September 2, 2020

7 Manufacturing Challenges Due To Lack Of Transparency In China & How To Mitigate Them

In This Episode...

Recently Renaud wrote a blog post on the 'China Law Blog' titled: Verifying and Monitoring Your Chinese Suppliers. In it, he discussed 7 challenges facing buyers with Chinese suppliers which stem from a lack of transparency. We'll discuss these challenges in today's episode.

When we speak of risks and challenges these days many buyers are thinking of the effect of the US/China trade war, the situation in Hong Kong, and other political issues on their business, but the risks covered here are related to the daily struggle that buyers have just to receive their products at the quality they expect and some of the steps you need to take to mitigate them.

Show Notes

Start to 4:35 - Introduction + what are the 'risks' and challenges facing buyers today that are NOT box-office news topics like US/China trade war, Hong Kong, Xinjiang, etc? The 7 situations where challenges occur due to a lack of transparency and how these are very damaging. Podcast episode on social compliance audits (referred to around 2:25)

4:35 to 12:17 - 1. Supplier screening & qualification - taking control of your supply chain and not letting the supplier keep sub-supplier information, etc, from you. 

12:17 to 18:33 - 2. New product development (manufacturing side) - includes how prices can be increased without warning and suppliers can skip pre-production steps like a pilot run.

18:33 to 25:54 - 3. New product development (design side) - including why you should expect to be given up-to-date designs for your product and not being sucked into losing the rights to your IP to OEMs who want to lock you in by holding your designs. Podcast episode on choosing the correct supplier (relevant to this section).

25:54 to 30:40 - 4. Confidentiality of information - how Chinese suppliers can play 'fast and loose' with information and IP that should remain confidential and how to safeguard against this.

30:40 to 37:29 - 5. Purchasing materials & components - being wary of counterfeit components and how to keep tabs on suppliers who may switch out components to improve their profits.

37:29 to 40:02 - 6. Manufacturing (Sub-contracting) - can you be sure that the production is truly carried out at your supplier's factory as agreed, or is it being subcontracted to a sub-supplier that you don't know about due to being too busy? Solutions to this issue.

40:02 to END - 7. Your supplier selling your products without permission - are you open to abuse by the supplier because they have your tooling and can use it to produce your products and sell to other clients or in your market against you? What to do to avoid this.

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