We tarted working with a factory at the client’s request. They communicated well, had a relatively clean factory, and offered an amazing price. For most, this sounds like a picture perfect scenario when manufacturing abroad.
What many overlook, is those traits don’t matter without one underlying aspect: a factory needs to have the right certificates in place in order to sell to certain markets. Most don’t know what products need which certificates and unless you’re somehow an expert right off the bat in your field, this is going to become part of what you learn when starting to produce your own products.
The worst case scenario comes to play when you’ve got products stuck in customs because the factory you manufactured with doesn’t meet certain government regulations. This could mean you have thousands of sunglasses stuck at the U.S. CBP because your factory wasn’t FDA approved (sunglasses are considered a medical device in America) or that your tea packets in Australia are being held in customs because the factory isn’t certified by the TGA.
It’s not surprising that scenarios like these are common and one of the keys to ensuring you avoid this snafu is knowing which markets your factory typically produces for.
Unit prices won’t matter if the product your factory produces can’t be sold in your market.
There are tons of overlooked aspects of manufacturing abroad. Read the four main ones below:
Factory Workers Don’t Always Know What They’re Producing
For factory workers, this translates into certain products. What is commonly used in your country may not be used in theirs. Traditionally, this was very true among chemical factories that produced shampoos, conditioners, and body wash.
Factory workers from villages aren’t used to using these washes. When a quality control inspection agent goes to ask, “Where is the shampoo?”, they don’t know what shampoo is.
They know the product by the product number, not by the actual use.
Though this is rarely the case anymore, it was relatively common that factory workers wouldn’t understand what the products they produced were being used for.
Nowadays, almost every good factory will ensure their workers know the use of its products.
I’m Being Polite by Accepting This
Whenever doing work abroad, you’re going to experience and be offered things that you don’t commonly do. In Asia, smoking cigarettes and drinking heavily is a commonality when doing business.
Though it is usually a great time to share drinks with business partners, I remember one specific meeting when there may have been a down side. A factory boss went around our table offering cigarettes. I don’t smoke so declined, yet one of my clients who doesn’t smoke either, accepted the boss’s cigarette.
I’m pretty sure this was the first cigarette of his life, as he continued to cough a lot and constantly hit the ash tray.
Eventually, I asked him whether he actually smoked. “I do now!” he said.
He seemed proud to have sacrificed his lungs for this factory boss.
Factory bosses do like to engage foreign guests and smoking is always common in China.
What this client did not realize was, if the factory boss could get a nonsmoker to pick up a nasty habit so easily, imagine the terms they could get this client to agree to when it came time to start a production contract.
I’m not saying you shouldn’t build relationships this way in Asia, but what I’m saying is you shouldn’t change your habits for the sake of doing business in another country.
Where’d All the Workers Go
When visiting a factory, there is a lot you should be mindful of. There are surface level aspects like general hygiene and overall company culture, but also hidden tricks you need to be wary off.
One specific trick, is what I like to call made up factories—a factory is struggling to stay alive, has good management, and has hired fake workers for the day to make it seem like the factory is busy.
A busy factory usually means it’s a good one as other companies are already doing business with them. If a factory has a big buyer coming in, they may hire additional workers just for that day to showcase their busyness.
These tricks are why big retailers like Walmart have what they call “Jump Teams”. These teams race to factories with short notice to see what’s really going on when they aren’t there.
If you plan a factory tour, a factory has time to make sure everything looks as it should for your visit. If you really want to see the dynamic when you’re not there, give them a call and say, “You’re in the area and coming by now just to say hi.”
They’ll have no time to prepare whatever magic trick they may have planned or done for your last visit.
All We Need is a Sample
It is honestly amazing to see a factory’s capabilities. This is what got me excited by supply chains in 2010.
For a company looking to produce a new product or try a different factory, often times all they need is a sample. To me, this is incredible.
All you have to do is send a factory a sample and they’ll be able to produce it at scale (if they’re a good fit).
The key to this sample approach, is to make sure the sample you send is exactly how you want your product to be produced. There’s a funny story going around the sourcing community to emphasize this:
“There was a Turkish importer who had placed an order for shoes with one Chinese manufacturer.
When the shoes arrived at their destination, a nail was found driven in the bottom of each left shoe. The head of the nail stuck out of the sole about an inch.
The importer had given the factory an original sample pair and had said that he wanted the shoes made “exactly like this”. The only problem was that there had been a nail in the bottom of the shoe from which it had hung on a display rack.
The workers at the factory did not think it prudent to ask anyone about the nail. They figured, “that must be how they like their shoes in Turkey—with a nail driven into the bottom of the left one”.
If you’re producing products based on a sample you sent the factory, be sure to be clear of any adjustments you’d like made beforehand.
Let’s Produce Abroad
Don’t let any of these stories scare you. It’s just a matter of fact that the manufacturing industry can change that fast and your dynamic with a factory is always going to be a balance.
If you get to the point where you’re a factory’s main client, you’re usually in luck. They’ll go above and beyond to ensure you have a smooth relationship and continued success.
I remember one of my first factory visits back in 2010. I was looking to produce watches and went to one of the smallest watch factories I’ve ever seen. Flash forward seven years, and this watch factory now produces for some of the fastest growing eCommerce brands. They supported their customers as they grew and in turn, were able to grow with them.
When you think about working with a factory it’s not always best to choose the biggest. Find the one who you think can grow with you.