April 10, 2020
What Are the Hidden Risks Importing Products From China?

What Are the Hidden Risks Importing Products From China?

In this episode of the
Business of eCommerce. I talked with David Hoffman about what
are the hidden risks importing from China. This is a business of
e-commerce, episode one Oh seven Welcome to the Business of eCommerce, the show that helps eCommerce retailers
start launch and grow their eCommerce business. I’m your host, Charles Palleschi
and I met today with David Hoffman. David is the founder of global TQM, is an expert in Chinese
sourcing, supply chain, private label and brand licensing. I as David on the show today chat
about what are some of the hidden risks importing from China. So, Hey David,
how are you doing today? Very good. How you doing? Good. Awesome
to have you on the show. I love the topic of some of
the risks importing from China. I think it’s one of the things a lot of
people kind of tell folks just to kind of jump into it, but a lot of people don’t talk about
the other side of like what you can run into and there are a lot of potential
risks. So first, where are you? So I’m in Boston Hill and I know we kind
of had to get a time-zones lined up. Where are you located? So I’m located in Hong Kong. I’ve been
living out here for about 16 years. I’ve got offices in China, so I spend a lot of my time
between Hong Kong and China. So we bought a 12 hour time zone apart. Okay. And that was, and where
are you originally from? Originally? From South Africa. Okay. And you moved there
for this specifically? Right. We will purchasing a whole lot of
products from China and I’ve got the top utility to move out to Hong Kong,
which at the time seemed like a, I had nothing to lose and
everything to gain. And you know, my plan not to come back here for one
year and 16 years later just got absorbed by this world in this
industry. And here I am. So that was 16 years ago. You’ve
been there and this has been the, what you do is focus? Yes. So, so we, we do a lot of sourcing
quality control in China. You know, I’ve started different
businesses and you know, those businesses that all started because
I’ve always had this habit and base in China, you know, being
able to source products, deal with manufacturers and really
get the right quality product. And that’s always been for our own
businesses in my own business. So then, you know, from here it’s just kind
of accelerated into, you know, helping more and more people on
the ground in China. And as such, I haven’t been able to leave. Yeah. I’ve heard a number of folks that
once they start kind of scaling in the sourcing but let’s say
there’s two partners, there’ll be like one partner that stays
local and then one partner goes out there, you know, X number of times per
year and almost like it’s their part, their home away from home sort of thing.
I feel like it’s kind of a common, yeah. Is that something you recommend? Are there other ways around that or
like what are some of the best practices when you want us to do it? Yeah, it’s a great point. I think why
that happens and it’s almost that again, as you get bigger in a business
it becomes a necessity. I mean there are different ways to do it, but I think the core of it to me
is really it’s about, you know, having the relationship with
your suppliers and really
being able to, you know, oversee what they do and
work closely with them. And I think, you know, what you’ll find while a lot of people
end up living out here is just because of that, you know, they need to
vent in proximity to suppliers, oversee the details. Cause you know, this whole business is a lot of attention
to detail and distance unfortunately creates, you know, a barrier for lots of problems to
occur just by being on the ground. We can manage it closely. You closer to opportunities as
well as new opportunities arise. You can react quicker and
faster. So I think it’s, it’s like any business, you know, the closer you are to
things the easier they go. And because all the manufacturing is
done in China now as you scale up, it does kind of make
sense to either be here, I have a partner here or you know, if you, if you can find a liable companies
to outsource to it’s an option. But you know, one of the
things I always say to people, and I worked with a lot of companies of
different sizes is nothing replaces your work and your input into
these things. So, so, so no matter what type of resource
you’re working with in China, you’re ultimately at to
own that and you know, take control and really lead the project
and lead and project manage, you know, your product development. Yeah. But let’s say you’re a
retailer and you have, you know, a family and kids and they go to school
and all sorts of things and you just can’t like pick up and move there. Is there something in between some
alternative that you kind of see folks successfully doing or is that you really
need it like a man on the ground sort of thing? I think you do need that. You do
need a man on the ground, you don’t, you don’t necessarily have to be
the one on the ground. I think I mean, I don’t want to speak specifically
about outcome you, but as an example, you know, we offer services on
the ground in China, but you know, our business model is really such that
