Thinking about manufacturing your product overseas?
Our Guest Blogger, Ashton Udall, is a partner at Global Sourcing Specialists, a product development and sourcing firm that assists businesses, inventors, and
start-ups tap overseas resources to succeed in the global economy. He has helpful advice on finding Asian manufacturing partners for the readers of AmericanInventorSpot.com.
Here's his article:
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Today, Asia is a hot topic amongst small businesses and inventors who want to benefit from the cost-savings there. If you are taking a product to market that will compete against products that have been on the market for some time, you might have no choice but to begin manufacturing overseas. Whatever your impetus, it's a topic that's worth becoming familiar with when you assess manufacturing options for your product.
But, before newcomers to the Asian manufacturing and business environment jump in, we recommend that you understand some crucial issues and strategies to manufacture abroad successfully. In this article, we've attempted to distill a complex subject down into four overarching themes, or issues, that come up when sourcing (i.e. the process of finding a manufacturing source) overseas, particularly in Asia.
At first glance, these four points might seem intuitive or too theoretical, but don't underestimate their importance. These issues will crop up again and again and you would be surprised at how many people neglect these general practices when they actually begin operating overseas. In future articles, I'll delve into more detail in each area with the intent of passing on more concrete steps and tips. But as my grandmother always said when I was a kid, "when thinking about manufacturing products in Asia, you've got to understand the big picture first".
- Be Aware of Communication Barriers
You cannot communicate too much during the product development and manufacturing process. But, be prepared to face communication barriers in language, culture, time differences, and distance. The subtleties of understanding words, body language, behaviors, and more, are numerous and challenging. Add in the factors of working by phone (cannot see a person's body language) or email (cannot see or hear someone) on top of the cross-cultural communication factor, and you have many chances for something to be misunderstood. Remember, you are trying to get something made thousands of miles away exactly as you have defined it here. There is little to no room for error. It might be worth stopping and taking a second to educate yourself a little more about what might come up with a given culture. You might not care to try and fully wrap your mind around the intricacies, but there are things to take heed of that could impact your business.
- Perform Significant Due Diligence
Many have rushed into the sourcing process and failed because they did not spend sufficient time to find the right partners and take the right steps to control the process. This aspect of the due diligence process is crucial to success. Online trading websites and portals have made the process seem deceptively simple and safe. There is more to good sourcing strategy than simply finding someone who represents that they can make what you are requesting over email. I cannot begin to list the number of stories I have heard from lawyers about U.S. companies that have paid severely because they did not perform their due diligence during this step. If you are going to be investing significant resources with a manufacturing partner to build your product, you will want to know as much as you can about their abilities and background, and you will verify this through credit checks, reference checks, and eventually by visiting the factory. In addition, have another verified source lined up and ready to go just in case issues come up with your first source. Invest more time up-front to make sure these are in place and you will avoid costly problems later.
- Set up Your Quality Control
When you begin sourcing, finding suppliers with low costs will not be difficult. Finding suppliers that can provide high-quality product will be the biggest variable. The more factories you visit, the more you realize that vendors come in all shapes, sizes, conditions, operational proficiency, and attitudes. One of the main reasons I emphasize the previous point regarding inspecting who you will be working with is that you want a vendor that is going to be able to provide the quality that your product and business requires. The vendor is most likely going to tell you that they can, even if they can't. So inspection and verification are your best protection measures against paying for and receiving a container load of poor-quality product that you cannot sell. To begin with, inspect a factory's quality by having them send you samples of their work. When you believe you have the contacts you need, someone, perhaps yourself, should visit the factory in person. As a company, we never work with a factory we haven't visited. If inspecting a secondary vendor supplying sub-assemblies or components to a primary vendor is necessary, it must be done. Routinely inspect and verify-it is essential to high-quality product.
- Find Someone on the Ground You Can Trust
This "someone" on the ground can be you, or someone you are working with. Whoever is performing this step, it is an essential strategy to accomplish the previous point (routine inspection and verification) effectively. Do not rely on the vendor's word that everything is flowing smoothly. Instead, rely on yourself or a 3rd party there who you can trust to look out for your best interests. This is one of the best strategies in reducing the risks and maximizing the rewards of sourcing in Asia. The more adventurous might want to try and accomplish these things personally. Plan for a steep learning curve a substantial time investment on your part. If you are interested in finding support, there are service providers out there who can assist you. Import brokers, trading companies, quality control inspection agencies, and others will provide varying levels of support to you throughout the process. If you are operating with a foreign entity in this capacity, again, perform your due diligence.
Each product and project is different, so it's up to you to determine how these strategies will best be implemented in your business. In the end, working with overseas manufacturing partners can increase your profits, be a great learning experience, and can be a lot of fun.
You can reach Ashton at:
Global Sourcing Specialists
2226 A Westborough Blvd, #258
South San Francisco, Ca 94080
Tel: (415) 359-8115
Fax: (650) 588-7340