China Manufacturing Decoded
 

China Manufacturing Decoded

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Join Renaud Anjoran, Founder & CEO of Sofeast, in this podcast aimed at importers who develop their own products as he discusses the hottest topics and shares actionable tips for manufacturing in China & Asia today! WHO IS RENAUD? Renaud is a French ISO 9001 & 14001 certified lead auditor, ASQ certified Quality Engineer and Quality Manager who has been working in the Chinese manufacturing industry since 2005. He is the founder of the Sofeast group that has over 200 staff globally and offers services (QA, product development & engineering, project management, Supply Chain Management, product compliance, reliability testing), contract manufacturing, and 3PL fulfillment for importers and businesses who develop their own products and buyers from China & SE Asia. WHY LISTEN? We‘ll discuss interesting topics for anyone who develops and sources their products from Asian suppliers and will share Renaud‘s decades of manufacturing experience, as well as inviting guests from the industry to get a different viewpoint. Our goal is to help you get better results and end up with suppliers and products that exceed your expectations!

Episodes

Why Pre-Production Samples Are So Important

Friday May 21, 2021

Friday May 21, 2021

In This Episode...

Renaud Anjoran, Sofeast's CEO, is back with Adrian from the team this week and they're discussing why pre-production samples (also known as golden samples) are such an important tool for obtaining your desired results once your products go into mass production.

What are PP samples? How do they evolve over time until they're a final PP or 'golden' sample? What problems do they help avoid? How to specify your exact requirements? Who pays for them? These questions and more are answered in this episode!

 

Show Notes

00:00 - Introducing the episode, discussion about the COVID situation and problematic raw material cost rises 

03:34 - What are pre-production samples and where do they fit in the production process? 

12:57 - Specify what YOU mean by a PP sample 

14:58 - About 'Golden' samples

16:07 - How do you assure that your external inspection company gets hold of the PP sample?

18:52 - Some issues that we can expect to iron out during pre-production sample development

21:58 - Is it common for the PP sample process to be skipped? 

23:00 - Why do suppliers deviate from your PP sample during production and what can be done to guard against this happening? 

27:28 - How to reduce variations? 

29:00 - Should importers pay for PP samples? 

31:01 - Does the inability to visit China or other Asian countries hinder an importer's ability to approve samples? 

34:05 - Wrapping up

 

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Greg Fleming | Vietnam VS China Manufacturers & Digitizing Processes In The Factory

Friday May 14, 2021

Friday May 14, 2021

In This Episode...

Renaud interviews Greg Fleming, an experienced merchandising and manufacturing operations manager who went from New Zealand to Australia to China and finally is now based in Ho Chi Minh City in South Vietnam.

Greg's background is mainly in the apparel trade, from fabric production to retail. Due to his experience in both Vietnam and China, he is well-placed to give us some really interesting insight into manufacturing in both countries.

Since Vietnam is a very popular China-alternative for many importers, let's hear more about it from Greg here!

 

Show Notes

00:00 - Introducing the episode, Greg, and his experience

01:51 - What's the COVID-19 situation in Vietnam? 

04:51 - What are the main differences between working with Chinese or Vietnamese manufacturers? 

09:11 - What have been the main obstacles that have prevented Vietnamese manufacturers from digitizing their processes? 

12:23 - Is there a particular software Greg suggests for apparel based on his experience? 

15:56 - How software can save on costs of getting a new apparel product from concept to production (example) 

17:22 - How software can save on costs of getting a piece of new furniture from concept to production (example) 

19:29 - When starting the digital transformation on a factory, where to begin? 

28:57 - Summarising Greg's approach of implementing IT  

31:15 - Is there a risk that some importing countries will start to demand more proof that products are truly made in the country claimed, materials are not from certain contentious areas, they are sustainable, etc? What is the solution to this? 

34:40 - Wrapping up

 

Related content...

Remember, Sofeast provides most of our solutions in Vietnam, too, such as product inspections and factory audits, so if you are importing from Vietnam and need assistance, we can help. Visit our website at Sofeast.com. 

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How To Qualify A Contract Manufacturer Or Component Supplier? (Best Practices)

Friday May 07, 2021

Friday May 07, 2021

In This Episode...

Sofeast's CEO Renaud Anjoran joins Adrian from the team to explore the best practices importers could follow when sourcing a new contract manufacturer or component supplier in China, or beyond. This includes sourcing options (who to use), the typical sourcing process, if the lowest prices are always best, IP protection, manufacturer types, and CM sourcing tools and steps.

The purpose of this episode is to give you the awareness of risks that await you, suggestions on how to qualify better supplier/CM options, and an understanding of the different types of manufacturers you may encounter and what their expectations may be.

Hopefully, you'll find a CM or supplier who better aligns with your needs.

 

Show Notes

00:00 - Introducing the episode 

00:49 - Who should be doing the sourcing? Is working with a sourcing agent necessary?  - Renaud explains the different sourcing options and some of their pros and cons:

  • 01:53 - Commissioned agent. 
  • 05:00 - Third-party sourcing agency. (This is the model Sofeast's supply chain management team follows when sourcing suppliers for you). 
  • 05:52 - A trading company. 
  • 09:07 - Buy direct from a factory yourself. 

12:41 - Exploring two typical sourcing process 'templates' that can generally be followed by most buyers. 

  1. If you buy standard off-the-shelf products...
  2. If you develop your new product with confidential IP...

After going through a thorough and careful sourcing process you can end up with a preferred supplier and keep one in reserve as a backup factory, too.

20:14 - Is chasing the lowest price the best strategy? - choosing the lowest price comes with risks which we explore here.

26:33 - Tips to protect IP when sourcing manufacturers or suppliers - don't send designs, etc, to 20 potential suppliers, as you are leaking it yourself. Don't assume that your local NDA will protect you in China, it won't. 

🤔 Explore further: We spoke before about manufacturing contracts/agreements here.

32:38 - Which of the different types of manufacturers is suitable for you? ODM, OEM, or CM? - Renaud explains each of your manufacturer options:

🤔 Explore further: We covered OEMs, ODMs, and CMs in detail in this episode.

41:35 - What kinds of tools and steps might buyers follow when sourcing a CM? - if you develop a new product you need to consider the following tools and steps...

47:11 - Wrapping up

 

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9 Things Small Importers Can't Negotiate With Chinese & SE Asian Suppliers

Friday Apr 30, 2021

Friday Apr 30, 2021

In This Episode...

Sofeast's CEO Renaud Anjoran is joined by Adrian from the team for a conversation about some of the things that smaller companies who are getting products manufactured abroad either cannot or will have great difficulty negotiating with suppliers in China, Vietnam, or other popular manufacturing destinations in Asia?

This list of 9 items will give you some idea about what is realistic if you're manufacturing lower volumes.

 

Show Notes

00:00 - Introducing the episode 

02:24 - How do you define what a small importer is? 

9 Things Small importers can't negotiate with suppliers in China & SE Asia

04:41 - 1. Negotiating with large contract manufacturers 

10:34 - 2. Reserving production capacity for the mid- or even the long-term 

13:56 - 3. Negotiating directly with large sub-suppliers 

17:59 - 4. Gaining open-book visibility about the supplier and their costs, facility, etc  

24:37 - 5. Forcing the factory to use your own ERP system 

26:32 - 6. Negotiating ‘open account’ payment terms 

28:08- 7. Negotiating product warranty & liability from the supplier 

30:52 -8. The ability to physically shape the supply chain 

32:25 - 9. Having their own teams on site all the time 

34:17 - Wrapping up

 

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Phil Brown | ISO 9001 QMS Features, Benefits, & Implementation Tips

Friday Apr 23, 2021

Friday Apr 23, 2021

In This Episode...

Adrian from the Sofeast team is joined by special guest Phil Brown, owner of Phil Brown Consultancy, who is an ISO 9001 and 14001 consultant in the UK.

Phil talks us through the ISO 9001 QMS, the requirements that make up this standard, benefits, the difference between good and bad implementations, and some tips from him to follow if you're implementing the QMS sometime soon.