we help you build the relationship with your supplier. And you know, you
know, we don’t believe in, you know, kind of having middlemen in the supply
chain process. We believe in, you know, just nurturing those
relationships. And, you know, I think having somebody that you can send
to the factory to check on things or, you know, even just a, a Western mindset, we’re always to the voice that
you can talk to, communicate with, can check samples quicker
and faster for you. You know, it’s very helpful. And I think if you can create a really
healthy three way relationship where you know, it, things are very
transparent, you know, absolutely, you can outsource a lot of that
work. And I think you can, you know, make the process such that you can still
do your checks and balances and you know that if that means you know,
more Saul polling and checking, you’re checking more and more samples
and not rushing things and just taking time to do it. It absolutely can work and you can send
people out to the factory to check it. You can inspect your products
before they leave the factory. But I think it’s about patience and not
really not a rushing things and assuming things are going to be
done right. You know, just checking each step along the way. What do you say to folks that, cause
I know this happens all the time, they start talking to a factory
and the factory says, yeah, we have someone here
that kind of does that. Someone in house that does that
interfacing for you where they’ll send you samples, they’re on ’em WeChat
and they’ll send you you know, photos right there over the phone,
you know, and they say, you know, with our factory, you don’t need that.
What do you say to folks who do that? Is that viable or is that
still not the way to go? No, I, I think firstly I think it’s absolutely
okay to communicate and interface with the factory through Weechat to get
their, make proposals and all of that. And I encourage that because that’s part
of the relationship and also how they conduct themselves is a good kind of
litmus test for you to see how they’re going to, you know, deal with
you. But I, I think it’s, I mean, I’ve been burned so many times
and I know so many people that have, and as long as truly intentional,
deliberate, you know, mistakes happen there’s
misunderstandings, you know, I say without seeing samples, without checking production before it
leaves the factory without getting you know, depending on the product type, getting the the compliance
checked independently, there’s crucial. You can’t rely just on your manufacturer
to provide that for you. You know, ultimately, ultimately you have to own
their responsibility because
when there are problems you know, you’re the one facing
your customers, your reputation. It’s your online business or, or even
just bricks and mortar retail business. So, no, I think it’s really essential. There’s always two potty chairs or you’re
checking out with the trusted party that you know and not because you got
to kind of trust people because mistakes happen. I think that’s really,
really critical over time. I think as you build a relationship with
the manufacturer and you know them well and you’ve met them a couple of times
and you’ve had a smooth run off shipments and quality, you know, you
can ease up and try any road. I don’t think the
relationship in China is, is two different
relationship anywhere else. It’s you build relationships
over time and you know, trust and confidence is something
it’s earned over time and you know, that’s when you kind of, you’d kind
of feel more relaxed than you do less, but you still need to do
some basic checks always. Because even with the best of intentions, mistakes happen and I just
think that’s really important. Yeah, there’s always this dream of everything
being completely like hands off and just going to submit an order. It’ll land in the U S it’ll go to some
three PL and orders of stock coming in and the magic will happen. Exactly. And that’s why
when I came to Hong Kong, I thought I’d come for one year and
move on 16 years later for that exact reason. Yeah, exactly. Exactly. I realize I actually need to build a
whole infrastructure around all these things. It doesn’t stop, but
you’ve got to own it. Yeah. So what are some of the hidden
things that people aren’t, so these are some of the things that
people know, like quality issues, things like that. Are there some more hidden things on
need that you wouldn’t necessarily think of? As a new regular? I think, I think some of the things that I’m kind
of facing more and more is I mean of course quality, but I think, you know, what happens a lot of that time is it’s
the things you don’t discuss with the supplies that sometimes matter the most
because I find people will often press on a price but without
clarifying a specification first. So you’re press on a process supplier
might meet the price and then you realize later that, Oh, they took a shortcut or
they reduced the quality of material, let’s say to think massage chairs. It’s all kind of always the things that
you don’t think about that otherwise it creep up, you know, to
cashews. So, you know, like I always kind of say that process
is the first thing to negotiate. Like do like a holiday around
of sampling, first checking, understanding the space from
multiple factories first. And then when you really know what you
want and you’ve seen the song pulls, you know, there’s the time to negotiate
on the price because you know, you could get 10 samples from 10 people
and they can be substantially different in, in, in words what you expect. I think one of the other things I’m
finding a lot more is, you know, we’re having a lot more conversations
with people in terms of protecting their trademarks in China. And that’s
something I advocate a lot. Because if you register your trademark
in China first, you know that, you know, we’ve had cases where supplied
and manufactured trademarks
that they see do well overseas. Or just, you know, you know,
idolize sellers in China, you know, you are interested in themselves and
although like a lot of people say, I don’t sell in China, what happens a lot of the time is the
Chinese sellers will go and sell it online on Chinese marketplaces,
on China, Amazon, China, and it’s lawful because they own the
trademark for that market. So, you know, I’ve been telling people a lot more
and more to reach to your trademarks in China just to protect
your manufacturing base, irrespective of whether you selling
there and then, you know, just, just watching out for those things
you don’t know. And having patients, you know, I’m finding
people trust, you know, in relationships too quickly
because of lack of patients. And I think often it’s just their
communication and time that it takes to nurture things. And, you know, don’t expect a perfect song
put on the first route. People ways to either prefers
long should be perfect. But it’s really the
case cause I, you know, I just find manufacturers actually are
better at mass production that aren’t making handmade samples. And a lot
of the time if it’s very custom, they’re making handmade salt with it
aren’t perfect. So I think, you know, understanding those kind nuances
and adept him with that patience. You know, some of the hidden things too, to kind of look out for
and just think about. Yeah, I like that concept
of registering in China. So even if you’re not selling in China, you’d recommend registering
a trademark there. Absolutely. Without a doubt. What those little tips, is there a large costume in that or is
that something similar to the U S or what’s kind of the process? It’s a couple of, I mean, there’s
lots of companies that do it. We even do it for people. It’s,
I want us to help them with that. It’s a couple of hundred dollars in two,
$300, depending on how many classes. But it’s one of those things where I’ve
had online centers where the factories register the trademark and
sell it in China. And you know, it’s quite disturbing but you
can’t really do anything about it. And I just say it’s like when
you read sort of business, your tech and insurance
and certain things you do, I just always say register your trademark
in China because you know that there’s a misconception that intellectual
property is not manageable in China. It actually is, if you’ve got the
Chinese intellectual property, you know that the conflict really comes
in and people have got the overseas RP and then I try to enforce it in
China it becomes a much more costly, long exercise. And you know, I say for two to $300 a lawyer is going
to charge you five to $10,000 to deal with the issues. So for me it’s, it’s, I’m negligible if you’ve got a good
brand that you’re building is doing well with it, just registered in China, even
if you’ve got international trademarks, it’s just going to shortcut a
lot of issues in the long run. And it’s becoming more and more of an
issue with the marketplace is going global. Yeah, that’s a good one. And you don’t hear people saying it that
often and it sounds like if you have someone that can help you do it, it’s
a relatively cheap and easy process. Right on. [inaudible]. Exactly. And I think that, you
know, the obstacles are, you know, you do have to check the, there are Chinese regulations that
too many short trademark qualifies for registration in China and you do have to
do some of that application in Chinese. But you know, it’s not hard.
I mean, we’d do it for people. It takes them within seven days. They got the application in and you know, then can take anywhere for a year
to get the registration through. But the key is once the application is in, you already protected because in China
is the first one to register or to to apply. So, you know, jeez, no one else can come in later
without being contested. So I’m just a huge advocate. You know,
anybody I’m dealing with, I’m saying, please do it. Whether it’s with us
or someone else, just get it done. And it’s really Okay. That’s a, that’s a good tip
right there. So if you’re listening, it sounds like one of
those things you like, you almost just have to do at that point.
It’s well worth the small investors. It sounds like you have to do that and
you’ve got to hope you never even need to use it. But it’s, it’s just if you do
have to use it as that, it would be, it would have been a no brainer. And I
think the way the world’s changing now, like people always tend
to me, Oh, what visit, protect my IP in China and stop factories
from copying my products. And I go, you know what debt a lot hard, enriching your trademark and your
trademarks that your brand, you know, it’s your reputation, it’s everything.
