My Manufacturer Is Forcing Me To Accept Poor Quality! | Disputes With Chinese Suppliers Q&A (Volume 11)

Sometimes your Chinese supplier will use various dirty tricks to push you into accepting products that don’t reach your quality standard. Why could this happen and what can you do about it? Find out here with a helpful example and some tips…

An example scenario

An importer purchased some products from a Chinese manufacturer. They then wanted a contract packaging company to check the quality of the completed products, add the package, and ship the goods out. Here is what happened:

1. The customer sent an inspector to do a random inspection at the manufacturer. No big issues were found, and only about 4% were defective (which is not good but could be put aside in the next step).
2. The customer paid for the goods and authorized the manufacturer to send them to the contract packager.
3. The contract packager did an incoming QC check on 100% of the pieces and found about 12% of them were defective.
4. The packager told the manufacturer about this. The usual process is for the manufacturer to take the defective pieces, re-work or re-produce them, and bring them back to the packager.
5. The manufacturer complained to the customer that the packager was “rude and unreasonable”. A review of communication shows this is not the truth.
6. The manufacturer said they would stop further production until the situation could be handled properly. 

What can they do?

Explanation and tips

The manufacturer’s response to cease further production is clearly a threat, meaning: “accept our products, even if some are not very nice, or you won’t get any more products.”

This situation brings up a few questions and answers.

Q: Why did the random inspection show only 4% defectives, while the 100% inspection found 12% defectives?

A: It is probably a combination of several factors:

• The quality standard was not very clear (not showing boundary samples illustrating what could and could not be accepted on the most common defect types).
• There is a random element in the sampling of the first inspection that could lead to an incorrect result.
• The supplier may have “salted” some bad products in the middle of the good ones after the first inspection was completed and before they shipped the products to the packager.

Q: Was the first inspection a good idea?

A: In this case, it was obviously not useful. The importer paid the manufacturer and was even providing them with an excuse to cast doubt on the packager’s findings (the first inspector found only 4%, so why is it so high now?).

In other cases, serious quality issues are found while the products are still in the factory, and discussing these issues before the final payment gets done is always better for the importer.

Q: What could the importer have done better?

A: Here are three suggestions:

1. The importer should have defined the quality standard in more specific terms, with clear limits between “acceptable” and “not acceptable”, and so prevent a subjective judgement.
2. They could have signed a manufacturing contract with the supplier, providing more leverage to the buyer’s side.
3. They might have been able to negotiate for the payment of the last 10% after the full inspection by the contract packager. Or, since the packager is also in China, perhaps the purchase could have been done by the packager instead, who might have been able to negotiate better payment terms as a local company (which is common for China-factory-to-China-factory deals).

Does this sound like your own situation?

Sofeast could help you in the following ways:

• By helping you source a suitable manufacturer
• Advising you on a manufacturing agreement and quality standard for your need
• Providing product inspections to assure your quality standard is met before goods leave the factory.
• Handling your contract packing at our 3PL facility in Sth. China.
• Taking care of your purchasing and payments to suppliers locally for you to try to obtain better payment terms (we’re a foreign-owned local Chinese company)

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