 

Show Notes

00:51 - Introducing the episode and introducing Phil and his business

01:16 - Explaining the ISO 9001 QMS and its requirements - ISO 9001 is a standard designed to assure that companies deliver their customers' expectations and requirements. Phil goes through the different requirements for the standard:

  • 01:45 - Leadership
  • 02:09 - The way inquiries, quotations, and orders are handled
  • 02:29 - Using approved suppliers
  • 03:19 - Noncomformances
  • 05:05 - Records of employee competencies
  • 06:30 - Setting targets for improvement
  • 08:04 - Regular review of the business systems
  • 08:22 - Management review
  • 08:57 - Production planning and scheduling
  • 09:40 - Control of design and development
  • 10:18 - Documented information (and analysis of it)
  • 11:28 - Identification and traceability
  • 12:43 - Control and measuring equipment
  • 13:53 - Continual improvement

14:25 - Drawbacks of implementing a QMS - ISO 9001 accreditation can sometimes be used as a 'badge' by management rather than a means for real improvement of the business. 

16:17 - The importance of everyone being involved in ISO 9001 QMS implementation - this is from top management down to the individual operator. Renaud recently wrote about the mistake some management make by relying solely on a quality manager to implement the QMS and otherwise not getting involved.

17:19 - Communication's role in staff retention - a dialogue between workforce and management is far better for the company than if workers are kept in a vacuum and unaware of how the business is doing. 

18:37 - What's the difference between 'good' and 'bad' ISO 9001 implementations? - a good implementation is where (in the case of a 3rd party consultant) the person/s implementing the QMS becomes like a part of the company, gets involved in the ISO systems, but also helps encourage operators to do what the system requires. Whereas, bad implementations are often where there's no real personal involvement in it, such as when software is used. 

20:13 - Some real examples of QMS implementations that Phil has been involved in 

24:30 - Some tips from Phil for manufacturing companies who are planning to implement ISO 9001 

25:33 - Wrapping up

 

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Getting To Grips With Non-Recurring Engineering (NRE) Costs

Friday Apr 16, 2021

Friday Apr 16, 2021

In This Episode...

Sofeast's CEO is joined by Adrian from the team and they discuss Non-Recurring Engineering (NRE) costs for manufacturers. As the name suggests, these costs are usually one-off and accrue towards the start of a new product development project and are what it takes to get your product into production. These costs are perhaps better known as R&D costs, and it's important to get to grips with them as they have a great impact on your product's sale price, as well as the feasibility of manufacturing it in the first place.

So, let's get to grips with NRE costs in this episode.

 

Show Notes

00:00 - Introducing the episode

01:15 - What are NRE costs? (A brief summary) - essentially NRE costs are all of the one-time expenses (investment) that you need to pay in order to get your product into production.

08:01 - Some examples of common NRE costs for the different production processes:

  • Plastic injection molding 
  • Metal parts 
  • Electronics 

14:37 - Going through some of the other processes and materials, and their costs - extrusion (plastic or aluminum), compression molding, silicone, etc.

17:11 - Why your NRE costs are probably higher than you're initially anticipating - Renaud shares an example of real Sofeast customers who believed that their NRE costs were fairly modest until they did the research.

19:24 - Do some suppliers pay the NRE costs for you? - it may be that when purchasing very standard products, or white labeling products which have already been developed, that you won't need to pay NRE costs as they have already been paid by the manufacturer who supplies them.

26:02 - Using a development or development & manufacturing agreement to protect yourself 

27:55 - Most manufacturers are more interested in mass production rather than product development, so how does this impact you during the R&D stage? 

28:55- How to gauge what the manufacturer is comfortable with doing for you - in general, the closer you are to production the more appealing a prospect you are to manufacturers...

30:57 - If you have a prototype that is fully functional, you're ready to give it to a factory and go into mass production, right? - No. This would indicate that you aren't even halfway yet! 

33:26 - NRE costs you need to consider when projecting your costs - these activities typically full under the umbrella of NRE costs.

34:40 - Typical recurring costs - for comparison, here are some of the typical recurring costs you will also need to consider when developing and manufacturing a new product.