You stand forward, your customer service. So would you protect your personal
name, right? It’s your integrity. So I set up a base way to protect yourself
from Chinese manufacturers or copying is protect your trademark and
brand name first. Because you know, people products have cycles. That
comment go under the, you know, the next bad comes and you know,
that’s a much harder battle to fight. But you know, our reputation
is standing there, you know, nobody can copy easily
and that’s your brand. So I say it’s the single biggest
way to, to simplify things. Gotcha. Yeah. Good tip though.
So changing gears a little, you mentioned about the sampling process. I feel like there’s some confusion
around that where I hear a lot of times someone new kind of doing this, someone’s the factory is asking them for
cash upfront before the sample or the sample during the PR, like this down
paint, like all these different things. What is, what’s like the right path?
Like what’s the best practices, how should this work and what should
someone expect going into this? So the, I don’t think there’s a golden rule from
every single supplier that they should follow. I think it comes down
to anything. If you can imagine, if you put yourself in like
a lot of people, I said, put yourself in the supplier’s shoes. They’ve probably got hundreds if not
thousands of people approaching them all day every day for samples, you know? So when a supplier kind of
asked me to pay for a sample, I actually always say no problem because
that’s how they’re going to give me the attention. You know, it shows
that I’m serious, right? I’m putting skin in the game. If a guy’s asking for samples for free
and I want to pay or want to pay later, you know, what was, you
did get a hundred or 200, 300 people asking you for things. You
go to the guys series and says, well, I’m willing to pay for the
sample. I think you know, over time when you’re dealing
with it more and more, they started giving you samples for
free because you’re a customer you’re already buying. So I think, you know, upfront you’ve got to give them a little
book, a little bit of give and take, paid for the sample, get it. You know, I think it’s reasonable that if the
salt poles no good or it’s broken or damaged, that they
replaced it or substituted. But you know, I generally say the one thing you
don’t want to shortcut is sampling. I don’t think you can touch a product
without pulling it multiple times. I think if you get a bad salt and
pull, it’s par for the course. It’s kind of an investment in what on, I think that the cost of the sample is
far less than the pain of ordering the wrong product and not checking
it out properly. And I just, I just see that as he saw him pulling as, as I can investment in an investment
in product development and R and D and just, you know, quality
control. You just have to do it. A lot of manufacturers by the way
will say if you place an order, we will refund you the
sample cost and they will. But I think just mentally, you know, I just see sampling as a necessary
evil. I shouldn’t say evil, a necessary requirement. And it’s, it’s a cost of doing business and it’s
a mass cheaper cost of doing business. What is harmful is that we get all our
samples sent to our China office and our clients also use our China office because
then that just saves a lot of time and Korea costs. So like we say to people,
you don’t get jobs sample sent out, offers our team, go through it, check
them and do like a scar call with you, hold them up and discuss
them because you know, it takes effect you one or two days to
send them to a local China office and you know, and they’ll often cover
the freight cost, you know, because it’s quite cheap. So very often the factories will cover
their cost and you pay for the sample and then you don’t have to worry about
carrying it overseas. You know? And then you kind of gets people
like us to go through it with you, check them and you know, once you’ve kind
of done that filter and you say, okay, if that one’s good and
that one’s good, send it. If those aren’t good to send it back
to the factory and try to get a refund, you know, or in some cases a factory, like if you’ve got a local office to
send the samples to the side cases, a factory, will you get some cases,
you’ll get away at the factory, give you a sample because
you can always say, well, if you could send it to my
China office if it’s no good, I’m going to send it back.
