Making Operations Work in China

By Lindsay Sandham

The company that I work for, a retail packaging manufacturer, recently acquired a one-stop packaging facility in China's Guangdong Province. Our clients had complained that working in foreign markets was stressful and found that there were many hurdles to overcome. They came to us looking for a solution.

Dealing with foreign manufacturers can bring about many issues that simply don't arise when working with your regular North American suppliers. Language and cultural barriers can add to the stress of dealing with problems, such as the requirement of lengthy lead times, transportation and production times, procedural differences, approval of proofs and samples, quality control and inventory control.

LOOKING AT THE BENEFITS
American firms that acquire an already existing and operating Chinese company may find that they can deal with many of these issues much more effectively than a broker working with multiple manufacturers. The key is to establish a positive working relationship with Chinese employees, a feat that is much easier to accomplish if these employees are working directly for you.

"[We] recognized that American businesses were outsourcing manufacturing to Asia via brokers," says AVC President Moshe Begim. "The problem is that the brokers have little to no control over the production in China. While outsourcing translated into killer deals and unrivaled prices, it also translated into many hassles and headaches.

However, as a result of our acquisition, the clients have benefited by not having to exchange communications with the Chinese company or even a broker for that matter. Thus, we as an American company assume total responsibility for these issues through effective and established working procedures. After hearing of clients' past experiences of dealing with poor quality finished goods coming from overseas, we realized that, in order for our Chinese venture to be successful, all production in China had to be done in accordance with our own strict procedures and guidelines, including quality control and inventory control.

Though working in foreign markets can be stressful, it can prove to be beneficial. Our company has found ways of overcoming most of the common problems associated with dealing with foreign manufacturers.

By eliminating the middleman, lead times can be cut dramatically. Additionally, approval of artwork, proofs and first articles can be done at the U.S. office, which saves companies wasting time and money while waiting for costly air shipments. Shipping of finished goods can be expedited, especially if your China plant is within hours of major Chinese ports and Hong Kong.

"Global production does not mean you have to have global headaches," says AVC Executive VP Guy Marom. "Choosing an American partner experienced in your particular area with a directly managed production facility in China can be the headache relief you need."

Lindsay Sandham is the executive assistant at AVC Corp. in Torrance, Calif. She can be reached at (310) 533-5811, or via e-mail at lindsay@avccorp.com.