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Heavy equipment manufacturing is an interesting measure of the maturity of China's economy. Its one thing to build a bulldozer, but its quite another to build a bulldozer that can compete with the best in the business. And right now, China is aspiring to achieve just that. But is it there yet? Not quite.

Measuring progress
China's progress in heavy industry exports during the last decade, however, is very impressive. The chart below illustrates just how well China performed in terms of total heavy industry exports in 2010 (y axis), and CAGR from 2000 to 2010 (x axis). It now stands just behind the US, Germany and Japan, but its growing much faster than those. 

Major Exporters of Heavy Equipment.png

As the note explains, 'heavy industry' here refers to a bundle of exports of 10 trade items, in all of which China has  immensely increased its share of world exports. To illustrate this further, the following chart shows these items individually, and contrasts where China stood in 2000 vs. 2010. Its quite a change, as you can see. 

Growth and Share of Heavy Equipment Exports.png

Competitive champions
So the statistics illustrate a clear picture of China's emergence in heavy industry. Yet when it comes to actually competing with the best, does China's best efforts measure up? I want to take one example to discuss this: construction equipment. The 'Bulldozers, etc.' and 'Derricks and Cranes' categories in the chart above refer to such construction equipment for which China has registered rapid progress in the last decade. And if China has become competitive it means that its leading construction machinery manufacturers have done so as well. 

Its no surprise then to discover that China now has three companies in the top ten of construction equipment manufacturers globally; only six years ago, the highest ranked Chinese company was in 33d place. The ranking I am referring to here, which used sales revenue for the 2010 calendar year, is the Yellow Table published in the magazine International Construction (downloadable with registration), which lists the top 50 global construction manufacturers (Im referring to the April 2011 edition of the magazine). 

Its very interesting how the Yellow Table ranking corresponds with the first bubble chart above: the US, Germany and Japan lead, followed by a few other countries and China. In the 2010 Yellow Table, Caterpillar (US) is at the top, followed by Komatsu and Hitachi (Japan), Volvo (Sweden), Liebherr (Germany) and Doosan (S. Korea). Then, in 7th, 9th, and 10th place follows the Chinese competitors Sany, Zoomlion and XCMG. Other Chinese companies in the top 25 are Liugong (20) and Shantui (22).   

Being competitive vs. matching the best
But how competitive are the likes of Sany, Zoomlion, XCMG and Sany really? Can they really compete with Caterpillar and Komatsu? The short answer to this question is no, or at least not yet. The longer answer is more complex, and needs to be looked at in terms of the situation in a specific market. I am going to briefly refer to the South African market for this purpose. 

Buying a bulldozer or a wheel loader is not just a case of buying a bulldozer or a wheel loader. Construction companies and mines will want to be absolutely sure that the machine they buy will work as long as its supposed to. And they will want to know that if a part is needed, it can be provided without delay. For every hour that the machine does not work on a mine, the mine loses a stack of cash. Reliability and longevity is everything. Price is not unimportant obviously, but quality is more important. 

So consider the disadvantage that new Chinese competitors in South Africa face against long established players like Cat and Komatsu. While you will pay more for a Caterpillar machine, you know when you buy it that the after sales services coming with that machine will be top notch. If it breaks, Caterpillar will supply a new part within 24 hours. As new entrants in the South African market, the Chinese competitors cannot yet match this service offering. Their machines cannot yet match the performance of a Caterpillar or a Komatsu, even though they have come a long way in the last few years. 

A different future
And thats just the rub: Chinese manufacturers have come this far, its very unlikely that they will not become serious competitors to the best in the business sometime in the future. The Chinese are learning the ropes fast, they know that you need to put down deep roots in a country to be able to supply the kind of after sales services necessary to compete with the best, in addition to building quality machines. They are not quite there yet, but they are getting there. 

Some of them even seem poised to step up to another level of competitiveness right now. One example is the Chinese producer Shantui, whose main product is a bulldozer. Shantui hails from China's Shandong province, where Shantui had originally set up a factory based on Japanese technology. Shantui has now been in South Africa for a few years, and just a few weeks ago it launched a whole new facility in Johannesburg, which I attended. 

Shantui has run an advertising campaign in South Africa proclaiming itself as the world's #1 bulldozer manufacturer, and seem to have placed great emphasis on the right kind of after sales services. Shantui was also able to present feedback from some of the users of its machines which glowed with appreciation of the quality of the machines, and it also announced that its sales in South Africa in the last few months have gone through the roof.

So time will tell if this is really the beginning of big things for Shantui. But I can picture a time when a Shantui bulldozer or a Sany wheel loader will be among the best brands in their classes. Its happening, but give it some more time. 

Food Safety in China in 2011

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The past few months have been a particularly active period for food safety issues in China. The fact that something is wrong with the food that we are eating in China adds a panicky element to these food scandals that have cropped up with worrying frequency in recent months. The fact that there is deliberate malfeasance involved, moreover, adds an element of anger and general mistrust.

Tainted food is of course nothing new in China. We all remember the dramatic case of tainted milk in 2008, when six babies died and 300,000 people fell ill. What made this case so frightening, however, was the deliberate malfeasance involved: tainted milk for bigger profits. Since this time, the authorities have attempted to address the issue of tainted food, yet on recent results the outcome has not been overly successful. 

