Global Perspective: Fast, Cheap or Good: How to Pick the Right Two In China1 Jul, 2013 By: Steven Feinberg Response
Did you hear the one about the marketer who went to China and ground the price down so low, the quality of his product was reduced to dust? It happens every day and is a reminder of the old adage that the project management triangle consists of three somewhat opposing forces: service as defined by turnaround times, price and the quality of the end result.
In simple terms, this equation has been represented as the somewhat glib generalization: fast, cheap or good – pick two. When it comes to sourcing in China, it’s an especially relevant trichotomy to consider because, in realistic terms, you cannot achieve all three without making some serious compromises that just might jeopardize the vitality of your business. There’s a right way to go about the process, and there are many moving parts to consider. Here are some of the most important ones.
One of the keys to producing a quality product manufactured in China is to carefully plan ahead – and then to allow adequate time and resources to accomplish your goals. One of the byproducts of a prolonged recession is that everyone has gotten a lot hungrier. The accompanying desire to please and succeed has sometimes fostered a mindset where anticipated turnaround times and cost expectations are out of alignment with reality when it comes to delivering a first-rate product.
The first step in ensuring you get what you want is to carefully plot out all of your product specifications to the most finite detail. However, when it comes to China, fastidious planning alone may not be enough. The reason is that certain terms are subjective.
Take a children’s plush toy, for example, an As Seen On TV product category that has gain in popularity in recent years. An American’s version of “soft” might not be in alignment with what a Chinese manufacturer considers “soft”. What about the type of stitching, details such as the material that comprises the eyes, and the kind of stuffing that will be required to pass regulatory muster? Such variables have to be thought through and selected with care – and they affect the ultimate cost to manufacture.
That’s why the process of sample runs and reviews is so crucial. They are the only way to guarantee that your expectations for quality and detail will be met. And, frankly, the process takes time. When timelines are escalated, the quality is often compromised and, ironically, the process winds up getting delayed anyway. That is why we strongly recommend that a marketer plan on approximately six months for the typical review cycles to play out and to arrive at a product that meets or exceeds expectations ready for mass production.
This perspective is not a question of a “can do” or “can’t do” attitude – it is simply a candid point of view borne of experience. In fact, one of the perils of dealing with Chinese manufacturers is that you can always find someone who will promise to deliver a product based on an aggressive timeline or price, and that leads us to our second key insight.
You Get What You Pay For
In order to get a quality product that aligns with your mind’s eye, it’s important that you not over-negotiate. Given the nature of China’s somewhat “Wild West” reputation, this assertion may seem counter-intuitive. What do you mean, over-negotiate?
Having sourced hundreds of different products there, we’ve learned that if you grind too hard on the price, you will simply wind up getting a product of inferior quality. Therefore it’s important that your sourcing agent have the knowledge and equity with manufacturing partners to know where the line should be drawn.
This is especially important for products marketed via DRTV, because they need a cost of goods that is one-fourth to one-fifth the retail price in order to sustain high media costs. What you don’t want to do is wind up shooting yourself in the foot by shaving the price so low that the end result is a product that disappoints your buying public.
The reality is that the public will destroy your reputation online, and with more consumers using second screens such as tablets and mobile devices to check out product reviews before they order, if your product is – to use a Bart Simpson term, “craptacular” – you’ll be sunk before your ship even leaves the dock.
Proceed With Caution
Finally, it’s absolutely essential that you select a manufacturer that specializes in your specific product category. Ask any factory owner if they can make a particular widget and they are programmed to say, “Yes!” Yet you would never want to hire a factory that specializes in MP3 players to make your doll, would you?
That’s why it is vital that your sourcing agent have boots on the ground in mainland China to make sure that the factory has the expertise and management skill to deliver a quality product at the right price. That presence can also help accelerate the process leading up to full manufacturing runs by reducing the need to ship product back and forth between China and the U.S. for review cycles.
Consider these variables and choose a sourcing agent carefully. If you do, you won’t just have a product that is merely good amid the trifecta of cheap, fast and good – but one that is great.
Steven Feinberg is the CEO of SF Global Sourcing (www.sfglobalsourcing.com) and a past chairman of the Electronic Retailing Association (ERA) Board of Directors. His company helps marketers source and manufacture a complete product configuration by leveraging a worldwide partner network, with a concentrated focus on sourcing in China. He can be reached at (855) SF-GLOBAL or via E-mail at firstname.lastname@example.org.