My experience outsourcing manufacturing to China (or WTF happened to my samples?)

Update: You can read my follow up to this post here

Ever since I read Tim Ferriss’ book “The Four Hour Work Week,” I’ve been convinced that I can outsource large chunks of my start-up. About 9 months after starting the process, I’m realizing that outsourcing itself is about trading time for cash savings. I wrote a blog post in the past about my experience outsourcing to India. Some of the issues that arose from outsourcing code involved difficulty communicating, unrealistic expectations for initiative, and an inability on my part (as a non-coder) to verify the work being done. Now having understood those issues, I decided it was still worth it to outsource the  manufacturing of TrekDek playing cards.

Why did I decide to outsource manufacturing when I’ve had a negative experience outsourcing code? The reasons are as follows:

a) The cost savings were substantial (and I’m low on cash at this point)

b) The product itself  is simple (playing cards), unlike code.

c) I could hedge the risk by ordering a product sample first

I listed what I was looking for on alibaba.com and was contacted by about 8 different playing card manufacturers, most of them in China. Some of them were clearly scams (asking for 100% payment upfront, cheesy design templates, etc). I finally narrowed it down to one manufacturer whose sales person is named Sophia (on Alibaba all the sales people pick western names for business).

My friend Gilbert did the card designs and I sent them over to Sophia. We hammered out the specs. For playing cards, these included things like card thickness and card size (poker vs bridge). In order to mitigate the risk of getting a crappy batch of cards, I ordered sample decks with a couple of different specs. I payed for the sample via paypal; it was $100. I had to fight the impulse to order all 500 decks because I was very eager to start selling these things and generate revenue. Good thing I didn’t.

I received the sample packs today. At first glance, they looked pretty good. However, upon further examination there was a bunch of things wrong with them. Here are some of the issues:

a) Many of the borders on the cards aren’t uniform. Some images are shifted right, others are shifted down, etc.

b) On one of the boxes, they did not print a few things on a few of the box faces that were supposed to be there. They were present on the other box so I don’t know what the issue was.

c) The edges of the cards were cut very roughly. Its kind of like some print books whose page edges aren’t uniform.

Now those are the things that I thought professional manufacturers should check for. I didn’t expect to come across those issues. There are a few others things that I want changed, however, they weren’t in the original specs so I don’t fault the manufacturer for that.

Here are my options now:

a) I can e-mail Sophia and order another sample with the corrections

b) Find another outsourced manufacturer

c) Order a much smaller batch of cards at a higher price from a US manufacturer

d) Market test the cards by putting them up for sale using the pics of the samples and see how much interest there is. Determine whether or not I should even produce these cards.

So far I’ve been unimpressed with the results I’m getting from outsourcing. Though outsourcing at first glance appears to be an attractive option for those with limited funds, the actual cost seems to be much higher in the end. Is outsourcing worth it? Let me know what you think.

One of the sample boxes

The back of the box. Notice how the text isnt centered and shifted too far to the right.

An example from each suit plus a joker. The actual designs and colors came out well.

Update: Read my follow up to Sophia here

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19 responses to this post.

  1. Posted by Eric Daigneault on April 15, 2011 at 9:47 pm

    Hi Dale,

    Having many friends that are experiencing this very issue I fully understand where you stand. To be really successful you need to have someone here that can oversee the manufacturing and quality control. Often times these people will have privileged relationship with a few manufacturers and can you a big impact on the final quality of the product.

    I have been living in China for a few years now and, as a consumer, the problems you are facing are a daily experience here. There is hope though, some people specialize in off-shoring relations and can really help you in finding the right manufacturer and once decided can oversee the quality of the product before final payment is made and the product is shipped.

    Though I do not do this personally I do know someone that I think could help you. If you wish to I can put you in contact with her, she is in China currently and often deals with printing in many forms. Reply to me on the mail I left with this posting and I will put you in contact.

    Best Wishes

    Eric

    (just in case) santaroga at gmail

    Reply

  2. Posted by Chris on April 15, 2011 at 10:04 pm

    One thing you might consider is the cost to them to print a sample run of card decks. The fixed costs of setting up a small sample run on their machinery likely eats a large portion of the $100 that you sent them (the samples may even be a loss leader product). I imagine they produce a fairly large percentage of their samples for projects that do not progress to runs of the larger profit bearing quantities. To reduce this overhead they may make quick imperfect samples to demonstrate the general concept while minimizing expense, expecting that a serious customer will notice defect and request changes before committing to the full order. They save money, weed out the customers who aren’t serious, and get feedback before producing a large run that a client might not pay for.