Since February the following were some of the leading food safety issues in China:

  • On February 23, government scientists released research that millions of acres of Chinese agricultural land and over 12 million tons of Chinese grain are contaminated by toxic metal pollution. It was reported that Yunnan, Guangdong and Guangxi are particularly polluted. Crop contamination that soaks into the soil did not start this year, however this year the the extent of the problem is becoming clear 
  • On April 22, Guangdong provincial authorities uncovered 16 tons of pork tainted with toxic chemicals. The pork was tainted with "colorings" made of sodium borate, bean flour and other additives. The authorities believe that it was done deliberately in order to make the pork look like beef and to sell it a higher price 
  • On April 26, it was reported that 26 tonnes of milk powder tainted with melamine were seized in a Chongqing based company. The company bought the milk powder from a company in the southern region of Guangxi at a significantly lower price
  • On May 6, farmers in Jiangsu province reported cases of exploding watermelons, attributed to farmers excessively using forchlorfenuron, a growth accelerator. Chinese authorities do not actually forbid the drug, yet Chinese farmers have clearly made excessive use of this chemical 

The words 'Made in China' can be found everywhere, from the labels on basic necessities such as clothing to the portable music players and cellular phones which exemplify modern life’s conveniences. It is the work of international procurement professionals who have brought these products from the manufacturing floors of China to households worldwide. China’s emergence as the world’s largest exporter in 2009 is further evidence of the immensity of this nation’s sourcing potential. But before calling the bank to open a letter of credit, it is best to first understand sourcing from China and how to engage with this unique business environment.

The reason for China’s position as the foremost sourcing destination is of course, low costs. On average, 30% cost savings can be expected for products procured from China in comparison with the home country. Everything from machinery to articles of steel to furniture can be obtained cheaply. At the heart of this are labour costs. Average wages in developed nations such as the United States are nearly 30 times those of China. Even other developing nations are unable to compete with China on a cost basis, as the average wage in Brazil is over six times that of China, and in Mexico, three times.

Second and often overlooked is China’s infrastructure which gives it a distinct advantage over other developing nations. China ranks 27th on the World Bank’s Logistical Performance Index—higher than the other BRIC nations. Numerous, newly constructed, multiple lane highways and 78,000 kilometres of railway end in six of the world’s ten busiest ports along China’s coastline. By air, 500 airports are available to link Chinese products with their end-users abroad. This network of thoroughfares effectively link China’s low labour costs with the world.

The question then becomes how does the world—or more specifically, the procurement manager—access China’s potential. This process begins at home with an effective strategy, the pivotal element of which involves deciding on the point of contact with Chinese suppliers, the conduit between decision makers at home with Chinese producers. To manage this crucial task there are three options: to work with a local Chinese agent, to work with an international company with a presence in China or to dispatch employees to China for on-site operations.

Using a local Chinese agent is the cheapest option. Such agents have the potential to be well connected within various industries. The most experienced Chinese agents are likely to find the most suitable products for their foreign partners at the most favourable prices. The downside is that this approach is open to cultural misunderstandings and difficulties. A common complaint is that Chinese counterparts are often less responsive to emails, and even when responsive may be less direct regarding actual circumstances; a straightforward “no” is rare. Thousands of Chinese agents exist, making the best ones more arduous to find. Furthermore, many of these agents may not have the appropriate import/export registration.

An alternative to this is to use an international firm with a presence in China. These firms typically employ international staff members alongside local Chinese to obtain “the best of both worlds”. A more acute understanding of the home office’s procurement requests can be obtained through the use of these agents; it may even be possible to find such an agent from the same country of origin in the more cosmopolitan cities of Shanghai and Beijing. These foreign-owned companies are able to obtain import/export rights, and often do. On the downside, international agents tend to charge higher fees for their services and are subject to more strict administrative controls which may cause delays or unexpected costs in the procurement process.

There is also the option to forego the use of third parties by directly dispatching employees to China. This may be the most attractive option for those considering large scale operations abroad. Expatriated staff members will already be aware of the product requirements and time frames, thus eliminating any communication problems. This option may also be considered if relationships have previously been established with Chinese suppliers as the China-focused strategy matures. It is a less feasible option for those still in the early stages of their China strategy as it is difficult for newcomers to China to find appropriate suppliers and to manage all steps in the production-to-port process.

Although there are options for establishing a point of contact in China, having a representative of the home company physically present in the country greatly eases the business process with suppliers. Business in China is centered on relationship-building. Having a face to associate with the voice over the phone or the signature line of an email will foster a more personal commitment from the Chinese supplier. This process entails regular visits, if even from an agent, and is an important cultural aspect in dealing with Chinese producers. Concurrent on-site inspections further work to ensure greater quality control.

Through effective communication the China low-cost advantage can be transformed into profit and customer savings. The question is just HOW this will be done, because China sourcing is all about having a strategy that works for you. 

As all sourcing professionals will admit, finding the right supplier is the most important step for successful China production. But how can buyers evaluate the probability that a given factory will deliver acceptable products without delay? They should perform factory audits to approve each manufacturing facility.

Buying teams, or the quality assurance firms that represent them, can perform two kinds of factory audits:
  • Audit to quality standards: overview of the factory (organisation, processes, capacity…) and study of its quality system
  • Social audit: study of the factory’s labour policy and/or any other issue relevant to the client (i.e. the environment…).

