Manufacturing Agent in China
“STAK Services is top-of-the-line sourcing company. The partners live in China and speak English and perfect Mandarin Chinese. If anyone has ever done business in China, they know that communication is key. Charles and Peter are as good as they come. They are quick to respond via an app on your phone. They are very honest and they do high quality products. We have done one product with them and are now starting a second.”
– Tyler Carson, President, Alignment Pro
If you are wondering how to find a good manufacturing agent in China, the operative words become, “in China.”
Far too many companies that claim to be an effective resource for connecting U.S. firms with Chinese manufacturing facilities, do not have a physical presence in Asia. The bottom line is, regardless of the progress we have seen with Internet communications, there is still no substitute for face-to-face contact.
When issues arise, and they always do, it is critical that you partner with a firm such as STAK that can meet directly with the manufacturer to address them. We become your negotiating team on the ground in China.
STAK maintains an impressive list of references and testimonials to help you understand the importance of retaining an experienced manufacturing agent in China.
We love working on all products! However, not all of them are within our reach. We try to stay away from commoditized products like off-the-shelf promotional goods – and we are also limited on how much engineering we can do. We don’t work with highly complex or high-precision assemblies.
Our sweet spot is with large volume original products that have a technical element or where some degree of engineering is required. We do many consumer electronics; products with batteries and alternative energy sources such as solar; durable consumer goods; cosmetic accessories; packaging; and soft goods. We will consider anything that is new, challenging, and that will require effective teamwork and oversight to make it a success! Send us over your project for a free DFM (design for manufacturing) analysis and project review.
Do you need help with arranging the shipment of your goods from door-to-door? We work with multiple agents and shipping companies that offer competitive freight and shipping rates, as well as bulk-discounted courier and air shipping services. Depending on your needs, we can assist in providing recommendations on shipping, fulfillment, and direct-to-customer drop shipping.
The 6 Biggest Risks of Doing Business in China
Anyone considering a business relationship with a company in China should take a few minutes to learn about the risks involved:
Bait and Switch/Quality Control Issues
Imagine that you are working with a supplier that you located on Ali Baba. After communicating with them multiple times and feeling confident that everything is going perfectly, you receive a prototype, which looks great. You place a sizable order and commit substantial funds toward production. You are on a tight time schedule, so you hope for the best.
Weeks go by. Eventually, you receive a container of product and there is a flaw. Or, the materials used for the actual production are of a lesser quality than those used for the prototype. Sometimes this is intentional. The factory makes a good impression with the sample but follows through with shoddy materials. Other times it’s not intentional and might be due to a lack of communication or clear specifications. Either way, it is a very costly mistake and may be impossible to remedy.
The Customs and Border Protection (CBP) Nab
You have decided to place an order for an electronics product such as a tablet or MP3 player. You have spent significant time and energy defining the quality with the manufacturer. You have tested the prototype and you place your order, confident that your diligence will be rewarded.
You wake up to an email from CBP indicating that your shipment has been detained and that you must show proof that your hardware is properly licensed. You had logically assumed that since the factory routinely generates products with HDMI connectors, they are licensed to use the technology. You now realize, to your horror that the factory does not have the required documentation and you are on the hook for the entire order.
Rather than receiving your product, you now must hire an attorney who specializes in imports to help release the product. Regardless of who is at fault in these types of cases, the liability generally falls upon the importer. Import attorneys are expensive; resolutions to these situations are often tedious and sometimes futile.
The abbreviation FOB stands for “Free on Board.” This indicates that pricing and risk of loss transfers from the seller to the buyer at the designated loading port, as soon as the freight crosses the rail of the cargo ship. Another term you should be familiar with is Ex Works (EXW), which means that the seller takes no responsibility for export duties or transportation. These trade terms also define who is responsible in the event that a shipment is lost or damaged during transit.
It is critical to understand these and other terms, while using them appropriately during contract negotiations to ensure that your product is not over or under-insured. There is nothing like surprise taxes or duties to sour an otherwise attractive deal.
As a general rule, factories are only concerned with getting your product shipped out of Asia and will provide little or no help on the importing end. A recent example is a solar panel factory that was happy to produce and ship panels to a customer in the United States without concerning themselves or their customer with the recent antidumping tariffs that have been levied on these devices. The customer was left with hundreds of thousands of dollars in duties payable.
The House Fire
Imagine that you have an exciting new product and you’re anxious to get it into the marketplace. You dive right in. You spend serious money on engineering and fly to China to locate a supplier who seems like they will make a good fit. You drop the project in their lap since the market is hot and you really need to get your product out. You assume the factory has your back and has dotted all of the I’s and crossed all of the T’s.
You take delivery and get the product into your excited customers’ hands. Sales are brisk and you’re getting great feedback. Then you receive a phone call from an irate consumer claiming that your product caused a fire and burned part of their house down.
Rather than capitalizing on a hot market, you now have to spend exorbitant amounts of time and money with a recall. The factory refuses to take responsibility and will not even replace or repair your remaining inventory. Many companies never recover from such a circumstance.
Anyone who has spent time on Ali Baba (or any other sourcing website) or has done business in China is likely aware of the term “trading company.” Trading companies are a large part of the manufacturing economy in China. They can be a blessing and a curse for anyone wanting to source or create a new product.
For those who want products that are customized, trading companies are typically more curse than blessing. Although the factory landscape is slowly evolving, most factories in China are ill-equipped to deal with English-speaking clients, especially those who do not know exactly what they want.
Enter the trading company. Trading companies attempt to bridge the gap between factory capability and overseas customer needs. Although the trading company is typically much better with communication, they too are essentially a customer of the factory and are often not in control of the manufacturing process. They lack the authority and technical know-how to do anything more than basic product transactions.
For those ordering an off-the-shelf product, they can be effective. However, a custom design for any re-design is often beyond their capability. This leads to a broken telephone situation, where communication becomes ineffective. To make matters worse, trading companies often pose as the factory giving you the impression that you are receiving factory direct pricing. In fact, you are getting a marked up cost and the relationship becomes completely fragmented when things go badly, since you are not dealing directly with the factory. A bi-lingual manufacturing agent in China can eliminate these situations.
To the untrained eye, most search results on a platform such as Ali Baba appear to be factory direct. In fact, the majority of these listings are trading companies and the only way to learn the truth is to meet with the owners and management by visiting the factories.
The Fast One
Even companies experienced in working with suppliers in China for many years encounter serious issues when they stop paying attention. Once prices have been negotiated, orders have been placed, and everyone’s happy, the importer often feels they are in a position to squeeze the factory pricing down.
Since raw material and labor costs are constantly increasing and the factory very much wants to keep the business, they cut costs by using lower quality materials and swapping out components. Examples include exchanging brand-name circuit boards for gray market components or swapping decorative hinges with standard versions on a cabinet to save a few dollars.
Without proper oversight, these unchecked and unapproved substitutions typically yield detrimental results. They are often very expensive if not impossible to fix once the goods land in your warehouse.