Chinasavvy HK Ltd

Chinasavvy HK LtdChinasavvy HK Ltd

Avoiding Product RecallsAvoiding Product Recalls

Ensuring quality of Ensuring quality of

Chinese made products Chinese made products

in today’s in today’s hostilehostile environment environment

The The Made-in-ChinaMade-in-China label label

• Under Under attackattack from consumers from consumers• Strengthened Strengthened regulations from regulations from destination countriesdestination countries• Reputation Reputation damageddamaged• IncreasedIncreased recalls recalls

What is a recall?What is a recall?

• Retail recallRetail recall Product has reached the end customer and has to Product has reached the end customer and has to be recalledbe recalled

• Importer recall Importer recall Product has reached the importer and has to be Product has reached the importer and has to be recalledrecalled

• Regulatory recallRegulatory recall Product stopped at customsProduct stopped at customs

Made-in-China Recalls Made-in-China Recalls (just a few!)(just a few!)

HeatersHeaters (35,000) (35,000) FansFans (300,000) (300,000) ToysToys (18,000,000 +) (18,000,000 +) CandlesCandles (106,000) (106,000) BraceletsBracelets (4,000,000) (4,000,000) JewelryJewelry (too many…) (too many…) TiresTires (450,000) (450,000) GlasswareGlassware (200,000) (200,000)

Remote Controls Remote Controls (10,000)(10,000)

Pet food Pet food (millions)(millions) ToothpasteToothpaste (millions) (millions) BatteriesBatteries (240,000) (240,000) MP3 Players MP3 Players (13,000)(13,000) ReclinersRecliners (‘000s) (‘000s) JacketsJackets (‘000s) (‘000s)

Infamous recallsInfamous recalls

Mattell ToysMattell Toys

Infamous recalls 2Infamous recalls 2

ToothpasteToothpaste

Infamous recalls 3Infamous recalls 3

Pet FoodPet Food

RecallsRecalls

Recalls don’t have to be that Recalls don’t have to be that dramaticdramatic to to hurt your businesshurt your business

Recalls can be as simple asRecalls can be as simple as rejection rejection by by the customer of the cosmetic appearance the customer of the cosmetic appearance of the product on arrivalof the product on arrival

The cost of even a simple recall can have The cost of even a simple recall can have a a catastrophiccatastrophic effect on your bottom line effect on your bottom line

The real cost is more than replacementThe real cost is more than replacement

The real cost of recallsThe real cost of recalls

LostLost product and shipping costs product and shipping costsCost of Cost of retrievingretrieving distributed goods distributed goodsReplacement by Replacement by airfreightairfreightLegal costs Legal costs – consumer– consumerLegal costs Legal costs – government agencies– government agenciesLoss of Loss of market share market share and goodwilland goodwillTime and cost of Time and cost of executives/staff timeexecutives/staff time

The question:The question:

WHYWHYdoes it happen so often?does it happen so often?

The answer:The answer:

3 main reasons:3 main reasons:

Lack of Lack of pre-emptivepre-emptive Quality Control Quality ControlLack of Lack of anyany Quality Control Quality ControlSupplier actionsSupplier actions


3 main reasons (in reverse order):3 main reasons (in reverse order):Supplier actionsSupplier actions

NegligenceNegligenceLack of knowledgeLack of knowledgeDeceptionDeception

Lack of Lack of anyany Quality Control Quality ControlLack of Lack of pre-emptivepre-emptive Quality Control Quality Control

DeceptionDeception

7 Tricks used by suppliers7 Tricks used by suppliersThe Xiamen Double TrickThe Xiamen Double TrickThe Baiyun Post Check Switch TrickThe Baiyun Post Check Switch TrickThe Shenzhen Certificate Writer TrickThe Shenzhen Certificate Writer TrickThe Foshan Substitute Packaging TrickThe Foshan Substitute Packaging TrickThe Dongguan 50:50 TrickThe Dongguan 50:50 TrickThe Guangzhou Pocket Liner TrickThe Guangzhou Pocket Liner TrickThe Xianju Surface TrickThe Xianju Surface Trick

