In the previous section of this article, the first steps in launching manufacturing projects in China were explained.

Once the right manufacturer has been found and audited, there are other factors that one should consider before effectively starting the processing.

Contract signing

Since "time to market" is always very important for manufacturing projects, the contract stage is often forgotten or postponed because it takes time (negotiations) and it also can be costly. This is due to the need for external resources like lawyers and various experts needed to ensure the contract covers all the possible conflict situations.

In case you do not have enough time or the budget to establish a contract that conforms to international business laws, you can however write a purchase contract covering the following points:

• The manufacturing procedure;

• Delivery time (for samples and orders);

• Exclusivity of the product and the territory (to protect your intellectual property);

• Quality control process and acceptance quality level of the production; and

• Penalties in case of late delivery or quality problems

This procedure is essential to improve the mutual trust and to avoid conflicts during production and after delivery. The contract allows you to write down all the aspects of the manufacturing project you might forget in the future. After this step, the development of your product can effectively start.

Good samples

Before beginning production, you should request samples of your product. Yourself or a specialized company could do the sample analysis. For the sample confirmation you have to set a high quality level because in mass production the quality level of the product might decrease.

Take the time to confirm the sample, because after sample confirmation and production start, it is difficult to change the specifications of the product. This might cost you time and money and you could also lose your credibility with the manufacturer thereby harming mutual trust.

To ensure samples provided by your manufacturer match your product specifications, a trial order is often necessary in order to evaluate the quality of your manufacturer during the mass production. Remember that samples are often produced with extra care and the best materials are often used.

As a matter of fact, in mass production the quality can seriously decrease because some Chinese manufacturers use cheaper components (compared to the samples) or the production is done very fast in order to respect the deadlines. On the other hand, if the samples do not match your requirements, placing orders can be risky. Some Chinese manufacturers do not spend enough time, energy and money on making samples. Therefore the quality could end up lower than your requirements and the manufacturer will try to convince you that the quality will be much better during the mass production. Thus, you should take the time and define a budget in order to produce perfect samples, because this could ensure the achievement of your requirements and quality during the mass production phase.

Production

Once production starts, you have to establish a strong production monitoring system. First of all, the production planning should be gotten from the factory. Many manufacturers do not have a production management system; therefore the production is not well planned. Even if the factory does not follow the planning schedule daily, a good system will give them the deadlines of the production and the delivery times.

During production you have to establish a quality control process. You can decide whether to perform the quality inspections with your company staff or quality control company based in China. It is important to have quality inspections at the beginning of the production process to detect possible defects earlier and perform the necessary changes. A pre-shipment inspection is also highly recommended to control the quality of the production to ensure that it matches the requirements. One should not wait until the end of production to worry about the quality because the quality control process should start from the very beginning of the process.

Manufacturing in China can be a great solution for foreign enterprises to be competitive in their local markets. However, product development can be very costly in terms of time and money, especially if foreign enterprises do not have teams in China. Therefore, establishing a manufacturing process can help both you and your manufacturer expand your visibility in the market place.

Column prepared by Milad Nouri, Managing Director of China Consultants International Limited