This article focuses on the evaluation of the quality system. Auditors generally follow a standard checklist inspired by the requirements of the ISO 9000 series. The vast majority of Chinese factories—including many of the so-called 'ISO 9000 certified' ones—will fall short on at least a few checkpoints. Buyers who need acceptable products shipped on time will easily weed out the most unreliable manufacturers, which will fail on most points.

The checklist below is only a suggestion, and each buyer is encouraged to customise it to their needs. Take the time to apply it in several factories and you will have a clear picture of who you want to work with.

Part 1 of the checklist: What you should check as a priority

Understanding the buyer's requirements
Does the factory have a clear list of all desired characteristics of a product, before production starts?
Is it clearly specified how each characteristic should be measured?
Are conform samples available to workers in production and QC areas?

Suppliers of inputs
How does the factory evaluate and select material suppliers?
Do they communicate the requirements accurately to material suppliers?
Do they check whether a purchased product is up to specifications? How?
Do they send samples for lab tests? How often and for what tests?
Are materials properly stored?

In-house production

Does the factory give clear procedures to each worker and for each job (including the QC staff)?
How do they validate that each production process achieves the desired results?
Do they do in-process QC? On what proportion of products? What do they do with the data collected this way (corrective/preventive actions)? What happens to pieces found to be defective?
How do they ensure that measuring instruments are available and correctly used?
Do the operators control their own work?
Is there regular training?

Subcontracted production
Are materials delivered directly to subcontractors? How are they checked?
How does the factory control the work of the subcontractor(s)?
What do they check about the subcontractors' operations?

Final QC
What proportion of products is checked? How are they checked? Does it include packing?
Is there one last inspection based on AQL statistics? Based on what level of AQL?
What happens when non-conformities are detected?

Part 2 of the checklist: What you can check if you have some extra time

Accepting an order
How does the factory decide whether it can make a product and meet all the customer’s requirements?
And how do they validate a change in the product or the packaging asked by the customer?
Can they explain the process and the decision makers?
Can they give an example of a product they have recently refused to make?

When the factory prepares some prototypes/samples, how does it make sure that the resulting product can meet all the customer’s requirements in bulk production?
Do they also make a prototype for the packaging at an early stage?
How are approved samples stored? Are they protected?

Instruments and machines
How does the factory determine what monitoring and measurements should be undertaken?
How do they ensure that measurement devices are calibrated and verified at specified intervals?
How often are production machines maintained and calibrated?


Does the factory determine the root causes of non-conformities, and what actions do they take so that they don’t occur again?
Do they determine potential non-conformities and take preventive actions?

Note about supporting evidence:
For every checkpoint, the factory should present corresponding documents. You should be able to form an opinion by yourself, for example by counting the QC staff or observing some workers. Don’t just ask questions in a meeting room—go and check! Chinese factories are often tempted to say “yes we always do this, but we cannot show you records today because [reason XYZ]”. In 95% of cases, this is a lie and the records either don’t exist or are not kept properly.

The inability to present supporting elements in a timely manner, in itself, is not acceptable—make sure you mention it to them before the audit.

Note about the role of factory audits:
Being shown a nice workshop is not enough. Subcontracting is very, very common in China. Many suppliers are not transparent about this issue. Therefore importers are strongly advised to check where their orders are produced. They can send an employee or a third-party inspector to check the goods during production. Another advantage of this is that quality issues are noticed and corrective actions can be taken early.

Renaud Anjoran is the founder of Sofeast Quality Control, a third-party QC firm specializing in garments and textiles in China. He also writes on the Quality Inspection blog. You can contact him at 
CHINA-FOOD-SAFETY.jpgThe long-awaited new Food Safety Law, which was approved by the Standing Committee of the Eleventh National People's Congress, went into effect on June 1, 2009. After a series of food scandals in China, the new law will undoubtedly not be able to allay domestic food product problems in one fell swoop.

The new law does show, however, that the government is intent on taking extreme measures against companies producing contaminated foods. Last year, with the Sanlu scandal, at least six babies died and 300,000 others fell ill because of poisonous milk powder. It was the most serious tainted food incident in China in recent years.

In the last few decades, China has implemented at least 20 food safety laws and 190 relevant regulations, and assigned 35 commissions to supervise the food industry. Yet even with so many regulations and laws, China still lacks effective supervision and enforcement. Confusion often occurs during implementation of the regulations, with sometimes strict and sometimes loose enforcement utilized by the regulatory authorities.

According to Professor Zheng from the Department of Agricultural Economy at China Renmin University, although the new law adds more punishments for offenders, it does not specify how to follow up on the tainted foods produced by more than 500,000 food-processing plants. Routine and sample inspections are almost useless because many people from different industries are involved in food processing operations, and many additives are purposefully added into the foods by illegal producers. Prof Zheng thought that the government should be focusing on resolving the remaining legal loopholes.

It has been reported in the media that 60% of people on the mainland do not believe that the new Food Safety Law will represent a substantial improvement on food safety. Nevertheless, the government has committed itself to implement a food recall system and has increased fines for infringements by up to ten times the original value of the contaminated products. It has also set up a new assessment center which will focus on identifying food safety problems at an early stage. Yet despite the stringent new law, many netizens in China doubt whether the new regulations will be completely successful, as a lot of the food safety problems are more directly associated with the failure of effective control and supervision on the part of health regulatory authorities.

While the new law is certainly a step forward, the process of helping the public establish complete confidence in the domestic food industry will not be a short process, and there's still some distance to cover.