If it’s good, you know, I’ll pay for it within a couple of days
and you know, it’s like a 50, 50 chance, I will accept it some way
and accept it. So, you know, I find that like whole sampling process
we do for our customers is lucky. It’s like incredibly hard for them to
save so much time because you know, you get samples, they’re not good
if you ship them overseas, you know, that can take a couple of days if not
weeks. And then you know, it’s no good. You start the process again
and you’ve incurred that cost. So I like to check swamp was in China
on round one and round two and then when you’ve narrowed it down, you know you
get the right ones sent through to you. I think it’s, I think it speeds up the whole cycle time
and I think overall it pays for itself because you’ve said it all that
Korea and all that time you’ve saved. So that’s generally high approach that, Yeah, I feel like that’s one of the
biggest things with the sample time, the sample process where folks
are, when they’re getting into it, they kind of just want it to happen and
don’t realize the amount of back and forth and time it’s gonna take is a lot
longer than I think a lot of people have expectations. It’s long and it’s important.
It’s the details, right? I always say to people that don’t expect
a perfect sample because that’s what you’re doing, right?
You’re building a brand. You’re that buffer between what the end
consumer sees and all the hard work that goes on in the manufacturing process,
right? You want to see every detail. You want to see the finish, the
quality, the texture, the fields, the performance. You need to see that you know
there is what your job is and and, and you know to expect it to
be perfect is not realistic. Rather embrace the process and go, well I’m glad I found all the problems
because they didn’t produce a lot bit. That’s, that’s one of the
points where right there, that kind of little thing you said to
point out, that’s what your job is. I think a lot of people think
that’s it’s a factory job, but that’s someone else’s job
and they don’t realize that ER, your value as the retailer, part of it
is that quality is that quality control. So the factory, that’s where the line
ends is the factory produces a product, but quality control is the retailer’s
job and I think it’s blurry. [Inaudible] Who does a
cuss, who does a customer, the consumer come back to the
retailer and I come back to you. You’re going to face them,
you’re going to refund him. You’re going to create them. They’re
not going to say, who did you buy from? And how did this happen? No one asked.
No one had asked those consumer, when you get a kid, Amazon, they don’t ask If they end, the factories never
say, well you credit your customer, we’ll create it. You
don’t worry. It’s very re Yes. So I think the sample
process, that is the biggest thing. People just kind of rush through that and
like just what they think somehow it’s not quite right. Like maybe they get the
first sample but it is not quite right. And they kind of just say, okay,
because they want to be done, but don’t realize there’s gonna be some
back and forth. Like how many times, what is kind of a short sample
process versus a longer one? Like are there other ever
times if somebody gets one
there, perfect, let’s go, let’s do it. Or should you apply
for four or five back and forth? It’s such a good question.
I think if you go, if you’ve gone back four or five times,
it’s perfectly normal and acceptable. Sometimes it’s more, you know, sometimes
we even break it down, you know, it could be generally okay. And we
might, so I’m looking at your headphone. Maybe the cable on the cables are
uncut, you know, you know what, just send me the cable. I want to
see the cables that you, you know, you’d think you’d say could just send
me that Bart, send me that piece. And then you’d say, okay fine, I’m
happy with all these parts I’ve seen. Now you know, you build it into a spec and it says
[inaudible] please confirm you’re going to produce with these parts and we’re going
to expect it that the mass production, you know, it’s got oil, all these different parts we’ve approved
and signed off and are happy with, you know, that’s what we want
to see in mass production. And that’s why you have to
have somebody that chicken, that mass production for
you who understands the
processes has been through it with you because you know those details
are hard to pick up unless you’ve been through that journey And who understands what you’re looking
for very specifically because you know, let’s say it’s a clothing product, the
feel of the fabric, like the texture, that sort of thing. There’s some very subtle differences
there that you can’t get unless you’re physically holding it in
your hand, touching it, seeing the way it looks in the light. Like there’s all these little kind of
nuances that unless you have someone on the ground that realizes,
Hey, I want, yeah, right. Like I want it to look a
certain way in the light verse. Not only I wanted to fill smooth,
not raffle, whatever that is 100% and even that’s Like a process. It’s like working with
the team, right? It’s like, you know, at the beginning you’ve got to hand
hold and nurture that team so much more until it gets to a point where you
go, remember how you showed them, fill those fabric, fill those fabrics.
That’s a texture I always want. And then they know and they can visit
half a dozen factories for you going forward and say, that’s
good, that’s not good. And they could of benchmark
good at, you know, frame of reference that they could
compare to, you know, slowly Stoney, building your team of people
that understand what you
like and what you need and what you want. Yeah, I like
that. What other kind of, what are the gutches do you see new real
retail is running into that they start this process and they
completely don’t see. And I know like the sampling
is one of the big ones, but are there any other ones
that retailers, they’re not even, they don’t even know what
they don’t know sort of thing. [Inaudible] There’s a
list. Delivery dates, I think like they just demand a
delivery date and they don’t, you know, packaging, packaging I think is a
huge one. Packaging and labeling, I think that attention to detail on
that’s so critical. And you know, I see guys take so much time on it,
but then they demanded delivery, then they forget that there’s a
production schedule. You know, so like, you know, I, I always say
like as far as I’m concerned, until you’ve actually signed up
all your artwork and packaging, don’t even expect to delivery date
because it’s just common sense. The supplier can’t order
those materials, right? So if I can’t order those materials,
how are they going to finish production? So like I always, you know, I
always had kid, he was out, well, last time that I’ve nappy rash
production and get it done next week. It just doesn’t make sense. Well he’s
would order those materials, get them in, then start production, you know. So I think that people miss
understand the timelines. And, and underestimate, overestimate what effect you can pull
off in a short space of time without, without making a mistake or compromising
some quality some way and not just quality in the product as quality. It
could be quality in the workmanship. You know, Tom stressors
make people make mistakes, order raw materials, put
dollar on artwork through me. We’ve had loads of times where
we’d spec the goods and we go, but you’re using the packaging that the,
the, the version one, not version two, you know, and they go, Oh, we made
a mistake. We were under pressure. We sent the wrong one to the printer. So there’s a lot of other quality
issues that come out of Tom stresses. So I think, you know, really planning those things and doing
the property makes a massive difference. Yeah, I like the idea of understanding
that that delivery date you, so you can’t even get that date until
the contract’s signed. Like they’re not, don’t even expect the factory to try, like don’t even press them on
the days because they sold it. It’s the made a date. Right. It’s like if everything runs
according to clockwork, you know, that’s going to be your production date
and people just use it kind of as they bottle, right? That’s there. There’s the
yardstick, which, which is important, especially running promotions, both if it’s a first time
factory and everything’s new, you haven’t checked a sample before. You haven’t done compliance
checks on the product before. You haven’t done packaging and
artwork and anything like that. It’s just not realistic. You
have to budget that time. It’s, if it’s a repeat order, I think
it’s a lot different, you know, then you can say, okay, look, you
know, to the exact same repeat order, production run, nothing’s changing
or there’s some minor changes. But yeah, and I think you’ve got to
budget that extra. And he always says, don’t worry, I’ll get the artwork done
in five days. It’s never five days because it’s human nature. You
see packaging, you see the design, and then you go, Oh, this
is better. That’s better. Change has changed that and that’s
fine. You know, you want it to be right. But understand that pushes
out the production schedules. Yeah. I think what people don’t realize is
they see an estimated date and they think that’s from like today. But what really happens is that’s from
when the factory gets everything they need and then it’s still only an estimate
at that point. But so don’t even like, yeah, like you don’t want to base
everything on that. It’s just an estimate. It might be the first time they’re
producing what this material or in this method, so they, right. So you don’t want to be pushing them
that hot on that date because they might hit the age but make
the product, you know? Yeah, exactly. And I think it’s okay to
keep them under pressure, but that dope, you know, I’ll say you
can’t fool yourself. Right. It’s okay to keep them under pressure,
but you have to understand there, I’m going to probably, I’m probably
not going to get this in 45 days, it’s probably going to be 60 days. It’s going to ship and as long as
you got your own internal time frame, you know it’s okay. You know,
keep pressure on the 40 days, the 30 days or it has been committed
and when things go wrong, you know, plot of pressure that doesn’t hurt
any targets and milestones never hurt anybody. Right. And getting things
that, especially the batteries, but I think don’t, don’t trick yourself into believing
that you must have your own internal timeframe and then you’d just, you know, you push production as fast
as you can realistically. Yeah. You’re going to have
to add buffers, right? Because even if it’s not the factory, there could be shipping issues that
could be issues with customs that, who knows, it just goes
like you hear all the time, price is going to held up in customs and
they’re in some customs black hole for indetermined and you can’t
even, you can’t even get a date. Customs will never know Exactly. They do what they want
when they want. Don’t understand it. But it’s true. You can’t,
they just get stuck in limbo. Yup. So just ask offers. Yeah, you’re right. And I think
also people don’t realize, you know, the fact she wants to ship
the goods and you know, it’s in their interest to produce the
goods and ship the goods and get them out. They don’t want to give
you a hard time, you know? So when these things do happen,
I think you do need to, you know, understand them and work
with the suppliers to, to work through and actually
builds a healthier relationship. Yup. Yeah. That’s a good, that’s a
good point. So yeah, last question, although it’s a big one, but
kind of in the interest of time, I want to make sure we get the second
is when do you start negotiate? When and how do you negotiate
on pricing with the factory? Because like you were saying earlier, I see people do that way too
soon in the process on, yeah, they’re basically asking for a sample
and a price they want and the factory doesn’t even know what they
give you a price on it. That, And you haven’t even seen a salt, but how
can you say it’s too expensive? Cross? Yeah. You see I always negotiate
from information is King. That’s how I look at it.
