and four years, respectively.”

So fast, for a company without any experience in electronics? How is it possible? As a commenter wrote: “By the time B&N came along, every ODM shop in Shenzhen had ripped open a Kindle, reverse-engineered the key technologies, and was ready to meet B&N half-way.”

Bottom line: if you want to incorporate technologies that are already used in China, you can probably find a manufacturer that will help you put together a full product that meets your intended function.

3. Capable of proposing new-to-the-world features

A few very large structures have gone beyond basic assembly. They have hundreds of engineers working on new technologies, to complement their customers’ own R&D efforts.

The prime example is Foxconn and its 25,000 patents. HP, Dell, and others probably push them to invest in R&D, in areas that they see as non-strategic for their own success.

Of course, only a few manufacturers (if any) do this in a given industry. And small buyers do not have access to these new features. It will take a long, long time before this type of initiative becomes more widespread.

This article first appeared on Quality Inspection Blog.

Renaud Anjoran helps importers check and improve their product quality in China.