What to Do after a Quality Problem with a Chinese Factory?

Let’s say you found a quality problem before shipment. The goods are still in the factory. You paid a 30% deposit and you have pre-sold a part of the order to important customers.

This scenario plays out every day in China. And it is much better than discovering a problem after delivery (in which case there is pretty much no solution).

Many importers have the wrong reaction and count on their supplier to get their act together. It works with a well-organized manufacturer or trading company if all parties see their interest in making the customer happy. Unfortunately, this is a rare occurence.

I listed 5 steps that importers should follow.

1. Understand the nature of the quality issues

Hopefully you got many photos and descriptions of the problems. Maybe these “problems” are actually acceptable. If not, you need to wonder:

• Is it widespread nonconformities? For example, the whole batch is made in the wrong grade of steel and won’t perform as expected when put to use. If that’s really unacceptable for you, you might have to cancel the order and forget about your advance payment.
• Or is it a high degree of inconsistency? For example, a batch of wallets is fine except for 30% of the embroideries that were sewn in a slant manner. This is much easier to solve — about 70% of what was already produced is acceptable, and rework is possible on the remaining quantity. Even in cases where rework is not realistic (e.g. dents on metal parts), the whole batch is not written off.

Explain patiently what the problem is to the supplier. If that was already done but the results were not satisfactory, and if you have no obvious reason to suspect your supplier of dishonest behavior, you have to assume it is due to a communication problem.

In many cases we had to send someone in the factory to explain what their customer really wants. If you can do this yourself, this is great. But try to document it and get it approved in writing by the supplier — that’s how you can  push them to rectify their mistakes later in the process (provided they are honest).

2. Ask your supplier for information and for an action plan

I drew a simple flow chart a few years ago and it is applicable in most situations. But you should involve your supplier in the decision for better results.

What do they think? Let’s say 30% of production is defective: can it all be reworked? Even the worst defective pieces? Can they rework 3 pieces and show you photos of before, during, and after rework?

Is it realistic to remake a small batch as replacement? How long would it take? (Usually they refuse this, but on occasion it is negotiable.)

If you you prefer a short shipment, how long would it take them to sort out the good pieces? Depending on your deadlines, you might ask them to send the acceptable 70% first — or to send, say, 20% by air now because you can’t delay certain deliveries to customers.

Will the supplier accept to re-produce some pieces AND send some goods by air at their cost AND pay for a second inspection? Usually they will resist. At this point, a strong contract that includes the right terms and was signed & stamped by the supplier will help a lot. If that was not done before you sent the deposit, it is certainly too late…

(In addition to the reluctance to spend money, there is another common source of resistance: the fact that you work with an intermediary that has no control over the manufacturer. Your direct supplier might want to get things right, but the factory just refuses because they don’t know you and and they have no reason to believe in long-term business. This is quite common.)

3. Ask your supplier to correct the situation

In the worst case, the supplier adopts a “take it or leave it” attitude. Then it comes down to a business decision and every case is different.

Hopefully your supplier accepts to do something. It doesn’t mean they will really have an impact, though. From experience, there are mainly two dangers:

1. They do a “quick and dirty job” of sorting the pieces without taking the pain to apply your quality standard. This is the most common case. Again, poor communication is the main culprit. This is easy to spot — for example the inspector representing the buyer found 30% of defective pieces but the factory’s inspectors only found problems on 5% of the quantity.
2. They pretend to do a sorting & rework job, but they actually wait for the customer to write “We can’t wait any longer–please ship the goods out.” Obviously the importer is very frustrated, but in the short term the Chinese side “wins”.

What to do to avoid these issues? We have been applying the following recipe with good success:

• Prepare detailed work instructions (illustrated with clear photos) on what needs to be done. It means we usually have to go to the factory, or we need a few samples in our office.
• Explain the customer’s standard and the steps to follow to the right people in the factory, and follow up on what they do. Again, it often means we go to the factory. But sometimes we get good results with tools like Wechat and Skype, with large exchanges of comments and photos, if the factory’s salesperson is involved and motivated.

4. Re-inspect before shipment

This one seems obvious but is often forgotten. Double-confirm that the original issues were fixed and that no new issues were created during the factory’s rework.

Real story: an importer paid us to check quality, we found issues, their supplier promised to fix the situation, the batch was shipped without a re-inspection (we were not consulted), and in the end we were blamed because there were still issues!!

5. Make sure corrective actions are implemented to reduce the risk of recurrence

You probably don’t want to go through the same nightmare over and over. If you did what I wrote above (clarifying and documenting your standard, explaining it to the right people in the factory, etc.), you already implemented positive changes.

The proper approach was described here. If you can push the factory (if possible by coming yourself) to follow that approach, great. A proper engineering or quality assurance agency can also manage this process on the ground, if needed.

Don’t overestimate a manufacturer’s capacity to change their way of working. You can only expect small changes in their organization, so the question is: can small changes bring in big results?

Similarly, if the supplier doesn’t care about your business and refuses to implement any improvement measure, it might be the signal to look for a backup!

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Did I forget something important?