The Xiamen Double TrickThe Xiamen Double Trick

The TrickThe TrickThe supplier provides a The supplier provides a

sample for approval sample for approval and then switches to and then switches to a cheaper material for a cheaper material for production – production – unnoticeable because unnoticeable because both look alike but both look alike but have different have different performancesperformances

The AntidoteThe AntidoteAdvise the supplier from Advise the supplier from

the outset that you the outset that you will be testing will be testing production materialsproduction materials

Test the materials for Test the materials for performance with an performance with an independent testing independent testing companycompany

The Xiamen Double TrickThe Xiamen Double Trick

The Baiyun Post Check Switch The Baiyun Post Check Switch TrickTrick

The TrickThe TrickCustomer product was Customer product was

rejected and then re-rejected and then re-made.made.

At 2At 2ndnd QC inspection QC inspection supplier said that 70% supplier said that 70% only was available for only was available for inspection.inspection.

After QC supplier added After QC supplier added back rejected stockback rejected stock

The AntidoteThe AntidoteMake sure all items are Make sure all items are

available for available for inspection. If not wait inspection. If not wait for full quantity.for full quantity.

Seal cartons after Seal cartons after inspection with inspection with security anti-pilfer security anti-pilfer labels.labels.

The Shenzhen Certificate The Shenzhen Certificate Writer TrickWriter Trick

The TrickThe TrickSupplier is advised of Supplier is advised of

material (steel) material (steel) specification.specification.

Supplier provides a Supplier provides a certificate from his certificate from his supplier – later found supplier – later found to be false.to be false.

The AntidoteThe AntidoteAdvise supplier you will Advise supplier you will

be testing material.be testing material.

Get material tested from Get material tested from a reliable test a reliable test company.company.

The Shenzhen Certificate Writer The Shenzhen Certificate Writer TrickTrick

The Foshan Substitute The Foshan Substitute Packaging TrickPackaging Trick

The TrickThe TrickAt QC inspection At QC inspection

supplier advises that supplier advises that packaging cannot be packaging cannot be delivered so requests delivered so requests substitute.substitute.

Substitute is cheaper Substitute is cheaper and weaker and and weaker and products arrive products arrive damaged.damaged.

The AntidoteThe AntidoteUnless you see and test Unless you see and test

the substitute insist the substitute insist on your specified on your specified packaging.packaging.

The Foshan Substitute The Foshan Substitute Packaging TrickPackaging Trick

The Dongguan 50:50 TrickThe Dongguan 50:50 Trick

The TrickThe TrickSupplier offers to pay Supplier offers to pay

for all the tooling.for all the tooling.

You later find the You later find the supplier is producing supplier is producing your product and his your product and his own using your IP. own using your IP. 50% for you and 50% 50% for you and 50% for him.for him.

The AntidoteThe AntidotePay for your own Pay for your own

tooling.tooling.

Sign an agreement with Sign an agreement with the supplier at outset the supplier at outset covering ownership of covering ownership of IP rightsIP rights

The Dongguan 50:50 TrickThe Dongguan 50:50 Trick

The Guangzhou Pocket Liner The Guangzhou Pocket Liner TrickTrick

The TrickThe TrickYour QC inspector Your QC inspector

carries out the normal carries out the normal inspection.inspection.

You receive a call from You receive a call from your customer saying your customer saying the quality is bad.the quality is bad.

You find the supplier You find the supplier has bribed your QC has bribed your QC inspector.inspector.

The AntidoteThe AntidoteMake sure you have Make sure you have

managers to check managers to check the inspector’s work the inspector’s work on a regular or on a regular or random basis.random basis.

Rotate your QC Rotate your QC inspectors.inspectors.

The Xianju Surface TrickThe Xianju Surface Trick

The TrickThe TrickYou place an order for You place an order for

painted wooden painted wooden products.products.

You QC the product You QC the product prior to shipment.prior to shipment.

It arrives split and It arrives split and covered with mould.covered with mould.

The AntidoteThe AntidoteFor these types of For these types of

products do several products do several different QC different QC inspections at inspections at different stages of different stages of production.production.

Test the product prior to Test the product prior to shipment.shipment.