37:50 - Wrapping up

 

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7 Common Plastic Injection Mold Tooling Development, Approval, & Maintenance Pitfalls

Friday Apr 09, 2021

Friday Apr 09, 2021

In This Episode...

Andy Bartlett, an experienced British product designer who has 25 years of experience in product design, development, and working with manufacturers in China, returns to the podcast to join Sofeast's CEO Renaud for a lively discussion about the kinds of issues and common pitfalls that can come up when developing, approving, and maintaining tooling for your plastic injection molded products.

You'll learn why supplier selection is key, how to protect your IP, tooling budgets, managing the process, and much more besides, as Renaud and Andy both have many years of experience in dealing with mold fabricators and the manufacture and design of plastic injection molded goods.

 

Show Notes

00:00 - Introducing the episode & our guest, Andy - tooling with a focus on plastic injection molding. How to go into tooling once prototype plastic parts have been made and are ready to go into production? What kind of defects may we see? Covered from the angle of the 7 most common mistakes to avoid.

02:31 - Mistake 1. Going straight into the fabrication of the tooling from a 3D CAD drawing without doing DFM, DFQ, & DFC reviews - Andy suggests using the interference check with CAD software and looking for issues in the tooling design like knife edges and radius adding, understanding where the cooling channels are, etc. 

07:32 - When is the real golden sample ready? - actually, it's after tooling has been fabricated and used, as this is when you see flow lines, gates, etc. 

09:12 - Mistake 2. Not giving enough time to iterate tooling and verify tooling - the first parts that come off will probably prompt you to need to make changes to tooling, so factor that time and budget in. 

13:08 - Mistake 3. Getting tooling made in China without making sure to use an enforceable contract - less experienced importers may feel that signing an NDA or an agreement from their own country is enough, but then find that they don't 'own' the tooling and can't be pulled out. 

17:58 - Mistake 4. Purchasing tooling from a supplier on Alibaba, etc, without confirming who designs and produces the tooling - risks include your small project being outsourced to a tooling shop you have no knowledge of which means a lack of control over your project, your IP, etc. 

21:41 - Horror stories where toys have been copied and sold on the market before your original product has even come out - if your tooling design and fabrication is outsourced, perhaps the outsourcer might also decide to produce your tooling again and sell it to someone else to produce your product themselves if they like it! 

23:34- Assessing toolmaker quality - A tip is to look at the floor of the tool shop of your tooling fabricator. If it's clean and well-managed, you have a good chance that they're able to produce quality tooling. 

25:13 - Mistake 5. Not maintaining the tooling carefully - if tooling needs to last for a number of years, it's important to store and maintain it carefully in order to avoid rust and damage. 

25:52 - Mistake 6. Not getting a guarantee for tooling -  Andy reminds us to make sure that tooling is provided with a manufacturer's guarantee that it will be usable for the right period of time appropriate to the quality of steel used in its construction and projected volumes. 

28:27 - Why from a designer's perspective it's better to have a cohesive alignment between the manufacturer and toolmaker - this reduces overall risks of things going wrong and also the effort needed to solve problems.

30:16 - Mistake 7. Not keeping tabs on the health of your supplier's business - if their business fails your tooling could be in danger!

33:42 - Wrapping up

 

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Why Pilot Runs Are A 'Must-Do' When Launching New Products

Friday Apr 02, 2021

Friday Apr 02, 2021

In This Episode...

Sofeast's CEO Renaud and Adrian from the team explore an important part of the new product launch process: pilot runs.

What is a pilot run, why is it so important when bringing new products to market, and what are the benefits we can expect when performing them before going into full production? These and more questions like this answered in this episode!

 

Show Notes

00:00 - Introducing the episode

00:51 - Why the pilot run is such an important activity when launching new products

03:11 - Why a pilot run helps you to validate whether the workshop is going to be able to mass-produce the products - initial prototypes made by an engineer on a bench, no matter how good, aren't ready for mass production without a lot of risks. These prototypes aren't made with the same processes as will be used in mass production, so going ahead without the pilot run is skipping a step.

