MADE IN CHINA … Is Sourcing Overseas Right For Your Company?

Sourcing overseas has become so common that it’s almost impossible to not consider it when selecting new suppliers for your business. Thousands of companies offer every product and service under the sun, and it’s hard to imagine the good ol’ U S of A could ever compete. There are definitely downsides though, so arm yourself with knowledge to ensure you make the right decision for your business.

1.) US standards do not apply … so go overboard on details and specs for quote requests.

The tiniest detail left unspecified can easily translate to a quote that’s for something close to – - but not exactly what – - you want. If your requirements are flexible, you can get some amazing deals. If not, you might find yourself extremely frustrated. The grade of material may be different than what’s considered standard here, a plastics plasticizer used might be something ok in China but banned under CA’s Prop 65, or your Pantone color match might be a few shades off. ALWAYS get samples before making a production order, to ensure that you really know what you’re buying. Ask plenty of open-ended questions to be sure you’re fully understood, and even ask for photos of the factory if your product would require specialized equipment. It’s very common for people to farm work out to others without telling you, which adds another layer of potential problems and miscommunication.

2.) It takes thirty to forty-five days to get my stuff? And then I have to go through Customs??

Logistics and transportation are no small matter when electing to purchase offshore. Ocean freight is cheap, but it generally takes 30-45 days. Your shipment will have to go through US Customs after it arrives, requiring a whole host of paperwork and fees. You’ll probably have to hire a company to act as your Freight Forwarder and Customs Broker unless you’re really adventurous and want to try to navigate through US Customs yourself. Even with a Broker you’ll be juggling details like whether your supplier is sending the original Bill of Lading by air, or if they’re doing a Telex release. If the details aren’t ready in time, your shipment will sit in Customs indefinitely while you pay storage fees. Air freight (like UPS) is much faster (2-5 business days), and they’ll handle all that paperwork for you … but you’ll be paying at least $4/kg. It is not at all unusual for airfreight to be more expensive than the products being transported. Yikes!

3.) This whole transaction looks shady … is this really the norm for China/Taiwan/India?

A lot of oddities that might indicate fraud in the US really are just the norm overseas. Yes, the person you’re emailing will probably call themselves by an English name that you’re pretty sure they made up (Paul, Salina, Alex, Tiger, Coke … I’ve heard a lot of interesting ones!). Yes, their email address is often hotmail, yahoo or gmail. No, their English isn’t all that great (I send lots of pictures along with any specs … with plenty of arrows, circles, comments, etc.). Yes, they’ll want 30-50% wired to them before they begin work. No, their banking information does not seem in any way related to the name of their company, and may not even be in the same town. Yes, they’ll want the remaining balance before they release anything for shipment … and if what shows up on the boat 45 days later doesn’t look like exactly what you want, you’ll probably have a very difficult time getting any type of resolution.

Side note: On large amounts, you may be able to negotiate a Letter of Credit rather than just a cash wire transfer – - highly advisable if at all possible, as it brings a bank’s oversight into the equation. The money is still effectively gone from your account as soon as you set it up, but you do at least have some recourse if issues arise.

Bottom line … there are great opportunities available in China, Taiwan and India for the wary buyer who puts in the extra work to mitigate potential risks. Weigh the pros and cons, do your homework, and you’ll be ready for success.  If you have any questions feel free to give us a call or email us.

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The Harbor Freight Phenomenom – Leveraging China

This place is like a grab bag of randomness for the tool junky in you. If that isn’t bad enough their website is from 1989 and they have an unending supply of catalogs and I seem to be at the top of their list. Just when I’ve finished reading one catalog partially for entertainment factor and partially for interest, I get another one!!! I’m not quite sure why I read them when it’s much easier to find parts on their website (as bad as it may look).

We’ve all heard about it before … manufacturing being moved overseas and people losing their jobs. Even though most people refer to this as the China syndrome, China isn’t the only guilty party. India, Taiwan, Vietnam and South Korea to name a few, all contribute to helping us move our manufacturing overseas. The interesting part of sourcing overseas comes when you find out that its not nearly as easy or as straight foward as it may seem. Each country has their own manufacturing specialty, communication idiosyncrasies, payment policies, and costs of business. Look for the nitty gritty on these areas and more in upcoming articles written by Kim our “Master of Sourcing.”

A healthy side effect is the affordability of many of the items manufactured overseas. This article is entitled “The Harbor Freight Phenomenon” to cover just that. Below, you will find some incredible pricing disparities. I won’t say that the quality, support, or even functionality is equal for what I’m about to show you. I will say this, for the prices involved one can nearly afford to discover the quality of the item and dispose of it without incurring much financial harm. We would never endorse such wastefulness, however it is a very real side-effect of this pricing model that all of us as humans must deal with in the form of land fills and recycling.

