All About Contract Manufacturing in China: 5 Tips

It’s no secret that outsourcing your manufacturing obligations can save you plenty of time and money. In fact, China is one of the most popular destinations to do so.

But, not every entrepreneur knows everything they should about contract manufacturing in China. So, we’ve put together a guide with all the details you should keep in mind.

Let’s get started.

1. You Need to Find a Reliable Supplier

As you might guess, you’ll need to find a reputable supplier before you can move forward with your manufacturing obligations. Although this responsibility can seem overwhelming at first, is not as difficult as you might anticipate.

In general, you’ll want to consider the following factors before you make your decision:

• The size of the factory
• The location
• Total production capacity
• Exclusivity

To elaborate on this last point, you should decide whether or not you want your supplier to exclusively manufacture for your business during the production process. Once you’ve figured out the necessary criteria, you can begin your search.

Keep in mind that either you or a dedicated professional must visit the actual facility before production begins. This is to ensure that the facility meets all your needs and that you aren’t being misled.

2. You Must Register Your IP

Unfortunately, many entrepreneurs are unaware of the fact that they need to register their intellectual property in China. This means that you should pursue any necessary patents, trademarks, or copyrights.

Foregoing this obligation can easily become a significant obstacle for your production process if another entity in China decides to register your IP under their name.

Not only will this prevent you from manufacturing a product, but you could also run into legal issues for infringing upon their copyright. Due to the murkiness of international law, it can be highly difficult to prove that you were the original creator and owner of a particular IP.

Even after you have registered your IP in China and found a reputable manufacturer, there is one extra step you need to take.

You must have your manufacturer sign a nondisclosure, non-use, non-circumvention (NNN) agreement in order to further protect your rights. Anyone who attempts to avoid this obligation is someone that you should never work with.

3. Prioritize Quality Control

Ideally, you would be able to provide your manufacturer with the necessary information and then receive a high-quality product. But, this isn’t always how things turn out.

It’s not uncommon for you to encounter quality issues while outsourcing your production overseas. Fortunately, though, this is often a result of misdirection that can be resolved through communication.

The best way to accomplish this is to have a third party regularly conduct QC checks during the production process. This will allow you to catch issues as quickly as possible and then take steps to remedy them.

Failure to do so could easily result in dissatisfied customers, delayed deadlines, etc. Put simply, brushing off your quality control obligation comes with a strong risk of hurting your brand’s image.

4. Preserve Approved Samples

It’s not abnormal for different batches of products to have inconsistencies between them. To elaborate, the first few rounds of Chinese contract manufacturing may meet your standards while subsequent batches may fall short.

To help keep everything on track, it’s essential that you preserve copies of approved samples. This will give your manufacturer a solid reference that they can strive to duplicate in the future.

Additionally, you can use an approved sample as an index of whether or not a current batch meets your standards. If it doesn’t, your manufacturer is obligated to make changes.

But, these can take a significant amount of time to complete. This also means your manufacturer may not be able to adhere to your time constraints.

So, it’s in your best interest to have multiple high-quality samples that your manufacturer can use in order to streamline the production process. In the event that your standards change, you should obtain new samples as quickly as possible.

5. Establish an Original Equipment Manufacturer (OEM) Agreement

For those who are unfamiliar with this type of document, this is an agreement between you and your manufacturer that aims to remove any form of ambiguity in your relationship.

This means that you need to elaborate upon any minute details that could cause complications in the future. In practice, you’ll find yourself having to clearly define the color you want your product to be, the projected timeline, etc.

In fact, colors are defined by Pantone number as opposed to terms like ‘red’ or ‘blue.’

Other factors to consider include:

• Ownership of tooling
• Dispute resolution
• Payment terms
• Quality requirements
• Certification

The same can be said about product weights and dimensions. In addition to all of this, you’ll need to ensure that this agreement is enforceable in China and not just the United States.

This often means working with a Chinese legal professional to help you navigate the nuances of Chinese law. Additionally, it’s required that you write the document in Chinese.

Otherwise, your manufacturer could break all of your guidelines and suffer no consequences.

Contract Manufacturing In China Can Be Game-Changing

So, it’s essential that you keep the above information in mind. From here, you’ll understand everything you should about contract manufacturing and can then make the most of this opportunity.

Want to learn more about what we have to offer? Feel free to reach out to us today and see how we can help.