Right? Information knowledge
is King. So you know, I say you use the fact sheet to educate
yourself on the materials you use. Speaking to a couple of factories, right?
So do you get in different process? It’s okay to send a factory. Why would somebody else put me a lower
price and then this, it looks the same. They will. That will be the first one
to tell you about is that this material? Is it the spec? Is it the thickness is
a, you know, this finish. Right. And, and that’ll help you educate and that
gives you the knowledge you need. Or I’ll give you the ammunition you
need down the line. So, you know, I just kind of record and
collect the information like, and then I think I start negotiating once
I’ve got a whole bunch of samples and I’ve seen what I’m getting for the process
quoted and I know what’s gonna work for me more than this. You know, and I say what works for me in
terms of what I’m going to land at, what can I sell it at?
And you know, you know, I don’t want to be stupid about it.
Prospect, go to him in Austin for Simon. I know it’s not achievable and kill the
deal. So once I’ve got their knowledge, I’ll always negotiate from a position
of strength and knowledge. You know, I want to be in to say, guys, you know, I’ve checked five products that 100%
identical, the space are the same, you know, I need a dollar
or $2 office. Right. That’s when it’s attached to the guide
shape because you got to be able to back up what you’re saying. Cause the guys that know what they’re
doing will see straight to you. They’ll go, no you don’t. There’s no
way you got the same product as me, you know, at that price. So
you’ve got to know the details, then you can negotiate, you
know, and then you know, and you can also then find ways
to cut down the prostate dog. What can you do to lower the price?
Right? We need to be at this price point. What’s not going to compromise
the quality, you know, rather agree on different
packaging or different the, if a different material with say,
look, it’s a different material, but we think the performance is the same
and you can make the educated choice. So I think understanding the materials
costs of those materials and having different products to benchmark,
then you start to negotiate. Yeah, I like that about, you’re almost working with the factory
to try to get to a target costs in some of these, right? Where it’s not
just give me the cheapest price. It’s not just like you’re beating
them up for the cheapest price. You’re more saying, you know, we’re
trying to get to, you know, 20, 23, 36 for this unit. And right now they’re
coming in bit higher. How do we, how can we get there? Yeah cause I’ve heard people do that
with packaging and things like that where maybe instead of having
the factory package it, you can actually just have them come as
like have them come in bulk to the U S and then break them apart here
or a different [inaudible] What happens? I say, and I must tell you, a lot of people don’t realize what a
big cost difference of packaging makes. You know, I know firsthand, we deal directly with other printers in
China and I know if I do a production run of a thousand or
5,000 boxes on a product, my price is so significantly
higher than that. We do a production run on 50,000
units. Even. I was surprised. I was, I blown away. I said wow, how can
it be that much of a difference? And it really is. So you know, quantity
makes a huge difference. So you know, if it’s smaller quantities rather than
make compromises on packaging where you know, you can lower the cost
if there’s, if it’s important. Depends on the product and how
important the packaging is. And if it’s e-commerce packaging, sometimes less important as long as
it passes drop tests. But visually, you know the products purchased in
theory before they arrived at the door. But you know, it’s a balancing act. But I do think packaging is one area
that costs can really be saved a lot, you know? And then just also understanding
spics and materials and products. Yeah. For people to kind of skip
on the packaging and then
have this like 50% damage rate and ups is pushing back
but they’re saying, you know, these weren’t packaged
correctly, so then you Drug tests and vibration tests
on everything before they go. Oh yeah. How do you do that? Exactly. Yeah, so so at 50 we, we’ve
dealing with our supplies meat, we give them our specifications, we
