8 Red Flags To Beware Of When Working with Chinese Manufacturers

As we always say, doing due diligence on your Chinese manufacturers is really important for ensuring smooth cooperation and long-term problems if you do decide to work together. Here are 8 red flags that, if exhibited by your Chinese supplier, should give you cause to start looking at making changes. When you know what to look for, keeping an eye out for them becomes easier…

Table of Contents

Red Flags That Require You To Take Action

When working with Chinese manufacturers, it’s always wise to keep an eye on the project and not leave them at arm’s length. From recurring quality issues and a lack of transparency in processes to unexplained price increases and restricted factory access, these red flags can mean that there are deeper problems that can jeopardize your relationship and even damage your business.

You can watch the video discussion of this blog post here:

Now, let’s get into the 8 common red flags you should be looking out for.

Red Flag #1: Persistent Quality Issues

Frequent quality issues are a major sign that something is amiss.

It’s not just about scratches or IQC problems; it’s about recurring issues with no solutions.
Worse still, manufacturers might introduce new issues with every batch, making quality unpredictable. This pushes buyers to accept lower standards over time which, of course, you don’t want to do.
This can also be caused if you, the buyer, aren’t clear with the manufacturer about your quality standard, leaving gray areas to be exploited.

Red Flag #2: Lack of Proper Process and Record-Keeping

Manufacturers often lack rigorous quality processes:

They rush or don’t do incoming or outgoing quality control at all, but report that it’s all good.
Inspection records might be fabricated or uniform across parts, suggesting checks were actually not conducted.

Another warning sign is reliance on outdated systems like Excel to manage production, purchase orders, and change requests. This leads to unrecorded or unapproved changes that can have serious repercussions.

Red Flag #3: Dependence on On-Site Oversight

If you find yourself needing to monitor the factory closely, this indicates a deeper problem.

When you need someone on-site all the time, it’s a clear sign that the processes or factory in general aren’t reliable.
Auditing them and periodically running quality inspections, perhaps tapering them down over time as the factory becomes more consistent and familiar, is appropriate. More oversight than this could be an issue.

Red Flag #4: Price Instability and Lack of Transparency

Unpredictable pricing is another issue:

If you’re seeing that prices keep increasing but never decrease, and there’s no visibility into the bill of materials or processes, that’s a red flag.

Moreover, subcontracting without transparency introduces more risks.

Red Flag #5: Insufficient Reliability Testing

Many Chinese manufacturers neglect reliability testing, risking entire defective batches and high product return rates.

Small-scale reliability tests are rarely performed, leading to costly failures that could have been caught earlier.
You find that you need someone dealing with product reliability all of the time.

Red Flag #6: Restricted Access and Factory Visits

Refusal to allow visits or tours of the production line is a significant red flag.

Excuses like ‘special confidentiality requests from a big customer’ often hide the fact that the ‘manufacturer’ might just be a trader. Covid restrictions were also used as a convenient excuse sometimes in the recent past.
A colleague recounted, “We requested to see the production line, but they flatly refused multiple times, citing confidentiality. It turned out they weren’t the actual manufacturer.”

If your supplier refuses to let you see the factory, could they be hiding that they are, in fact, a trading company? This opens up a real can of worms when it comes to your control over your own business, as they may be outsourcing your production to an unnamed manufacturer that you do not and will never know about.

Red Flag #7: Lack of Management and Engineering Access

Many businesses deal only with a single English-speaking liaison, often a salesperson with little technical knowledge.

Requests might not get communicated correctly to engineers, leading to further misunderstandings.
You often feel like you’re dealing with a one-person manufacturer, which creates dependency and hampers problem-solving.

When sourcing your manufacturer, can their engineers communicate in English? Food for thought.

Red Flag #8: Immature Processes

Unstructured, manual processes indicate operational immaturity and risks of poor quality coming off the line.

Quality control is often handled by the operators themselves, without a dedicated team of inspectors.
This raises serious concerns about consistent quality assurance.

Conclusion: Stay Vigilant and Proactive

This list of red flags is not exhaustive when assessing Chinese manufacturers, but it does cover a lot of the key issues you may encounter that, if avoided, will reduce your risks.

By addressing these issues proactively, you have a chance of avoiding difficulties down the line.

P.S. What action could you take if you’re working with a problematic Chinese manufacturer?

We have written about and discussed the topic of switching to a new manufacturer before:

Agilian also created an eBook tailored for anyone in this situation that you can download for free: