Purchase skills | 7 common problems in small and medium-sized factories in China

By justchinait
October 22, 2020

If you purchase from China, it should be noted that product prices are increasing at a rate of approximately 10-25% per year. Raising prices is not because Chinese manufacturers want more profits, but because their costs are rising rapidly. These manufacturers are also under increasing price pressure from customers.

In the next 10 years, which companies will survive and make profits? The answer is those companies that improve operational efficiency by reducing waste in the production process or improving production capacity or those companies that improve product quality and win by quality.

How can they achieve these goals? Through 11 years of close cooperation between us and Chinese factories, in our opinion, there are 7 obstacles that they need to overcome.

1. Short-sighted

At present, the goal of most exporters in China is to survive, or if the company can make money, the boss of the company is more likely to buy a new car (or buy another house for his wife)

In addition, it seems that some inherent content in Chinese culture is also making people tend to be short-sighted, which seriously hinders the continuation of long-term investments aimed at improving organizational efficiency.

2. Ignore craftsmanship

Why are they engaged in business? Of course it is for money. Only a very small number of manufacturers will concentrate on developing new processes, designs or producing perfect products.

When you explain the importance of the appearance of the product to the technicians in the factory, they politely nod in agreement, but in fact they don’t care. This is frustrating. All they want to know is how to make more money with the least effort instead of a customer-centric strategy.

3. Focus on “Production Products”

Entering a factory workshop, you will see everyone trying their best to get the product out of the workshop. In 95% of cases, the workshop is very chaotic.

The problem now is that no one will stop production because of the noticed product quality defects, because the workers are paid according to the output. If this attitude persists, then product quality cannot be improved.

4. Don’t care about employees

Ten years ago, China’s workforce seemed infinite. Employees without technical expertise were dismissed at will. The fear of losing a job is an effective employee incentive measure (either follow the rules or be fired).

The problem is that the change in management methods cannot keep up with the speed of the situation. Now training and retaining employees should be one of the primary goals of the company.

5. Fight separately

It is a common phenomenon for manufacturers to design product models in one place and then organize production in another place (or subcontract production to other foundries). However, design, process and production should be closely coordinated.

Another problem is that young and passionate sales staff agree to all the requirements of customers in order to obtain new orders, and ultimately disappoint the customers because the products cannot meet the requirements of the customers. They have to find new suppliers.

6. Not paying attention to cost analysis

Understanding the cost composition of a product is important to reduce costs. However, most factories in China not only do not use accounting analysis tools for analysis, but they usually avoid taxes by manipulating accounting statements.

They don’t know how many ineffective work (such as duplication of work, redistribution of elements, discounts, customer churn, etc.) increase their costs. ?

7. Unwilling to change

Most factory owners copied the experience of other manufacturers (usually his former employer). For them, the way to make money is to maintain growth while reducing costs, and occasionally develop some new customers.

They are usually not interested in improving organizational efficiency through experimentation or purchasing hardware and software. They ignore new technologies and craftsmanship and only focus on immediate benefits. It is difficult for such a factory to make a breakthrough, and may even be eliminated with the development of society.

The above are common problems in China’s small and medium-sized factories, and these 7 problems are interrelated. I believe you have also felt these problems in your cooperation with them.


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