This is the last article of this series. After introducing the inspection levels, the AQL, and the types of QC inspections, I am going to put it all together by walking you through several examples.

Example 1: 5,000 widgets from a new supplier
You have no information about the factory, so you should adopt the normal level (a.k.a. level II). The order quantity is comprised between 3,201 and 10,000pcs. If you open the first AQL table, you see the code letter is L. (If you forgot how to read the tables, see the article about AQL tables). And with the second AQL table you see that 200 samples have to be checked by the inspector. If you opt for the standard AQL limits (0 C. / 2.5% M. / 4.0% m.), the inspection is failed if at least one of these conditions comes true:
  • One or more critical defects are found
  • Eight or more major defects are found
  • Eleven or more minor defects are found
And let’s say you want the inspector to check all the product functions on a few samples. This test takes some time. You can choose special level S-2. You see this test will be done on 8 samples (by opening again the first AQL table and then the second AQL table). The 200 samples can be checked by one person in one day, so a third-party QC firm would quote you one man-day.

When to inspect? If this is a standard product and you have flexibility with timing, a final (pre-shipment) inspection should be enough.

Example 2: 30,000 watches from unknown supplier(s)
You suspect that your supplier gave orders to several workshops to produce your goods, but he won’t tell you. And these items are rather valuable. A level-III inspection is probably the most appropriate.

If we read the AQL tables as we did above, we have to inspect 500 samples, and the maximum number of defects is: 0 critical, 18 major, 18 minor.

If a visual check on all samples and a function/accuracy check on a few pieces is enough, it probably takes two or three man-days.

When to inspect? If the supplier refuses to disclose the factory information, you have to go for a final (pre-shipment) inspection.

Example 3: Four different styles of garments from a good factory
You know that this factory’s workmanship is quite good. But you want an inspector to check all the conformity elements, and in particular the measurements. Level I should be enough. You sell these products in boutiques at a high price, so you can only accept 1.5% major defects and 4.0% minor defects (for garments, there are generally no critical defects). The fitting is quite important, especially for the brassiere and the brief, so 3 to 5 samples should be measured in each size. There are 4 different types of products, so there has to be 4 inspections:


Order Qty (in pcs)

Code letter

(level 1)

No. of samples to check

Max. No. of defects

No. of samples to measure





1M, 2m

3 sizes x 3 pieces





2M, 5m

3 sizes x 3 pieces





2M, 5m

6 sizes x 5 pieces





3M, 6m

3 sizes x 5 pieces







The total number of samples to check is only 127 pieces. But this order cannot be checked in one man-day, for two reasons:
  • There are four different inspections to carry out. For each product, the inspector has to check all the conformity elements (fabrics, colors, accessories, stitchings...). And there are four reports to prepare.
  • There are 63 samples to measure, across four different products and many sizes.
So it will probably take 2 inspectors for one day, and maybe 3 (depending on the products complexity).

When to inspect? The best is clearly during production, when the products are on the line. As the 4 products might not all be processed at exactly the same time, it might be preferable to send an inspector at different times. And if an inspection is failed, a re-inspection can probably be performed at the supplier’s charge.

Now what about you? Tell us briefly about your case in the comments section, and I’ll give you some advice.

Renaud Anjoran is the founder of Sofeast Quality Control, a third-party QC firm specializing in garments and textile in China. He also writes on the Quality Inspection blog. You can email him at

The first two articles of these series focused on the different inspection levels and on the AQL tables. So you know how to set the number of samples to check and how many defects have to be accepted. With these settings and your detailed product specifications, a QC inspector can check your products and reach a conclusion (passed or failed).

But importers face one more question: when should the products be inspected? This is an extremely important issue for buyers willing to secure their supply chain. Spending a few hundreds of dollars to check and fix issues early can be an excellent investment; if might save you weeks of delay, shipments by air, and/or lower quality products that you have to accept and deliver to your own customers.

Four types of inspections

Let’s picture the simplified model where one factory turns raw materials into finished products. (If you also have to manage the quality of sub-suppliers’ products, the same model can be applied to them).

Guest post image Final.PNG

Pre-production inspection

This type of inspection is necessary if you want to check the raw materials or components that will be used in production. Buying cheaper materials can increase a factory’s margin considerably, so you should keep an eye on this risk. A pre-production inspection might also be a good idea if you suspect that technicians on the factory floor have not been given all the information or have not understood all your requirements. How to make sure of this? By sending an inspector when the very first products are in process (under bulk production conditions). If you need to help the factory improve its processes, this is also the right time. But you will need to either send your own technicians, or find a highly specialized QC/engineering firm.

During production inspection

How to get a good idea of the average product quality, and be able to ask for corrections if problems are found? Send an inspector during production! It can take place as soon as the first finished products get off the line, but these samples might not be representative of the whole order. So usually such an inspection is done after 10-30% of the products are finished. What are the main benefits of an inspection at this stage?   

  • Be aware of quality issues early, and implement corrective actions before it is too late
  • Communicate with your supplier about what is acceptable and what is not
  • Get a precise production schedule

Final (pre-shipment) inspection

Inspecting the goods after they are made and packed is the standard QC solution of most importers. The inspector can really check every detail, including counting the total quantity and confirming the packaging. Final inspections are usually performed in a hurry, just before shipment. To avoid creating delays, inspectors can usually start after 80%+ of the order quantity is packed. Final inspections are appropriate if the factory delivered good quality on the exact same product in the past. Otherwise, buyers are strongly advised to have the products checked earlier.

