China Sourcing

Originally manufactured in India using gravity casting, our customer was not happy with the quality which varied from batch to batch.

Chinasavvy redesigned the product and built the diecasting tooling to produce neat, crisp moldings in ADC12 grade aluminum.

The size of the part is approximately 15″ (380mm) x 11″ (280mm) x 3.5″ (90mm) and weighs about 15.8 oz (450g)

The tooling required a number of moving slides to mold the various cores and cavities as well as bolt holes.

Diecast water pump body

The final product is sand-blasted to provide a mat finish that can be left or can be painted or powder coated.

The unit price (cost) worked out less expensive even after taking into account the capital cost of the tooling.

Diecast tooling costs in China are substanially less expensive than in the West and delivery lead times can be as quick as 4 weeks.

Chinasavvy specializes in diecasting of aluminum and brass and has manufactured many high quality castings for companies in the UK and the US.

Many buyers like to consider consolidating shipments from various suppliers in China in order to reduce the sea freight costs.
But are consolidated shipments really less expensive? I think not.

Chinese inland freight costs kill consolidated shipments

Like in the US, the UK and Europe inland freight costs in China are very high compared with the cost of sea frei

Container ship from China

ght. The cost of additional inland freight costs in China can be many times the cost of additional sea freight.

The factors to consider are as follows:

For consolidating you need to work out the total inland freight for all the components plus the warehouse storage costs.

For shipping by sea separately you need to total the individual sea freight costs plus the export licenses and separate destination freight forwarding costs within the destination country.

If the distances within China are not great it probably is better to consolidate.  If not it may be cheaper to individually LCL sea freight each product to the destination country.

Whichever way, careful analysis is needed to work out which way is less expensive as it is not always immediately apparent.

Quality Fade in China

In most western countries the more a product is manufactured the better the quality.  As engineers and manufacturers discover quality problems they find solutions in the manufacturing process and gradually, or rapidly, improve the overall quality of the product.

In China the reverse is usually true.  Chinese manufacturers tend to quote low to get the business and then spend the entire life-cycle of the product trying to reduce the cost of the product through lower cost material substitution, design changes, specification changes, etc. At Chinasavvy we call this Quality Fade.

The process used by Chinese suppliers can be most subtle and devious. Frequently there is no change in the specification during the first or second production runs or shipments.  This creates confidence with buyers who relax their “guard”.  Then, little by little, changes start appearing – sometime too small or insignificant to even notice.

“We thought you would prefer this specification”

When the buyer does start to notice excuses will be given such as “the raw material supplier has changed the specification” or “the grade is no longer available” or ‘this is an improved specification” or “we thought you would prefer this specification”.

The truth is that the Chinese supplier has entered the “fade” period.  He is now determined to reduce his costs to make more profit.

So how do you avoid Quality Fade if you are a buyer sourcing from China?

There is only one word: Vigilance.

At Chinasavvy we create thorough product specifications and extensive quality control specifications covering everything from raw materials to processing to packaging.  Every production run or shipment is thoroughly checked against the specifications.  We anticipate that suppliers will start the quality fade process so after the first shipment we double our guard for future shipments.

To avoid quality fade make sure you have thorough quality control during the first delivery and then each and every time you buy the same product. Remember: Vigilance.

Not everyone wants container loads of products from China.  Many buyers want smaller quantities – specially during the current recession.

But there are costs involved other than those incurred during low volume manufacture and can have a significant effect on the end price.

There are three areas that can turn a seemingly inexpensive product sourced in China into a barely competitive cost.  These are:

1. China Export license and FOB costs
2. Destination import and handling costs
3. Destination inland transportation

China Export license and FOB costs:
Every shipment out of China (except courier shipments) requires an export license.  This license and its cost applies whether you ship one widget or you ship one million.  The export license is based on value but there is a minimum fee regardless of value.  Likewise with other export FOB costs.

Destination import and handling costs:
When your shipment arrives at the port of embarkation there are fixed and variable fees payable to the port, to customs and to the freight forwarder who handles your import. These fixed fees can be crippling for very small orders.

Destination inland transportation:
As a rule of thumb, inland transportation from the port to your warehouse can be as much as, or even higher than, the sea freight from China.  Although variable according to size and volume the costs are disproportionally higher for small quantities.

Overall these three factors can serious affect the delivered value of small orders from China (or any other exporting country).

Make sure you calculate these into your costs!

It seems that the back street boys are at it again.

An American investigation has found serious quantities of cadmium, a particularly toxic heavy metal, in low cost jewelry from China. It seems they are mixing it with other metals.

Why do they do it? The usual answer: To lower their costs. Normally Zinc is used for low cost metal jewelry but current Zinc prices are around $4.00 per kilo while Cadmium is currently only $2.60 per kilo.

So if you are sourcing jewelry in China be sure to get the products tested for heavy metals such as Cadmium and Lead.

Welcome to China Sourcing.

14 years ago I arrived in Guangdong fascinated by a country and people I knew little about.

I have learnt much in those 14 years but still I feel that sometimes I know very little behind the masks.

This blog is a combination of experiences, advice, humour, frustrations, observations.  And a lot more.

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