Tuesday, April 7, 2020

5 Tips for Building a Relationship with Your Chinese Manufacturer

As the Pearl River Delta region in Guangdong province continues to evolve from being China’s industrial powerhouse to an innovation hub, more  factories are now opening their doors to startups. Some may even welcome you with open arms and offer perks like lower MOQ requirements and generous payment terms. Although it may be easier to find a manufacturer nowadays, the real challenge is how you can establish a solid relationship with this important business partner.
After all, your startup is heavily dependent on your manufacturer because they are the ones who will turn your ideas into reality. You may have heard some cautionary tales about working with Chinese factories. But based on our experiences as a manufacturer in China, many of these pitfalls can be avoided if you know how to build a good relationship with your manufacturing partner. Here are some tips:

1. Meet them in person and do a factory tour.
Although emails and calls are good for early-stage communication, it is worthwhile to make a trip to visit the manufacturer in person and get to know the people you are working with. This is a great way for you to make a good impression, as well as for you to tour their facilities and gauge their manufacturing capabilities. This acquaintance stage will go smoother if you work with a manufacturer referred by your business contact because the mutual connection can boost your credibility. Ideally, you should partner with strategic investors who can give you access to their large network of contacts and resources. But generally speaking, many investors are happy to offer advice and make introductions, even if they are not planning to invest in your startup.

2. Share your vision and long term plan.
Given the small volume of business you are bringing to the manufacturer at the beginning, chances are you will not be their significant customer. Try to get them excited about playing a role in your future by communicating your vision to them. Also, manufacturers typically commit a certain production capacity to their major clients well in advance. Our key clients always share their long-term production plans with us and propose estimated annual volumes for the next three years. Although startups may not be able to accurately foresee that far into the future, you should try to share your plans as soon as possible to ensure that your orders do not clash with the factory’s prior commitments.

3. Ask for their feedback.
This will make your manufacturer feel valued as an important business partner. You will also greatly benefit from this cycle of constructive feedback, especially during the EVT, DVT and PVT phase. Remember, they are a team of specialists who can give you practical tips on how to optimize designs for mass production and cost saving. As a startup, you can leverage their technical expertise and soak up their insights like a sponge. Even experienced brands with tried and tested products, like McDonald’s, often collaborate with us on their product designs because they want to hear feedback from our perspective.

4. Understand their constraints and set realistic targets.
If you think you’ve figured out every possible scenario and fine-tuned every detail to perfection, then you are about to learn a valuable lesson called Expectation vs. Reality. One thing you will soon realize is that it is impossible to achieve a 0% defect rate. So be considerate of your manufacturer’s constraints and set realistic targets together. During the PVT phase, be sure to work closely with your manufacturer to estimate the defect rate and then order spare components prior to mass production. We did this for a Disney product which required a specialized lenticular sheet that must be sourced from the United States months in advance. Our client purchased spare components for us in advance to avoid any production delay. A sense of trust and mutual understanding can go a long way. If you’ve got your manufacturer’s back, they will have yours too.

5. Station yourself at the factory and offer on-site support.
This is especially crucial at the start of mass production. Be aware that unexpected problems may arise at this stage even if all parties have done everything correctly up to this point. By stationing yourself at the factory, you have the opportunity to monitor the production lines in real time, offer timely feedback and debug on the spot to ensure continuous production. Your manufacturer will be grateful for your on-site support because any interruption on the production line will have a cost and schedule impact. Also, your physical presence can serve as a friendly reminder for the factory to prioritize your production.

About the Author
Carly Liao and Eddie Lam are husband and wife investors based in Hong Kong. Their two manufacturing plants in Guangdong produce plastic premiums for brands like McDonald’s, Disney and 3M. They enjoy connecting with passionate entrepreneurs because they like to invest in the people first, ideas second.

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