PBV 5: How to Source a Factory – Part 1: Sizing up the Situation

Manufacturing in China – Pulling Back the Veil, Part 5

This is Part 5 of a 10 part series called “Pulling Back the Veil” that aims to answer the basic question “how do I manufacture my product in China”? These articles are primarily step-by-step instructions and directly applicable information about manufacturing in China.  To see the other “Pulling Back the Veil” Articles, click the “Pulling Back the Veil Link” under the categories section to the right.

What I’m going to give you here is the secret sauce because, well, frankly, I believe that the more you know about what it takes to get quality products made in China, the more you will value our services. At this point, let’s say you have the engineering package: your drawings, specifications, some prototypes.… You’re ready to take your baby to market, now you just need to find a factory to make them. The recipe, roughly, should look something like this:

  1. Determine the correct size

    Large Metal-working Factory

    Large Metal-working Factory

  2. Find a partner/partners
    • Trade consultant
    • US trade company
    • Chinese trade company
    • Chinese agent
    • Direct to factory
  3. Identify factories
  4. Determine quality requirements/ability
  5. Get quotes
  6. Choose one or two factories
    Blow Molding Machine

    Blow Molding Machine

  7. Make samples/Approve (iterate)
  8. Place order

How Many?

There is a ton of information involved in getting this process right, so I’m going to make each step its own article. The first question you need to ask yourself is, how many products am I looking to make? By the time you are looking for a factory, you should have a pretty good idea of at least what your first order quantity will be and hopefully roughly projected numbers for the first year or two. You want to be looking for a factory that can match your size well, at least for a couple years.

The fundamental problem will be that the factory doesn’t really want or need your business
If the capacity of the factory is 50k pieces a day and you want to order 10k pieces, then you’re going to run into trouble. The fundamental problem will be that the factory doesn’t really want or need your business, but the trouble may manifest itself in higher prices, lack of responsiveness, poor quality, missed deadlines….

Two Days to Two Weeks

A very general rule of thumb is to work with a factory whose capacity is 5-50% of your order size per day so that your order will take the factory 2 days to 2 weeks to complete. This number gives a good incentive for the factory to want your order, but is not too large that you will be waiting months for your product. Obviously, this range is quite large. The key is to not be grossly mismatched with the factory capacity. As you grow, you will probably want to change factories to keep this ratio.

Work with the Person In Charge

Generally larger factories will have more capabilities, but that is not always the case. More capital can allow a factory to buy more expensive/higher quality machinery, but growth also means more bureaucracy. Chinese factories are very hierarchical. To get things done, you need to be working with the person in charge. It is often better to be working with a factory boss who is responsive and cares about your product with less technology than a sales manager with many accounts but better machinery at a larger factory.

Be on the Ground

Another note on size, unless you are at the factory, the numbers you get regarding capacity will probably be exaggerated. In a Chinese cultural perspective, bigger is generally better. Small restaurants are shunned by the wealthy in favor of sprawling mall size eateries and larger factories mean “better” business. You can get a rough idea of the numbers from your communication, but if you want to hone in, you’ll need to be on the ground. We’ll talk about how to get there in our next article.

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