The Xianju Surface TrickThe Xianju Surface Trick


3 main reasons (in reverse order):3 main reasons (in reverse order):

Supplier actionsSupplier actionsLack of any Quality ControlLack of any Quality ControlLack of pre-emptive Quality ControlLack of pre-emptive Quality Control

Lack of any Quality ControlLack of any Quality Control

In this category:In this category:No quality control at all.No quality control at all.Assuming that the product shipped will be just Assuming that the product shipped will be just

as the sample sent prior to order.as the sample sent prior to order.Assuming that the product shipped will be just Assuming that the product shipped will be just

as the sample sent “from the production run”.as the sample sent “from the production run”.The supplier “will do his own QC”The supplier “will do his own QC”

Quite simply, if you rely on any of these you Quite simply, if you rely on any of these you must expect to have quality problemsmust expect to have quality problems


3 main reasons (in reverse order):3 main reasons (in reverse order):

Supplier actionsSupplier actionsLack of any Quality ControlLack of any Quality ControlLack of pre-emptive Quality ControlLack of pre-emptive Quality Control

Lack of Pre-Emptive Lack of Pre-Emptive Quality ControlQuality Control

In this category:In this category:

You carry out quality control just prior to shipment.You carry out quality control just prior to shipment. You do not consult with your customer about his You do not consult with your customer about his

quality expectations.quality expectations. You give the supplier no prior warning or knowledge You give the supplier no prior warning or knowledge

of what you expect the quality to be.of what you expect the quality to be.

You may be lucky but the chances are that you will You may be lucky but the chances are that you will still have quality problemsstill have quality problems

The real solutionThe real solution

Pre-emptive Quality ControlPre-emptive Quality Control

(PEQC)(PEQC)

What is PEQC?What is PEQC?

PEQC is:PEQC is:EstablishingEstablishing the customer’s requirements and the customer’s requirements and

quality expectationsquality expectationsDefiningDefining the required the required performanceperformance of the of the

productproductAdvisingAdvising the supplier what the supplier what qualityquality is expected is expected

in advancein advanceAllowing for Allowing for everyone’s everyone’s actionsactions and possible and possible

failingsfailings

PEQCPEQC: The customer: The customer

Involve the customerInvolve the customerGet the product specs in detail from the Get the product specs in detail from the

customer.customer.Ask the customer what his quality expectations Ask the customer what his quality expectations

are in detail.are in detail.Add your own product spec observations and Add your own product spec observations and

send to customer.send to customer.Send your customer the same quality Send your customer the same quality

specifications and processes that you send to specifications and processes that you send to supplier.supplier.

PEQCPEQC: The Product (1): The Product (1)

Understand the Product:Understand the Product:

Know how the product works and what is Know how the product works and what is required of its performance.required of its performance.

If you don’t understand fully how the product If you don’t understand fully how the product works and its environment you will never be works and its environment you will never be able to specify the quality requirements.able to specify the quality requirements.

PEQCPEQC: The Product (2): The Product (2)

Consider all aspects of the product and its Consider all aspects of the product and its requirements:requirements:

RegulatoryRegulatory DurabilityDurability SafetySafety FunctionalityFunctionality CosmeticsCosmetics

PEQCPEQC: : The Supplier/ManufacturerThe Supplier/Manufacturer

Involve the supplier/manufacturer:Involve the supplier/manufacturer:Make sure the supplier knows what quality is Make sure the supplier knows what quality is

expected of him at the earliest stage.expected of him at the earliest stage.Discuss any quality issues/problems before Discuss any quality issues/problems before

production starts.production starts.Make sure he knows that products / materials / Make sure he knows that products / materials /

components will be tested where necessary.components will be tested where necessary.Provide bi-lingual documents so there is no Provide bi-lingual documents so there is no

chance he does not understand anything.chance he does not understand anything.

PEQCPEQC: Internal staff: Internal staff

Ensuring your own staff understand the Ensuring your own staff understand the product:product:Essential that all staff involved with the Essential that all staff involved with the

product/project understand the product specs product/project understand the product specs and quality requirements.and quality requirements.

This is not possible if the staff do not This is not possible if the staff do not understand the functionality of the product.understand the functionality of the product.

Product education is essential.Product education is essential.

Implementation: Product SpecsImplementation: Product Specs

The Product Specs:The Product Specs:TechnicalTechnical products: products:

Typically Drawings; Dimensions; Processes; Typically Drawings; Dimensions; Processes; Materials; Finishes; Packaging; Performance; Materials; Finishes; Packaging; Performance; Regulations affecting it; etc.Regulations affecting it; etc.