    Now, they could just be bad manufacturers. But if the savings are significant enough, it should at least be worth your time to respond to Sophia with detailed notes on the defects and request additional samples and/or quality assurances that these defects will not appear in the finished product. As an added precaution, if you do choose to get the full 500 run done, make sure that you get them to agree to use something like iEscrow to protect both parties.

    Reply

    • Hi Chris,

      Yea I’m definitely planning on sending my notes over to Sophia. At the very least I can see how they respond to that thing. One of the things I’m worried about however is eating up my budget by constantly ordering new samples. Your theory about weeding out customers is interesting, though It seems a bit counter-intuitive to me that they wouldn’t put their best foot forward on what is essentially their sales pitch via sample.

      I appreciate the input. What is your background if I may ask?

      -Dale

      Reply

  3. Hey Dale,

    I enjoyed your blog post because I’ve also considered doing this myself. I’m curious what ends up happening, and hope you post a follow-up.

    The advice given by the first two commenters seems excellent, especially Chris. We have assumptions about the way things are “supposed to be” but the reality is that in a lot of cases there are simply differences. I suggest that you give them the benefit of the doubt, because anything worth doing is worth $200 in due diligence.

    What you might consider is suggesting to Sophia that you’d like to see the changes fixed for free in the next sample as these issues you raise are not changes after the fact, but legitimate quality issues that they’ve introduced. It’s not terribly fair to expect you to pay for that.

    Best of luck with your cards.
    Pete

    Reply

    • Hey Pete,

      Thanks for the feedback. Its definitely been a learning process. I imagine there is a lot of money to be made for “outsourcing consultants” that acts as the middlemen between manufacturers and the client. Maybe after enough trial and error I can be one of those.

      Yea I think I will let Sophia know my concerns and figure out what she thinks is the best course of action. I think being upfront about my thoughts (besides just the corrections) might work.

      I’ll definitely have a follow up post.

      Thanks again Pete.

      Dale

      Reply

  4. I live in Shanghai and know first-hand the fun of dealing with China vendors. You’re right, it’s trading time for cost. I’ve found that the best way is pretty much being on the ground here and having a good interpreter. Quality standards in China can be very high, but it takes some shopping around to get it done right. Having some “boots on the ground” can be a big help, even if it’s just a Chinese-speaking associate that can help you. Although many suppliers speak English, there’s a strong personal aspect that can often mean the difference between a good relationship and a bad one. I would try to address the issues as mentioned in the comments above, but don’t be afraid to shop around. One tactic is to find a product on the market that you do like and then try to track down that particular supplier who obviously knows how to do the quality you expect. A little more time consuming, but it sure beats playing roulette with random suppliers.

    Reply

  5. Posted by muanis on April 15, 2011 at 11:57 pm

    I have a friend who does a lot of china trading and he tells me that chinese manufactures are all the same.

    He goes to china, agree upon a manufacturer. Agree on some quality benchmarks and come home.

    First shipment is ok.
    Second shipment has half defective items.
    Third shipment makes you fly back to china to find another manufacturer.

    In his case, shipments are containers loaded with stuff…

    The good products made in china are the ones that foreign companies run the factories and have a strict quality control. Like foxconn and apple.

    Reply

  6. Posted by Chloe on April 16, 2011 at 1:09 am

    Bummer. But I wanted to say that I REALLY like the graphic designs on the cards. With cool images like that, they’ll sell. Good luck!

    Reply

  7. Posted by Anonymous on April 16, 2011 at 3:10 am

    You’re talking about off shoring. It’s outsourcing when you don’t do it within your company. If you’re not making the cards yourself, then you are outsourcing. If you got the cards made in your own country by someone else, that is still outsourcing.

    Reply

  8. If budget allows you, when outsourcing you should always order the sample from at least 4-5 companies, and then pick the best (or the least bad). Problem with China and India is in their business politics, they go strictly for quantity (that’s the only way to offer such low prices), and thus they can’t afford to spend too much time on one (just potential) client. They mass produce even the samples.

    Also consider outsourcing to Eastern Europe instead, people approach the work differently there, and you will get a better quality, better communication, higher skills (on average), but also it will cost you a lot more than in China (but still less than US).

    Reply

  9. We had a similar experience when we created our first designer toy. We were looking for exceptional quality as our designers were incredibly talented and we waned their work showcased in the best possible way.

    First rule: stay away from Alibaba.
    We went this route initially, found someone who looked like they could do it, and even found other small toy manufacturers who had supposedly heard of the factory and recommended it. This was important since many of the factories tend to steal and re-post product photos from eachother.