The downside of final inspections is that inspectors adopt a “policeman attitude”. Factories hate the risk of last-minute rejection, after all the goods are made (and might not be repairable). Buyers have the upper hand and can often ask for discounts and threaten to refuse the goods. This is a major cause for the corruption of QC inspectors. Most Chinese manufacturers are not organized to keep their processes under control, and they often discover the issues after an inspector shows them defective samples. Helping them with pre-production or during-production inspections usually makes more sense.

Container-loading supervision

In some cases, a buyer wants to make sure the factory ships the right products, in the right quantity, and with the right loading plan. This supervision can take place immediately after a final inspection (in which case the same inspector does the job). But usually it is a separate service that consists of two steps:

  • Counting the whole quantity, opening a few cartons and doing a quick check on the products, and checking all the packaging details

  • Supervising the loading of the cartons in the container or the truck

The importance of detailed specifications

  1. Most quality issues come from miscommunication and misunderstanding. Importers should keep track of all their requirements regarding the product and its packaging. When a good deal of customization is involved, and for large orders, these specifications should be translated in Chinese (for the factory technicians) and included in a contract. When the time comes for product checking, the inspector will use this information as a checklist
  2. After an inspection fails, the supplier usually agrees to repair the problems and support the cost of the re-inspection. Detailed specifications are useful in avoiding endless negotiations with your supplier

Renaud Anjoran is the founder of Sofeast Quality Control, a third-party QC firm specializing in garments and textile in China. He also writes on the Quality Inspection blog. You can contact him at 

In the last article, we explained the different inspection levels that can be used. Another basic concept rings familiar to many importers, but is often not clearly understood: the AQL (Acceptance Quality Limit).

There is no such thing as zero defect

First, as a buyer, you have to know what proportion of defects is tolerated on your market. If you are in the aviation business, any defective part might cause a disaster, so your tolerance will be very, very low. But you will have to accept a higher percentage of defects if you source consumer products made by hand in China.

An objective limit is necessary

So, how many defects are too many? It is up to you, as a buyer, to make this decision. There are two reasons why you should not leave this to the inspector’s judgment: 

  1.  When it comes to giving instructions to an inspector, you should never leave gray areas—as they might open the door to corruption.
  2. Your supplier should have clear criteria for acceptability, or they will see rejections as unfair. The AQL is the proportion of defects allowed by the buyer. It should be communicated to the supplier in advance.

The three categories of defects

Some defects are much worse than others. Three categories are typically distinguished:

  • Critical defects might harm a user or cause a whole shipment to be blocked by the customs.
  • Major defects are not accepted by most consumers, who decide not to buy the product.
  • Minor defects also represent a departure from specifications, but most consumers would still buy the product.

For most consumer products, the critical defects are not allowed, and the AQL for major defects and minor defects are 2.5% and 4.0% respectively. Remark: a professional inspector will notice defects and evaluate their category by himself. But it is better if the buyer himself describes the most frequent defects and their categories. .

How to read the AQL tables

The master tables included in the relevant standards are commonly called AQL tables. Let’s take an example.


levels.JPGYou buy 8,000 widgets from a factory, and you choose the normal inspection level. In the table below, you see that the corresponding letter is L.









Now let’s turn to the next table. (It is only appropriate for normal-level inspections). The letter L gives you the number of samples to draw at random: 200 pcs. And what about the AQL? Let’s say you follow the usual practice of tolerating 0% of critical defects, 2.5% of major defects, and 4.0% of minor defects. The maximum acceptable number of defects is 7 major and 10 minor. In other words, the inspection is failed if you find at least 1 critical defect and/or at least 8 major defects and/or at least 11 minor defects

Additional notes, for accuracy

  • The number of defects is not the only cause for acceptance of refusal. The products can be refused because they are not conform to the buyer’s specifications, even though their workmanship is very good.
  • If you have two different products (made with different processes or in different factories), you should do two separate inspections. If you inspect them together, one product might be accepted even though it presents too many defects. Why? Because the better workmanship of the other product might “compensate” for its poor quality.

Now you know how many samples should be selected, and how many defects can be tolerated. But when should inspections take place? After production is finished? Won’t it be too late for corrections if quality problems are discovered? These topics will be covered in the next article.


Renaud Anjoran is the founder of Sofeast Quality Control, a third-party QC firm specializing in garments and textile in China. He also writes on the Quality Inspection blog. You can contact him at 

This series of articles is about QC inspections. Maybe you let your supplier ship the goods without inspecting. Maybe you use a third-party company to control your products. Maybe you have your own inspectors. Are you taking unnecessary risks? Are you paying too much? The only way to form an opinion about these questions is to be familiar with the basics of quality control.

A word about applicable standards

Militari Standard 105 was created by the US Department of Defense to control their procurements more efficiently. In 1994 they decided to rely on non-governmental organizations to maintain this type of standard. The ANSI, ISO, and other institutes all created their own standard, but in essence they are similar to the latest version of Mlt-Std 105. All third-party QC firms use the same standards and the same statistical tables.

Why use random sampling?

Shipments often represent thousands of products. Checking 100% of the quantity would be long and expensive. A solution is to select samples at random and inspect them, instead of checking the whole lot. But how many samples to select? On the one hand, checking only a few pieces might prevent the inspector from noticing quality issues; on the other hand, the objective is to keep the inspection short by reducing the number of samples to check. The relevant standards propose a standard severity, called “normal level” or “level II”. It is designed to balance these two imperatives in the most efficient manner, and it is used for more than 90% of inspections. For example, for an order of 8,000 products, only 200 samples are checked.