Non-technical/ConsumerNon-technical/Consumer products: products:Typically Photos or drawings; Dimensions; Typically Photos or drawings; Dimensions;

Processes; Materials; Finishes; Packaging; Safety; Processes; Materials; Finishes; Packaging; Safety; Regulations; etc.Regulations; etc.

Implementation: The QC SpecsImplementation: The QC Specs

The QC SpecsThe QC SpecsEVERYEVERY last detail must be included in your last detail must be included in your

QC specs.QC specs.Sit down with your internal staff and cover Sit down with your internal staff and cover

every aspect of the product to be every aspect of the product to be manufactured or sourced.manufactured or sourced.

Regardless of how basic, write a QC spec of Regardless of how basic, write a QC spec of each component or process, from raw each component or process, from raw material down to the final shipping marks.material down to the final shipping marks.


The QC SpecsThe QC Specs

Work on the assumption:Work on the assumption:

If it can go wrong,If it can go wrong,

it will go wrong.it will go wrong.


Establish quality standardsEstablish quality standardsFor each item on your QC specs establish For each item on your QC specs establish

error levels into error levels into CriticalCritical, , MajorMajor and and MinorMinorEstablish, against a defined sample size, how Establish, against a defined sample size, how

many many MajorMajor and and MinorMinor faults you will accept in faults you will accept in an inspection.an inspection.

Establish that ANY Establish that ANY CriticalCritical faults will mean the faults will mean the whole batch will be rejected.whole batch will be rejected.


The important procedures:The important procedures:Now send the specs to your customer for Now send the specs to your customer for

comments. He/she may have additions or comments. He/she may have additions or corrections to make.corrections to make.

Once you have your detailed specs do Once you have your detailed specs do NOTNOT file it away until you do your QC inspections.file it away until you do your QC inspections.

Send it with your purchase order to your Send it with your purchase order to your suppliersupplier. Not later. He must have this . Not later. He must have this beforebefore he starts manufacturing the product.he starts manufacturing the product.


The pre-emptive message to the supplier:The pre-emptive message to the supplier:These detailed QC specs are what we will be These detailed QC specs are what we will be

checking for in our inspections. checking for in our inspections. Every item will be checked on a total or Every item will be checked on a total or

sample basissample basisMaterials Materials maymay be checked with independent be checked with independent

labs such as Intertek or SGSlabs such as Intertek or SGSYou have been warned!You have been warned!

QC InspectionsQC Inspections

Preparing for the inspectionsPreparing for the inspectionsList every item on your QC specificationsList every item on your QC specificationsEstablish the sample size. Calculate the Establish the sample size. Calculate the

acceptable fault levels.acceptable fault levels.Running the inspectionsRunning the inspections

Make sure the inspectors cover every item on Make sure the inspectors cover every item on the checks list for every item inspected.the checks list for every item inspected.

Do not allow your inspectors to make their Do not allow your inspectors to make their own judgements but encourage comments.own judgements but encourage comments.

QC InspectionsQC Inspections

After the supplier inspectionAfter the supplier inspection If not already done and if necessary send If not already done and if necessary send

materials/parts for independent inspection.materials/parts for independent inspection.Create a written report (bilingual) for Create a written report (bilingual) for

distribution to both customer and supplier.distribution to both customer and supplier.Discuss with supplier so he understands why Discuss with supplier so he understands why

product has been rejected (future education)product has been rejected (future education)

The bottom lineThe bottom line

Pre-emptive Quality ControlPre-emptive Quality ControlEliminates or reduces quality problemsEliminates or reduces quality problemsSubstantially reduces costs by informing all Substantially reduces costs by informing all

parties (customer, supplier) of what quality is parties (customer, supplier) of what quality is needed and defines quality levels.needed and defines quality levels.

Establishes better relations with both the Establishes better relations with both the customer and the supplier.customer and the supplier.

Eliminates or reduces the possibilities ofEliminates or reduces the possibilities of

RECALLSRECALLS

Thank youThank you

Chinasavvy HK LtdChinasavvy HK Ltd

Chinasavvy HK Ltd

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