    We went with this factory, and production started fairly smooth. We let the factory complete the sculpt (a rookie mistake on our part) and we began the tweaking process. Their sculpt was “ok”, not on model really, and it didn’t “feel” like our product. After a few months of sending photos back and fourth, we asked to have a sample shipped to us so we could see it in person. When we got them in the mail, we knew we were in trouble. Not only were the samples “way” off model (downright ugly, actually), but they didn’t even stand! The factory had, for some reason, rounded the bottom of the feet…

    Decision time- we were already in the hole a few thousand $- it’s a lot for us, as our entire operation at the time included myself and my fiancee. We’re bootstrapped and pay everything out of pocket. We decided to move forward, picking the best of the worst of the samples, and again attaching notes for fixes (“can we get the toy to stand, please?”). That’s when everything went really south. We never saw any fixes, never got to see the colors printed, or the designs in final form from this factory. What we got were weekly emails for 6 months that basically read, “so sorry for the delay, it’s almost ready- should have them for approval next week.”

    The following year came the stories of the Alibaba CEO stepping down over fraud investigations. No surprise:
    http://online.wsj.com/article/SB10001424052748704476604576157771196658468.html

    Second Rule: China is the wild west, do it the right way
    We started going to trade shows like Toy Fair and others, and began asking people with real product in the market for leads. While most kept their factories a secret, we made progress. We discovered the HKTDC, a more legitimate group, and then caught our break- someone who had connections and personal relationships and connected us to a truly great, legitimate factory.

    Result: aartingcollection.com – and our first designer toy on the market.

    Reply

  10. Hey! The cards look nice.

    I live in China and run a business from here (selling tea). My experience with Chinese suppliers of almost anything is that the core product is often great, but finishing touches are lacking. I guess you already know this! That’s going to be a common experience with a majority of suppliers over here from my experience.

    I wouldn’t be afraid to get back to them, and to be very clear about what you expect. Often manufacturers here are totally capable of turning out good products, but just don’t have the same quality expectations as you would, and so you get this kind of quality issue.

    Otherwise, try to search for that small minority of suppliers that does do it well. Get more samples, ask around… they do exist, and I’ve seen amazing quality products produced here in the most random places (eg. bigger or more expensive is not always better).

    Reply

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    Reply

  12. […] My experience outsourcing manufacturing to China (or WTF happened to my samples?) Update: You can read my follow up to this post here […]

    Reply

  13. I had an analogous experience printing business cards in Vietnam. General advice is to always have someone representing you on the ground, resolving any assumptions you may take for granted.

    Reply

  14. Posted by Robert on April 22, 2011 at 2:52 pm

    Hi Dale,

    I came across your blog through a retweet. Thanks for a great post. Outsourcing is a double-edged sword and can be a nightmare – I’ve witnessed it first-hand with outsourcing code (lesson learned). Your cards look like a great product and I think its a great concept.

    Blue Skies,

    Robert

    Reply

  15. Posted by Mark on April 25, 2011 at 4:05 am

    I came across your blog through Google, we i have been living in china for 9 years and am managing two factories manufacturing Electronics manufacturing for some well known retailers (note we not a Chinese manufacturer) from scratch to finish which involve printing as well.
    Muanis your friend is right most manufacturer in china are same. Since I been in the trade dealing with many clients every day and meeting all kind of people, I would like to put some light on this quality problems.

    A: We get what we pay for
    B: Nothing is for free

    two basic fundamental of business, most people go to china and bargain the price to the very low bottom leaving Chinese manufacturer with no margin, which forces them to cut corners to make profit, yet client fly back home thinking.. he done well saving himself money. To understand this batter one must understand Chinese thinking and culture and know what it mean when they say ok no problem hahahahahahaha (sorry couldn’t help laughing).
    Also nearly 50% of people you meet on Alibaba are not manufacturers. On the other hand if you put right amount of effort into finding one and your quantity is not there they will not work with you.

    ya there are ways to get around it but that involves you been there yourself and using some local channels. most people I met over the years, at first they all across happy and confident about how nicely they have bargain the price and how they found the manufacturer with such a good price and then three to four months later they will come back crying because they lost the money, goods arrived and half of them are not what he or she was hoping for.
    Back to the point if you are dealing with some serious numbers and money ask yourself will you do xx product in this price. I am sure most of you who arrive in china have enough experience in reverse calculating the price. Nothing is for free and no one work for nothing.
    Anyone who need help with china may contact me, no promise I will reply on time due to my busy schedule, but will do my best to guide you in the right direction.
    Thank you
    Mark
    markh755 at hot mail com

    Reply

  16. As the old saying goes, in China you get what you manage – not what you negotiate.

    Outsourcing offshore is not a push-button process, it takes constant management, constant communications, and quanxi.

    Reply

  17. Posted by Adele GZ on May 9, 2011 at 5:54 pm

    Don’t know if they would take on card decks but check out this startup that will help you get your concept manufactured in China.

    http://www.makible.com

    Reply

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