When to switch to tightened or reduced levels?

Suppose you source a product from a factory that often ships substandard quality. You know that the risk is higher than average. How to increase the discriminating power of the inspection? You can opt for the “tightened level” (level III) and more samples are checked. Similarly, if a supplier has consistently delivered acceptable products in the past and keeps using the same workshop, you can choose the “reduced level” (level I). As fewer samples have to be checked, the inspection might take less time and be cheaper. In practice, the relevant standards give very precise guidelines about when to switch, but most importers rely on their “gut feeling”. If you want to respect these guidelines strictly, ask your QC manager or your external inspection provider.

The “special levels”

Inspectors frequently have to perform some special tests on the products they are checking. In some cases the tests can only be performed on very few samples, for two reasons:

  • They might take a long time (e.g. doing a full function test as per claims on the retail box).
  • They end up in product destruction. (e.g. unstitching a jacket to check the lining fabric). For these situations only, the inspector can choose a “special level”.

So we have three “general” inspection levels, and four “special levels”. For a given order quantity, each level gives a different number of samples to check. Let's see how it plays out in two examples.

Example 1: You order 40,000 products

Special levels

General levels





Reduced (I)

Normal (II)

Tightened (III)

8 pcs

13 pcs

32 pcs

80 pcs

80 pcs

500 pcs

800 pcs

The number of samples to draw from varies from 8 to 800. Depending on the level you choose, the inspection might take only one day, or up to 4 or 5 days.
Example 2: You order 3,000 products

Special levels

General levels





Reduced (I)

Normal (II)

Tightened (III)

5 pcs

8 pcs

13 pcs

32 pcs

20 pcs

125 pcs

200 pcs

The number of samples to draw from varies from 5 to 200. If the product is not particularly complex, a professional inspector can check 200 samples in a day. In this case you can choose the tightened level for more reliability at no extra cost. But the factory might have a little more repackaging work.

In practice, how to know the number of samples to select for each order quantity and each level? In the next article I will show how to read the statistical tables and get this information.

Renaud Anjoran is the founder of Sofeast Quality Control, a third-party QC firm specializing in garments and textile in China. He also writes on the Quality Inspection blog. You can contact him at 
white rabbit.jpgIn recent years, a significant number of alarming incidents concerning food safety have taken place in China. These events have reflected that presently China still has numerous problems with food safety, such as food industry management flaws, supervision lags, and inefficient law enforcement.

The following are some of the most glaring food safety scandals that have occurred during the last three years.

  • Several domestic milk manufacturers are involved in a high-profile melamine contamination scandal. Thousands of babies and infants nationwide are affected
  • Man-made jujube appears in the Urumqi market, infused with soluble saccharin and sodium cyclamate liquid in order to make them taste better
  • Big White Rabbit toffee, a famous Chinese candy brand, is found to contain formaldehyde and other deleterious substances in the Philippines
  • Longfeng and Sinian, two famous frozen food companies, are found to have made products that contain pathogenic bacteria
  • In Beijing, 70 people who ate snails are confirmed to be affected with thelaziasis
  • In Wuhan, Hubei, man-made honey syrup is found to have been injected with many kinds of chemicals such as thickening agents, sweetening agents, antiseptics etc.
  • A batch of pork from Zhejiang poisons 336 people in Shanghai due to high amounts of thin carnosine
  • In Yangjiang, all Jiudu fish samples from 7 big agricultural markets are found to contain the antiseptic formaldehyde at ten times higher than the permitted level
  • Some red yolk salty duck eggs produced by a Hebei plant is found to contain tonyred, which improves the colour of the food

These concerns are not merely isolated incidents of negligence or malfeasance, but are closely tied to China’s model of economic development. The dynamic environment of the Chinese economic miracle of the last 30 years is key to understanding these food safety problems. For more than twenty years, China has enjoyed a rapid pace of economic growth, and we can observe a situation where the development of China's legal system has lagged behind the country’s fast economic development. Thus China's not yet fully developed legal framework has limited laws to refer to, or even if these exist, they are mostly out of date.

In addition, since overall social wealth and accumulation of individual wealth are still relatively low in China, social responsibility is not yet fully developed. China’s growing gap between rich and poor, moreover, contributes to the problem, resulting in large numbers of people desperate for instant success and potentially open to the crooked incentives of secretly tampering with food quality.

While there can never be an excuse for deliberate malfeasance with food (or any) products, the issues raised above can serve to contextualize food safety problems in China. The outlook is changing, however, and the Chinese government has stepped up formal regulation efforts to prevent food safety scandals. The latest government initiative was announced on 28 February, when China’s top legislature approved the Food Safety Law, providing a legal basis to strengthen food safety control from the production line to the dining table. The law, which goes into effect on June 1 2009, will enhance monitoring and supervision, tighten safety standards, recall substandard products and severely punish offenders.