06:25 - When to perform a pilot run, and how many runs to perform before going into production - you may perform more runs until all of the 'bugs' have been ironed out. Renaud also explains how in some industries, such as consumer electronics, they perform specific pilot runs for engineering, design, and production validation (EVT, DVT, and PVT), each focused on testing different elements of product design and production process.
Some comments on keeping suppliers accountable and being able to control costs better thanks to more visibility over what comes off the line with issues at an early stage.

10:32 - What we can learn from pilot runs used in the automotive industry? - if an auto part can't be made at the right speed and quantity it's a big problem, so numerous production trials are used to assure that the process is capable of fulfilling the correct rate. This principle applies to other products, too.

12:12 - Is a pilot run still appropriate when manufacturing smaller quantities? 

13:33 - How about if you are producing an existing product, but with a new manufacturer?

14:22 - Why DON'T Chinese manufacturers like performing pilot runs? - yes, these reasons cause this:

  • They can be overoptimistic and underestimate the pilot run's importance
  • Staff are often paid per piece which doesn't fit well with the stop/start pilot runs

16:11 - The key benefits of performing pilot runs:

  • It forces the manufacturer to plan the process and production linearly and so avoid delays
  • It trains the staff on small quantities at first and drives the supplier to write good work instructions
  • It allows you to see what does and doesn't work and make changes before too much money is at stake
  • Testing areas and equipment readiness can be assessed
  • The run rate can be tested to assure that no bottlenecks are slowing down the process unduly
  • Stress testing forces process and quality engineers to find issues and work on them before mass production

Basically, "learn from the mistakes before they become too costly."

18:32 - Wrapping up

 

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Is Investing In Process Automation In The Factory Worth It? (+ Implementation Best Practices)

Friday Mar 26, 2021

Friday Mar 26, 2021

In This Episode...

Adrian asks Renaud the questions: "Is Investing In Process Automation In The Factory Worth It?" and "What are the best practices to follow to smoothly transition into more automation?"

In China especially, there's a trend to replace staff with equipment, and part of this automation drive comes from the government itself who is steering the manufacturing sector towards higher-tech products.

As staff costs rise, the temptation to use equipment and robots due to the seemingly lower cumulative cost over time is understandable, but is process automation truly worth it, and If we do want to implement automation into the factory, what are the best practices to follow to make it a smooth transition? That's what we get into here...

 

Show Notes

00:00 - Introducing the episode

02:35 - Summarising process automation in the factory - essentially it's the use of equipment and software to replace human labor. This sounds great and can be, but this episode aims to dispel a lot of the fantasy surrounding automation.

05:07 - Is rushing into automation common amongst Chinese manufacturers? - yes, the government and owners are focused on going higher-tech more quickly, but they're walking a tightrope between increasing equipment use and putting too many staff out of work. The usual attitude is that to go up in the value chain processes need to be automated, which is somewhat true, but it's the implementation of automation where things can go wrong if it's rushed into and the pros and cons aren't fully investigated and considered.

07:54 - The benefits & drawbacks of automation in the factory - going through a list, starting with the benefits:

Benefits

  • (08:07) Lower costs of equipment in comparison to employing numerous operators over time (labor cost/social insurance/etc)
  • (10:27) Equipment reduces defects over operators (human error) and removes the need for an operator that focuses on rework
  • (11:30) Reducing management overheads and maybe even dispensing with requiring an HR manager to manage multiple staff

Drawbacks

  • (12:09) The cost of interest on capital expenditure - quite high in China, around 8-10%
  • (12:35) The costs of specialized staff required to run and maintain the equipment
  • (14:02) Cost of getting the machinery to work properly (setup/time/needing operators to work during this)
  • (15:44) Maintenance - a large driver of costs (parts, downtime, training skilled staff, etc) and really important for highly automated factories (listen to more about preventive maintenance here)
  • (20:36) Automation can reduce a factory's flexibility - manual labor allows a factory to be flexible and provide high mix/low volume work, but automation reduces this flexibility and leans more toward low mix/high volume work. Your higher MOQs may remove the ability to take smaller orders which can return more profit.
  • (22:08) Lead times could be reduced by equipment, but often it's not the case - in theory, automation means more parts can be made more quickly, but often Chinese manufacturers make a lot of inventory and don't take advantage of it and it doesn't improve lead times.

