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Managing Quality in China with 3PQ
Written by: Michael L. Hetzel, Vice President / Americas
Pro QC International
© All Rights Reserved
Anytime a company extends its supply chain across a national border they have crossed a cultural border as well. The differences in cultures can be minor, such as between the USA and Canada, or they can be major, such as between the USA (or any other Western country for that matter) and China.
Efficiently managing quality at great distances requires assets in the source country to represent the interests of the buyer in quality and conformance. In some cases the buyer will employ expatriates, in others they will hire locals, and in many cases they'll charter the services of a Third Party Quality (3PQ) Services firm such as Pro QC.
Fortunately, the cultural differences are well known and there are methods that can be applied to optimize the outcome for both buyer and seller. As a specialist in representing Western interests in China, we're pleased to share some of these methods with our clients.
It's important to note, however, that China is a large country with many diverse subcultures and dialects. There is no single 'rule' for anything in China so be ready to adapt these guidelines to the character of the specific suppliers that you'll be working with.
The Primary Issues
There are several primary issues to be addressed in managing product quality in China:
- Understanding the culture and language, along with translations of expectations and concepts
- The purchasing agreement or contract
- The product and/or tooling specifications
- The proper introduction of a 3PQ (Third Party Quality Provider)
Culture and Language
Most westerners have read product manuals and labels that have been translated to English from Chinese and found some of them to be anything from completely unintelligible to very humorous. This isn't necessarily the fault of the translator not knowing both languages, it can easily be that the words and concepts being used don't translate well between the languages and/or cultural perceptions without transposition based on understanding of the content. Well, keep in mind that a Chinese reader may find the very same range from unintelligible to humorous when they read your purchasing agreement and/or product specifications.
Care must be taken to use translators who are trained, experienced and skilled in the subject matter being translated rather than simply being bilingual. This is the true reason for the unintelligible to humorous results most of the time; the underlying concept won't be understood by a 'language translator' while it will if you use a 'content translator'.
This is also the reason that many of our clients book our engineers to be their interpreters when they visit their Chinese suppliers. Hiring the interpreter from the hotel will only take you so far, since they are unlikely to have any understanding of the concepts that they're translating, while using an engineer to translate your expectations for manufactured products provides you with accurate content.
Always use content translators and interpreters rather than language translators and interpreters.
The Purchasing Agreement or Contract
Whatever form of documentation memorializes the product that you intend to purchase along with the cost, schedules, terms and conditions, expect major differences in the perception of the documentation between China and the West.
In China, a contract is largely viewed as a framework for a relationship that is malleable to conditions as they change, essentially a starting point of the project to be adapted going forward. In most Western countries, a contract is considered a rigid document that functionally structures and restricts performance of both parties to the literal meaning of the words in print. Learn to expect and anticipate changes, substitutions, and disappointment if the purchasing agreement is used as the sole source of the definition of conformance for the product. Instead, apply the agreement as a framework in China and use detailed specifications to fully define conformance.
The purchasing agreement or contract should be used to identify the responsibilities of all parties, including the 3PQ, as well as the authority vested in each party such as the ability of the 3PQ to order a non-conforming shipment to be held and not shipped pending a determination by the buyer regarding corrections needed. It should also define the ideal shipping dates and related expectations along with expectations surrounding price.
Chinese culture is very literal when it comes to defined expectations. With enough detail concisely described in proper language and concepts that translate well, you can achieve a higher level of confidence in a successful outcome.
At Pro QC, our Western and Chinese staff members are skilled in the translation of your expectations across the cultural and language boundary.
Product and/or Tooling Specifications
The major tendency we've observed with Western companies manufacturing products in China is to construct the specifications the same as they would for a Western supplier. This is a recipe for disaster.
Workmanship standards, processing standards, definition of acceptable performance of tooling, machinery used for production and the definition of quality not only vary between China and the West, they vary greatly within China.
We'll set aside corruption and deception for the purposes of this guide. Just as in any other country in the world, there are corrupt and dishonest companies in China. The aphorism 'good supplier good result, bad supplier bad result' applies everywhere. Let's assume that you've found the good suppliers and verified this as well as possible through Factory Audits and other means.
Westerners often perceive material and component substitutions as some attempt at deception, while Chinese make substitutions (in most cases) as a sincere effort at some perceived improvement for their customer. The perceived improvement can be cost, performance, appearance or various other aspects of the product and may make perfect sense to the supplier, however this can lead to serious product and marketing failures for the buyer.
Detail everything in the drawings. Define everything. Make no assumptions of shared perceptions of workmanship, performance or appearance. Leave nothing out of the bill of materials, drawings, tolerance schedule and other specifications and the inspection and sampling plans. Make the literal culture of China work in your favor.
Define your specifications and drawings in metric. We see many companies who furnish imperial specifications to Chinese companies, however China, like the rest of the world except for the USA and UK, thinks and operates in metric. Since imperial-to-metric conversions can lead to un- measurable dimensions and tolerance stack-ups that will exceed functional limits, you must retain control of your product by having your own engineers control the conversion process and furnish metric or dual standard specifications to the suppliers.
Introducing a 3PQ to Chinese Suppliers
"Face" ('mianzi' in pinyin) is a very complex cultural subject in China that we can't even begin to effectively cover here. We recommend that you read several qualified sources of information on this subject in order to avoid causing your suppliers to lose face as you interact with them.
They key aspect of keeping your supplier from losing face because of the introduction of a 3PQ service is that it must not be based, or perceived as based, on a lack of trust or confidence in their honesty or abilities. The proper introduction, and frankly the best reason to use 3PQ in any case, is to invest in the mutual success and lowest cost and risks of doing business for both parties.
The 3PQ will function as the interpreter of expectations and the reporter of actual product conditions at the factory rather than as policeman. Good suppliers will replace defective products that they send you, but with 3PQ the products will most likely be identified prior to shipment and, therefore, the cost and time involved to rework or replace these items will be greatly reduced for both parties.
This positive outlook for 3PQ results in a very cooperative reception for the inspectors, since both parties are benefitting from the buyer's investment in 3PQ services.
Bear in mind, however, that 3PQ service is not an indemnification of the shipment or any other insurance product. It's a method of reducing (not eliminating) the risk of nonconforming products from shipping. Therefore, if nonconforming products are shipped it's still the factory, not the 3PQ provider, who is responsible for all replacement or rework activities and costs. When the 3PQ arrives to inspect a population the factory is effectively asserting "here's a conforming shipment of product that we would ship right now if there wasn't a 3PQ inspection required" not "here's a shipment that may or may not conform and you have to find any defects or it's your fault they don't conform".
The 3PQ is exclusively responsible for the quality of the inspection service, the factory is exclusively responsible for the quality of the product.
This short tutorial provides some of the background that you'll need for the successful introduction and application of 3PQ services, in order to reduce your risks of conformance failures and quality defects in purchasing goods from Chinese suppliers as much as possible.
Pro QC Account Managers are well trained and experienced in working with you throughout the process, from introduction to the supplier through the ongoing planning and deployment of services, to help you achieve the best possible procurement outcome.