Still, there can be no guarantees that food safety problems are completely in the past, yet hopefully most of them are.
All international purchasing managers try to minimize import risk. As a China sourcing expert, in order to achieve this goal we will always recommend you to undertake plant visits to China before you place an order, for the following reasons: 


  • It makes sense to meet the people who you will be working with before you place an order. You will get to know their personality and will start building a relationship with them. As we know, good relationships (or guanxi in Chinese) play a crucial role in business in China - hence the value of a face-to-face meeting can never be underestimated.
  • You can inspect manufacturing areas to get an idea of raw material quality, workers’ skills, production capabilities and the internal QC process of the manufacturer. There is nothing better than to see it with your own eyes.
  • You can find out to what extent your manufacturers subcontract their production to other plants by checking their work areas and warehouses, or by asking them during meetings.
  • You can experience the working environment and meet the workers to be sure that your suppliers are not using child labour and are providing protection masks etc. 
  • By making the trip to China, you can give your suppliers a sure signal that you are really serious about quality issues, and more so if you emphasize quality during your meeting. When they produce and deliver products, they will put you in a ‘Picky clients’ list and will therefore be more careful with your products.


Some extra benefits you can gain from visiting your China plant:

  • You may find out that you can actually source many other products in China besides those in your current plan. I had a client before who saw good packaging material during his plant tour in a steel tube plant and finally ordered some packaging materials as well.
  • You may see your competitors’ products in a production line during your plant tour. This happens a lot in the top equipment manufacturing plants of China as they get orders from all major international players.
Talk everywhere is of crisis and panic emanating from the US financial centers. Yet in China, a different yet familiar kind of crisis is playing itself out.  

Because of strict regulation and an overwhelming domestic focus, as put it, Chinese financial institutions are not overly exposed to US subprime-related assets or firms, yet China's overall economy, with its reliance on exports and with China's substantial dollar-dominated foreign exchange reserves, will inevitably suffer from a slowing US economy. As Wall Street wallows in a bad dream / nightmare, there are indications that China, while not gripped in panic, may be heading for some storm clouds of its own. While the impact of the Olympics is still unclear, industrial production growth plunged to a six-year low of 12.8% in August; car inventories hit a four-year high in June; air traffic has slowed sharply; and electricity output has dropped. While Chinese exports have remained robust, expanding 22% in the first eight months of 2008, the contraction in Europe and the US could make this period the calm before the storm - before Wall Street's bad dream turns into storm clouds over China's exports-dependent economy. In this context it is possible to discern how China's slightly slowing economy could proceed to slowing more rapidly, reaching what Leo Lewis at The Times referred to as a psychological turning point of single-digit growth.
Although the slowdown in the US and Europe will harm China's exports, in another view, Western consumers might only increase their demand for cheaper, Chinese-made goods. Speakers at this year's Trans-Pacific Maritime Asia conference (h/t 3PLwire) uniformly agreed that, despite the current weak global economy, China will remain the supplier of choice for manufactured products. Jonathan Beard, MD of GHK Hong Kong Ltd., noted that exports through China ports rose 13% in the first half of 2008, and other speakers lauded China's established manufacturing relationships, supply chain infrastructure, port infrastructure and political stability: even in these times China is a safe bet and will remain so.       

Yet if China sourcing seems set in theory to emerge unscathed from the current financial crisis, what of the reputation for quality and safety concerns associated with products made in China? The Made in China brand has once more been enveloped in crisis with the ongoing milk powder scandal. The fallout has generated vigorous online debate in which some Chinese netizens even called for a boycott of all products made in China, and China Youth Daily columnist Liu Yibin (h/t China Media Project) suggested that the best medicine for enterprises lacking conscience would be to simply allow them to die. Yet for those who do quality control for a living in China, its less of a crisis than merely business as usual. At the Silk Road blog, David Dayton writes:
As the milk powder scandal shows, out in the trenches, over the past year, nothing’s really changed...We still have the same issues with factories not meeting agreed upon standards, not understanding those standards in the first place, substituting cheaper domestic products in place of more expensive imported ones, using uncontrolled sub-suppliers, working rejected product back into approved stock, and of course purposeful and natural quality fade issues.

And Dayton is not hopeful of seeing any changes soon. He's not holding his breath, at least not until the next crisis. 
The Guangdong Bureau of Quality and Technical Supervision has released a special audit of DVD player manufacturers in the province in which only 39.2% of small and medium-sized manufacturers were found to pass quality spot checks. Yet large-scale manufacturers in Guangdong which, as the Bureau put it, produce relatively reliable quality products, scored a full 100% pass rate. In a similar fashion, smaller foreign companies also struggle with quality issues in China. The presence needed on the ground and the overall effort required for QC and due diligence makes for a formidable challenge. Reuters recently reported on a small number of German firms who, in response to quality concerns, are swimming against the tide and leaving China. One of these is toymaker Steiff, which originally outsourced around a fifth of its production in 2003 yet have had to reject a cumbersome number of toys made in China, some of which Managing Director Martin Frechen described as looking like they have been run over by a car. The stark quality divide between large and smaller companies seems to be a corollary of a fundamental trend with quality in China: Size is integral to every aspect of the process - the bigger the better.  

Steiff MD Frechen attributed the problems with quality to the high staff turnover in Chinese factories which meant staff received insufficient training, yet he also thought Steiff's typical orders of around 500 lots were too small to reap cost advantages in factories accustomed to mass production. For all its high-profile product quality problems associated with China last year, Mattel - the world's largest toy maker - has stood by its Chinese partners and improved quality checks, yet quality control is difficult to implement for smaller companies without a substantial presence in China. The problem for small companies in China with an emphasis on quality, as Volker Treier, chief economist of the German Chambers of Industry and Commerce, mentioned in the Reuters article, is when they have to jump into cold water and see if they can swim without the resources for proper research.    

