How to Make Chinese Factory Visits More Successful - Part One - Major Reasons for the Visits
There could be many reasons for visiting Chinese factories but the following four are the most likely ones.
Visiting New Factories for the First Time - Detailed Evaluation
There will likely be factories that you learned about during one of the Chinese Trade fairs or factories that you had contacted from your home country but have never visit in person.
Naturally, you want to spend more time evaluating these factories to make sure they comply with your requirements.
Visiting a Factory to Discuss a New Large Volume Project
If you want to discuss a new large volume project, most likely you visited this factory before and know their background. The wise importer will not place a large order with a factory they personally or their Importing Consultant have not fully evaluated. It is preferable to follow the evaluation with a small order to see if any surprises appear before moving on to a large order.
Visiting a Factory Because of Quality and/or Delivery Time Problems
You are having quality and/or delivery problems and want to know what the root cause is. You will also want to know if the problems have been satisfactory resolved or if it can be resolved before it costs a lot of profit or time.
The reasons and solutions given by factory management may not be the full story. In fact, the biggest problems may not have been identified to you at all. There could even be a cover-up going on. You want to get these resolved in short time. Visiting the factory to directly apply your skills, digging deeper is often the best answer. This is a good time to bring your own interpreter along. You probably want to talk directly with the factory's engineers. They often have the best background information and possibly already know the best solution.
Negotiate Terms and Prices for New Large Volume Orders
If you are placing large volume orders, most likely you visited this factory this factory before and know their background.
When you have large volume orders in your hands, you have stronger bargaining powers. Factories like large volume orders for several reasons. For one, they can buy raw material and components at reduced bulk prices. A long production run means less frequent production line changes. Also, tooling costs can be spread over the larger quantities.
Once the goods are engineered and in production, it means less engineering effort is needed. Often, long production runs reduce the frequency that production workers need to be trained how to manufacture new products
Keep this in mind during your negotiations.
In my opinion, this is one of the few opportunities to negotiate better terms and pricing. While still remaining competitive with other factories, the fact is increasing costs for raw materials and components makes negotiating the price for smaller order quantities difficult. Another fact to keep in mind is these same increasing raw material and component costs mean the factory will not place orders with their suppliers until your L/C is received. However, in exchange for the large order they will pass some of their cost savings on to you.
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.
About the Author:Klaus-Dieter Hanke is a professional exporter/importer for more than 2 decades. He is the author of a successful eight ebook series "Importing from China".
His company WebMediaBiz provides consultancy services to worldwide importers.
Claim his free eBook "7 Tips to more Successfully Import from China" from his website ==> http://www.webmediabiz.com now.
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