Exhibit A:

So I have a project I’ve taken on at home that involves building some wood cabinets. Since unfortunately Engineer != woodworker, I rely on my woodworker friend to advise me. He said I should get a corner clamp to make my life easier when gluing and nailing my boxes together. What he didn’t realize is where I intended to purchase it from or the price at which I’d obtain it.

Here is one that can be found on Woodcraft’s website for $29.99 and is part #145962. I wouldn’t say this is a terrible price however it is all relative. The marketing experts say one of the first actions a customer takes is to evaluate what they feel the product is worth. If their evaluated price is close to the sale price then the rest is history.

Woodcraft Corner Clamp

Here is a similar unit from harbor freight for……….. a whopping $1.99 part #1852-7VGA. They are not exactly the same but for an expert woodworker such as myself, I obviously have made the decision that they will both work and are equivalent for my intended purpose. I do have one of the Harbor Freight units on order but it is backordered so I’ll have to wait to give an opinion on it’s quality.

Harbor Freight Corner Clamp

Exhibit B:

Once again, my woodworker friend recommended that, for a clamp, I look for something called a pipe clamp. I know most mechanical engineers and woodworkers are familiar with these. I, on the other hand, was not and recently discovered how handy these guys can be. It’s essentially a clamp that can be made as long as you have pipe (within reason). Once again I visited my favorite tool junkie website, harbor freight.

First I will show you an option this woodworker “friend” (is he a friend if he isn’t looking out for my pocket book? debateable!) suggested. This is from his favorite place, woodcraft. For a low, low price of $15.99 you can get the beauty seen below part #15I01.

Woodcraft Pipe Clamp

… But wait, call now and receive this guy (below) for only $3.99 part #3813-1VGA pipe not included.

Harbor Freight Pipe Clamp

I received this exact part today (actually 2, what good is only 1 clamp?) and examined it closely. As you can imagine it is a low quality casting with a paint job looking like it was done in billy bob’s front yard. The wedge (slanted silver strips of metal seen in the woodcraft picture) that allows the second half of the clamp to hold onto the pipe is not at all designed like the woodcraft version. It uses a toothed, camming lever that wedges itself up and against the pipe. I have my doubts as to how well this will work but for $4, how can you go wrong? Surely I will be able to modify it or use it for something else.

Exhibit C – Finale

Getting older is full of many wonderful and not-so-wonderful experiences. There are many times when just knowing how to do something correctly could’ve saved me hours, days, or even weeks of frustration. One of these such times is when I discovered that many of our interior and one of our exterior doors don’t actually latch. Instead, the striker hits the plate instead of entering the opening in the plate to secure the door. This is an easy fix but being an engineer, I figured there HAD to be an adjustment somewhere on the door. I looked everywhere (short of consulting Google) and found nothing. Finally, I mentioned it when we had an inspector in the building and boy was I embarrassed to find out the answer. Dumbfounded was I when I listened to him describe to me how to move the striker plate down using a chisel or router (fancier). It seemed such a hack to me, like adding jumper wires to a circuit, I despised of the thought I’d be left with a chiseled door frame. I shortly got over it and fixed what I needed to. The only problem is I used a screw driver instead of a chisel. Yes, it was a pain. Yes, it was ugly. Yes, I didn’t remove enough material. Thus I lead you to my last and final purchase…. CHISELS!!!!

Woodcraft Chisels (Qty 4) part #148104 for $34.99

Woodcraft Chisel

Harbor Freight’s Chisels (Qty 6) part #3816-1VGA for $5.99

Harbor Freight Chisel

Now I have to say that I know these are no where near the same quality however for MY intended purposes cheap is on the order of the day. Just for the record, I DO appreciate nice quality tools however it is hard to convice myself when the choice is between NO specialty tool (screwdriver vs chisel) or a budget specialty tool. For good measure I have included a picture below of some of the nicest chisels I’ve ever seen. I can honestly say this is the first time I’ve caught myself lusting for…. chisels for $45.99.

Beautiful Chisels

My point of this entire (overly lengthy) post is that great savings can be had by considering overseas sourcing. It does not matter what industry you are trying to source parts as nearly all are affected. There are some exceptions and they usually are in cases where there is little to no human labor and a large capital investment or the cost of shipping becomes the limiting factor. A shipping limitation example would be for something such as a large plastic water tank. They cannot be stacked inside eachother and each one holds thousands of gallons of water. If you can only fit 100 in a container your cost of even ocean freight may exceed the cost of manufacture. In this case it may be possible that it is still economical to source these overseas but this isn’t always the case.

We can help you with all of your Engineering and Supply Chain needs. Sourcing overseas is not trivial and we have all the bangs and bruises to show for our education. We would love to share what we’ve learned and help you design and source your products. Give us a call and we can talk you ear off or give you some quick insight.

Here’s a link that has a LOT more regarding Harbor Freight and the quality of their tools.  It even has a list of the ones not to buy.

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