taught them, I think we use one is TA, I stand for correction. I’ll give you
the right details, we’ll notes later. But I think we use one sta, which is our international drop tip job
shipping test standard so that they’ll make the packaging according to them. And then we actually send our people
into the factory, I inspectors to, they do drop tests and
production and inspection. They’ll take X number of units, we’ll do drop tests on them that they’re
dropped in fast sides from one meter higher, six corners, and then you open
it up. The product shouldn’t be damaged. A box should have minimal damage. So there’s a standard is actually quality
control standard for drop tests and we do it on every single product, but we tell the factory upfront before
we place the order because it’s not fair to place the order in the factory. Then going post that inspection
standard and they go, but you never even asked us for that
because it is a cost difference. But I think, I’m sure
you’ve experienced it, there’s no cost worse. It reworking product and having damaged
goods in the warehouse off to that shit. You know, that’s the worst case scenario And it’s the damaged goods. And then
you have to send a second one with a, and then you have to go to ups and try
and negotiate your insurance claim. And that’s a, maybe you get it.
Maybe you don’t, this whole whole, it just opens up this Exactly. That happened inside of me that 20 cents
extra for the packaging didn’t seem like such a big deal. Yeah. Yeah. So the factories know like when people
to people that have had this happen, right. Does the factory know what’s going to
work for the drop cast and what won’t and it just something that the retailer just
didn’t ask them or it didn’t kind of specify or it was the
factory turn to skip on it. Like what usually happens
with this kind of breakdown? Yeah, it sucks. Yeah. I find there’s a mixture of factory. Some factories will know straight away
and they go, Oh okay, if you want that, you know, we have to use this beta packaging
and then some just know straight away, which I like because it’s a reassuring
and he’s, they know some just got a, okay well we’ll try and we’ll check
and it’ll test and they don’t know. And I think, you know,
kind of set the truthful, honest out of them is the
important part. But you know, I think as long as they agreed to it, when you placing the order before you
paying a deposit or opening your letter of credit, I think as long as you
agree on that in your spec, and I always say you front
load everything, our front,
all my quality control, chase, our front load, all
my specs and requirements, all the checks we’re going to do on it, all the compliance document are front
loaded boards because I would much rather that they tell me at that point
our look, we can’t do this, we can’t do that or we don’t
know how to do this cause he’s, I don’t know how to do it. I can
often help them get it done and I go, well look guys, we’ll help
you do it. But you know, maybe it’s going to cost some
money and we discussed that. But just front loading things and nine
up front is the key to everything for me. Awesome. That’s super helpful.
I yeah, no thank you for that. If folks want to learn more about
you, kind of ask you some questions, kind of contact, contact you about the
company, where the best way to do that. So, so we’ve got a website
called global tqm.com. Yeah, that’s why the word global, tqm.com and then I mean on there there’s
actually a button and we can just schedule a free call and if they, if anybody wants to just schedule a
free call and just they can mention your show in the notes when they book the
call and then I’ll take all those calls personally. You know, I love talking to the customers and
then we can talk them through just free advice, his fond and seeing
where and how we can help them. We more than happy to as well. If you’re offering free advice, I
definitely are to be able to take the Ash, cause it sounds like this is one of
those things where just having this knowledge of what not just what not
to do even is super, super important. So people should definitely
take you up on that. Yeah, I agree. It’s what you, it’s what
you don’t know that bites you. Yeah, Exactly. Exactly. Awesome. Well, thank
you very much for coming on today. I definitely, definitely appreciate that. Oh, wonderful. Thanks for having me.

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