So how can small companies keep themselves from drowning in cold water with quality concerns in China? Ultimately they will have to trust someone to do their QC for them. The Quality Wars blog (h/t China Law Blog) has weighed in on the choices available for foreign manufacturers between doing their own QC with an employee in China or hiring an outside QC service provider. While a local employee will generally be cheaper and may have access to local knowledge and networks, they may also be exposed to being bribed by the factory to pass unacceptable goods. Outsourcing QC to a third company, however, will put QC in the hands of a dedicated company that specializes in checking products and factories in Asia. 

Ultimately, in China, the best option is QC=BIG.
Small players: they are the weakest link (h/t Supplychainer).

This was the finding of an independent report commissioned by the EU, Evaluating Business and Safety Measures in the Toy Supply Chain, which concluded that China has taken steps to address safety concerns after the recalls of last year, yet small players all round - both among Chinese manufacturers and European importers - tend to be the soft spots in the supply chain. According to the report's independent expert authors, final product testing alone is insufficient to guarantee product safety (which instead has to be embedded in the entire supply chain), and Chinese enforcement authorities should continue to strengthen supervision of the Chinese toy industry, especially focusing on weaker manufacturers. One example of these would presumably be Guangzhou Dongxin Electronics Co., Ltd., which turned out to be the only substandard toy maker in a recent review of the Guangzhou market undertaken by the Guangzhou Municipal Quality Inspection Bureau before International Children's Day. (For children's apparel, however, the review found 30% of clothing to be substandard).

Yet because of these weak links in the supply chain and the substandard products that have menaced consumers, as an indication of how the debate on outsourcing has shifted, serious quality and safety concerns in outsourced products have led consumers and regulators to question whether products using global suppliers are of sufficient quality for end-users. And these intense discussions, as Ben Heineman writes at, have moved outsourcing to the top of the globalization agenda and focused attention on the need for more regulation. And while the role of sourcing countries, such as China, in setting and enforcing standards have likewise been emphasized, for Heineman this should not obscure the fundamental point with regulation, namely
Businesses are responsible for their products and must have sourcing disciplines which ensure their products are free of safety and quality defects...This basic responsibility exists whether the business is sourcing a finished product or components...or whether it sources from one supplier or must rely on second- and third-tier suppliers...
With today's elaborate global supply chains, moreover, the deverticalization of the manufacturing process through off-shoring and outsourcing does not change that ultimate responsibility of companies to take things in their own hands through all stages of the sourcing process,
from solicitation of bids to qualification of suppliers to monitoring, auditing and testing by the ultimate seller of the product before it enters the market. Due required to navigate the many shoals of shoddy businesses in the developing world - and to pierce the first-tier supplier, drilling back to the practices of second- and third-tier suppliers.
In global supply chains, therefore, as Bob Ferrari points out at Supply Chain Matters, the only thing that companies cannot outsource is risk.
In the latest of their TrendWatcher series, the Institute for Corporate Productivity last week produced a piece entitled China's Quality Squeeze, which incorporates a range of statistics, notably:
  • 70% of product recalls in 2007 involved Chinese goods, a scenario which has been greatly helped by the
  • 30% annual increase of Chinese imports to the U.S. from 2001 to 2005, so that today
  • 40% of all U.S. consumer imports come from China.
This despite the range of well-publicized China supply-chain quality lapses and gaffes of 2007, which have, however, not significantly dampened foreign firms' confidence in continuing to source from China. Instead, the strategic impact of the recent wave of quality concerns in China is inducing companies to inject more stringent quality control measures in their dealings with Chinese suppliers. Even so, the TrendWatcher piece continues, in its examination of best practices and risk factors for sourcing goods from China, a Quality Executive Board (QEB) survey found satisfaction with Chinese imports confined to a relatively small segment of companies that have developed long-range supply chain strategies that employ diligent pre-contract vetting and costly onsite visits.

In outlining how sub-quality products can reach the international marketplace, contract manufacturer Mike Bellamy at Smart China Sourcing recently pointed to how bad things can happen when a certain set of factors overlap. The fast growth of China's production base in recent years has given rise to a rapidly changing environment with a wide range of manufacturers of various quality standards. And as today's communication technology facilitates increasing numbers of first-time foreign buyers to suffer from a lack of experience in sourcing from China, an uninformed choice may lie at the root of product quality problems. (See also Sebastian Bretau at China Success Stories on how product inspection, auditing and testing can be used to spot potential issues before shipping, rather than upon delivery).

In a familiar refrain recurringly echoed by Silk Road International's David Dayton, Bellamy writes
The single most critical action you can take to ensure a successful sourcing program is to visit your selected factory.
In fact, in Dayton's experience, the money saved from not coming to China multiple times will be lost in missed delivery dates or quality problems. Yet simply making it to China is not enough, because without painstaking diligence on your part, you're not going to get what you asked for. In Dayton's list of rules for international purchase managers, this diligence includes, among other things:
  • personally speaking Chinese (I suspect, the first problem)
  • personally and physically having samples tested and confirming they match production, and
  • never getting angry in the midst of problems (the challenge is to get your supplier to like you).
And if you do make it to your Chinese factory, Dayton advises, beware if their answer to all your questions is 'no problem, of course we can do that,' because then you are simply not going to get what you asked for.

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