China inspections

Inspecting the Manufacturing Areas
You got your first impressions of the factory upon arrival and learned more at the first meeting. Next, your job will be to look at the different production and storage areas in detail to find out if the factory complies with your company’s quality expectations.

Quality Control for Incoming Material and Components
Let’s start where materials first enter the factory. This provides a clear indication if the factory takes quality control seriously.

A busy factory will receive materials on a daily basis. These include raw materials, components, packing materials, and anything else needed from different vendors to support production. Ordering the materials took place weeks ago and normally coincides when the factory receives the L/C for a particular purchase order.

The most important quality control starts with either a random or piece-by-piece inspection conducted by a specially trained QC staff.

Your task is to check whether the factory has established a systematic and effective incoming material/components quality control system. Ask your factory representative to take you to the incoming area to observe the Q.C. staff conducting the incoming inspection.

A piece-by-piece (100%) inspection should be performed on critical components. An example is a thermostat that will be installed into a portable space heater. It is a critical component that will either leave the heater useless if it fails or in a worst case scenario could start a fire. This type of component is not suitable for a random inspection of only a few parts.

The factory will of course tell you that they only buy from trusted vendors with a long established relationship. It is their opinion that a piece-by-piece inspection is not necessary. Do not buy into this rational.

Rejected Materials and Components
Here is another way to check up on the factory’s incoming QC process. If the factory assures you they have an incoming materials/components QC process in place, ask them to be taken to where the rejected materials/components are kept before being returned to the vendor.

If they tell you that they do not have any rejected materials or components, you can be sure that either the QC staff is either not being thorough enough or they are lying or they don’t have an incoming QC process. It is impossible that they have not discovered any rejected materials or components over an extended period. Normally, every shipment will have at least a few rejects.

By the way, ISO 9001 requires that rejected materials be segregated from approved production materials. They should be under lock and key to prevent them from entering the production stream.

If the factory is producing electrical products for EC countries that require ROHS compliance, these components must be also stored separately and the storage area must be marked with ROHS in order to avoid becoming mixed with non ROHS compliant components.

Another important reason is maintaining a good relationship with existing suppliers and building new ones. The Chinese business culture favors frequent personal contacts with their overseas trading partners and meeting at their factories is one preferred method.

At a minimum there are seven main reasons why you want to visit Chinese factories:

1.You want to see whom you will entrust with your precious orders before you place them.
2.You want to meet the factory management and determine whether it is trustworthy and competent.
3.You want to see firsthand which technical standards and quality management standards have been implemented.
4.You must assure the factory is complying with the Chinese Labor Laws that prohibit Child Labor and excessive working hours.
5.You want to learn which other companies are working with that factory.
6.You want to find out what the factory’s actual production capacity is as opposed what you have been told.
7.You want to see whether the factory is subcontracting part of their production to other factories and decide if you approve of the subcontractors.

Arrive at the Factory Early
Factory visits are not a holiday trip. They differ from Trade Fair visits where you have time until the exhibition opens the gates. The factory starts early and you should take full advantage of it.

If you have your own driver, you can leave the hotel at any time. Otherwise you will wait until the factory driver arrives with his car to pick you up, assuming that you made prior arrangements with the factory.

If you booked a hotel near the factories you plan to visit, it should not take you more than about 20 minutes to reach the first factory. Try to arrive no later than 9:00 AM.

Why is it Important to Arrive Early?
Production at most factories begins at 8:00 AM. Workers take an hour lunch break starting at 11:30 AM or at the latest noon. For the most part, management follows the same lunch schedule.

During the lunch break, the lights will usually be switched to conserve energy and save costs. Even if you wanted to continue working without any factory assistance, you would find it hard to work in the dark. If you do not arrive at the factory until 10 or 11 in the morning, you won’t get as much accomplished as you want.

Arriving early gives you enough time for a meeting, followed by a tour of the different factory areas, and concluding by joining factory management for lunch. Your afternoon can be spent at a second factory or in a second meeting.

Factory Visits in China are Very Important
Would you send a substantial amount of your hard earned money to someone you have not met before with only a hope that everything will be fine later? Of course not!

So why are you doing this with your newly hired factories in China?

To make a fine point, visiting your Chinese factories on a regular basis is a must for all importers if you want to minimize your risks. From my first hand experiences, I know Wal*Mart’s policy is for vendors to visit every one of their factories in 3 months intervals. Wal*Mart is a cost conscious company that would not require these visits if they didn’t believe them necessary.
Why You Should Visit Chinese Factories
You regularly take precautions to protect your company’s interest and visiting your suppliers’ factories needs to be included as an insurance policy.

As an importer, you are liable if something happens with your products. If it comes to a legal battle it is essential that you can prove to the court that you took all necessary precautions, including evaluating the factories on regular basis. It is just as an important task as inspecting goods before shipment and inspecting them again upon arrival at your warehouse.

Even if the court concludes you do have product liability they will not be able to add a negligence charge that can lead to punitive damages or even criminal liability.