22:57 - Many manufacturers don't take many of the disadvantages into account - this can mean that the cost of equipment VS operators over, say, 10 years works out at more! Pivoting is easier with a human workforce. 

24:31 - What are automation best practices followed by the 'best manufacturers?' - Toyota's approach is to automate or remove DDD (dull, dangerous, and dirty) operations without focusing on ROI, as staff safety is more important. 

25:59 - The wrong way to implement automation - rushing into heavy automation will cause trouble mainly due to your staff struggling to be skilled and familiar enough to handle the maintenance effectively. This can cause downtime, scrap, and reduced equipment lifetimes so is a serious problem.

Before implementing full automation, you should try... 

26:32 - Re-engineering human operations - Before implementing automation, the best companies have process engineers check the operations humans are doing and assess how to make those more efficient. So that's re-engineering human operations to reduce 'waste' and increase the seconds per minute that they are physically working on transforming each piece, for example, through improving the layout of and logistics around the production line and providing enhanced training to the operators and their group leader. This can reduce staff numbers and improve efficiency and quality.

28:54 - Semi-automating some of the operations - now you have improved the efficiency of operators you can look into implementing some automation to assist operators to become even more productive, for example, a machine that delivers a part into place for them to transform and then ejects it, reducing their time spent not transforming parts. Again, this should reduce staff numbers and improve efficiency and quality.

31:46 - Some of the problems factories face when rushing into highly technical automation too soon - if a machine goes down it can hold up the whole production until the machine is cleared, for example. But the worst case is that a machine gets broken and can't be used until replacement parts can be obtained.

33:35 - If your supplier informs you that they're implementing automation, how to handle that? - make sure that they're conducting a pilot run that is isolated from the rest of production and they are not recklessly rushing into it. This is a good thing, though, as it shows that they're investing in the company and looking to the future.

34:35 - Renaud's blueprint to implementing automation efficiently - assess whether tools even necessary or is reducing waste in manual operations, for example, a worthy goal? Re-engineer processes with lean manufacturing tools. 
The trend is that over time automation will be increasingly required by most manufacturers helpful, so starting with semi-automation to make the operator's routines more efficient starts to train them and the maintenance staff to work with automation and equipment (maybe with one pilot line to start with) now makes sense.
As you go along, more and more processes can be automated step-by-step, and this will be accompanied by a reduction in staff required in turn.

37:24 - Automation is NOT just robots - Michel Baudin wrote in this blog post that PLCs (programmable logic controllers) outsell industrial robots by millions to one each year. These units control the equipment and processes and the reality of most manufacturing operations is that robot arms, for example, are not actually what is used to automate processes at all.

39:40 - Wrapping up

 

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Simon Caballero | Common Risks & Issues When Making Garments In Vietnam

Friday Mar 19, 2021

Friday Mar 19, 2021

In This Episode...

Renaud interviews Simon Caballero, a Hanoi-based purchasing manager and expert on manufacturing in Vietnam, to discuss the manufacturing industry in Vietnam, common risks and issues you will face when manufacturing garments there, and the relationship between developing new products and manufacturing in Vietnam and China. 

Simon has a background in logistics and over a decade of experience in sourcing all kinds of products in Asia, with particular expertise in China and Vietnam (a growing manufacturing hub and popular alternative to China). In recent years he has been focused on the garment industry (specifically workwear), hence he's the authority to speak with for this episode's topic.

 

Show Notes

00:00 - Introducing the episode

00:54 - Brief self-introduction by Simon about himself and his experience - Simon explains how he started in Logistics in Spain, but since 2009 his journey has taken him to Thailand, China, and now, Vietnam.

04:53 - What is workwear (a particular focus of Simon's), and how has this clothing trend changed? - workwear includes protective clothing, technical garments, uniforms, and more. This kind of clothing has evolved to be more fashionable and specific to certain tasks and professions.

