Quality Control: Factory Audits & Product Inspections

Audits and Inspections Overview

In this post, you will find the standard factory audits and product inspections as an essential part of the quality control when sourcing products from China regardless of the order volume.

Only a naïve, new-to-China buyers would ever make final payment without inspecting the order before it leaves China. 

Some importers think they are being safe by withholding final payment until shipping documents have been provided.  But don’t think for a moment that the Chinese customs office is going to check inside the container and alert you to problems as it is being loaded at the port.  

Factory Audits & Product Inspections

I’ve seen suppliers fill 40ft containers with rocks in order to give the buyer proof of shipment and collect that final payment.  

A month later when the slow boat from China arrives, the buyer is in for a nasty surprise!  And the supplier has disappeared.  Don’t believe me? Check out SupplierBlacklist.com where buyers share their experiences dealing with vendors in China.  It’s a real eye-opener for those that fail to do product inspections before export.

Mutual Standards for Product Inspections

If you are buying factory-direct in China, at the very minimum you should have two layers of protection against defects:

  • Level One:  Well-documented, mutually-agreed product standards.
  • Level Two:  Arrange an independent, Pre-shipment inspection before you make the final payment and before the good leave China.

It’s even better if you can add a few more layers.  For example, if you catch defects right before shipment, you will probably miss your delivery target and the supplier is going to have to replace or rework a bunch of stock.  Who is going to pay for those defects?  They will probably try to pass it on to you somehow or find ways to save money by cutting corners. Either way, you end up losing.  A better policy would be to work with the factory to ensure they have a robust quality system in place that catches defects earlier, long before the components are converted into defective finished products.

You want your factory to have a crystal clear understanding your standard and as well as how to inspect for that standard. For example, let’s say you are buying red umbrellas, a professional buyer would state the PMS or Pantone # of red they want and also offer three physical reference samples showing the darkest acceptable red, the lightest acceptable red and the target red. The professional buyer would also get in writing the exact method to inspect for that red standard.

For example, “umbrellas are to be pulled from the line at random per AQL level 2, inspected against agreed counter samples, held at arm’s length (no greater than .8 meters from the eye of the inspector) under natural light.”

Any China sourcing veteran will agree- if you don’t put down in writing a scientific and repeatable inspection process for the key aspects of your product, there is a high likelihood you will get exactly what you didn’t want.”   If you only take away one two things from this entire mini course:

  1. In terms of your standards, really “spell it out”
  2. Link your payments to performance.  Final payment after independent inspection.

About the Author: Michael J. Bellamy

About the Author: Michael J. Bellamy

Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses.  Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.

A featured presenter on China issues at seminars, trade shows and corporate events across the globe.

Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/

Mike is the author of “The Essential Reference Guide to China Sourcing
(available on Amazon).

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