05:58 - Most factories in Vietnam can be categorized into one of three types (Simon believes this is common in garments and most other product types, too). What are they? - understanding the type of factories available is an important factor when choosing a Vietnamese garment manufacturing partner, so here they are:

  1. (07:05) Foreign-owned companies - these are growing fast and are mainly Korean, Chinese, Taiwanese, and Japanese invested businesses. They are more professional than local companies and have a stronger focus on QC and implementing modern production facilities and processes. But they are also more expensive, so they are a better choice for more complex and higher-quality products.
  2. (08:58) Locally-owned factories - usually only invest in the basics, such as production line/equipment, and lack an understanding of QC and technical processes. Can often specialize in one process or another, such as sewing, but they may not be able to handle multiple processes and sourcing - you can buy FOB from them, but you will need to support them in finding materials and accessories, for example. You need to manage your expectations well when working with them, but this is a low-cost option that can work well for less technical products.
  3. (15:49) State-owned companies - these are large well-financed companies that offer a vertically integrated service (so for garments this is materials, dying, weaving, etc). They are focused on medium/large buyers, so are not suitable for smaller buyers.

17:13 - The impact of Tet/Chinese New Year on obtaining materials and containers in the period just after the holiday in 2021 - raw materials and logistics have suffered from rapid price increases of 5-10% in 2021 after CNY/Tet. Simon discusses the reasons behind the increases, such as increased demand and speculators who had bought up materials when prices were low.
The lack of containers has also led to some delays in shipping from Vietnam, as well as logistics costs ballooning, too.

25:00 - The military coup in Myanmar has also affected garment production - unlike Vietnam, Myanmar was affected by COVID quite badly (with around 10 times as many deaths) and now the military coup there has also disrupted manufacturing. Simon got around this by quickly switching production from Myanmar to China.

26:01 - Are garments manufactured all around Vietnam as they are in China, or centralized in one area? - Vietnam has some industries that occur all around the country such as forestry product and chemical or mineral processing, but the country can be split into zones, each of which specializes in certain product types or materials:

  • (27:02) The Far North (along the border with China & Laos) - more for natural resources and electricity, mechanical and agricultural industries, forestry, mining and minerals (specifically coal), less for assembly of electronics and garments, etc.
  • (27:39) The North (around Hanoi & Haiphong) - industrialized provinces, especially for electronics and garments manufacturing, but also provides many of the natural resource industries found in the far North.
  • (28:20) Central provinces (around Danang and along the coast) - specialize in textiles, footwear, and electronics assembly, also seafood, and agricultural processing.
  • (28:51) The South (around Ho Chi Minh city) - specialize in high-quality textiles as that industry originated there in Vietnam, so they're the most experienced. Tends to be a higher cost than the North. Big brands are all manufacturing in the South in high quantities. More convenient for logistics, too. Also, electronics, software, and pharmaceuticals are found here.

30:41 - The differences between North & South Vietnam - like two different countries in some ways. The South is more open, developed, and more driven to do business, whereas the North is more traditional and led by the government as it is based there. Similarities in China are comparing the PRD cities in Guangdong with most other areas of China, where the latter have been exposed and doing business with foreigners for a long time and so are more open, experienced, and innovative. Also, Taiwan is more advanced again and can provide innovation that the Mainland doesn't have.

34:04 - How about developing new products in Vietnam? - Vietnam doesn't offer the diversity of products that China does, so for new product development in Vietnam, you need to consider that most materials, electronic components, injection molds, pharmaceutical chemicals, etc are imported from China. Importing to Vietnam increases costs and makes supply chains more vulnerable. It is feasible to develop new products in Vietnam, but it's likely there will be a strong reliance on China.

37:10 - QC in Vietnam - importers need to consider QC. Due to the small population in Vietnam in comparison with China, it can be harder to find qualified QC inspectors, and this shortage leads to higher travel costs and longer lead times for inspectors. There are also concerns over inspector integrity. The lack of QC inspectors can affect your new product development.

38:32 - Wrapping up

 

Related content...

Remember, Sofeast provides most of our solutions in Vietnam, too, such as product inspections and factory audits, so if you are importing from Vietnam and need assistance, we can help. Visit our website at Sofeast.com. 

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