I’ve been watching a number of your videos and you hit on many points that I will need to address in building my products.
I am an entrepreneur that has designed luxury machines that run with a smartphone app. I’m producing the casings in the US and want to source the components from China. These components are, in general:
• Digital display
• Touch sensor
• Speaker driver – currently looking at Japanese Flat Panel Speakers
• Internet radio chip w/basic app – currently talking to SMSC, Keystone Semiconductor, Frontier Silicon
I’m currently seeking funding and an engineering partner. I see my engineering partner as someone that will source the components ‘off-the-shelf’ from China and have them shipped to the USA to be assembled on a PCB and inserted into the casings. However, after watching your videos I would like to ask your advice on your thoughts on how to work with Chinese suppliers.
Since I’m a small startup, I would like to find a quality sourcing partner that will:
• research suppliers for each component needed based on input from my engineer
• negotiate price and payment schedule
• provide IP protection
• oversee production
• ensure quality control
• ensure on time delivery.
Can you recommend a partner that would provide all of these services or various partners that provide each important service?
Happy to offer some ideas.
Many agents claim to be a one stop shop providing in-house inspection, engineering, logistics and sourcing. But I have found these skills are highly specialized and it saves money and time to bring together various partners who are the best in their individual fields. Granted, these partners may be coordinated by one primary partner or central agent, but I like to have control over who is involved and how they are compensated.
For example, let’s look at engineering.
I think you are wise to separate engineering from production partners as you have serious IP to protect. For example, if your sourcing partner is providing engineering support as well as selecting the sub suppliers who will get the order, there may be a conflict of interest if
a) you don’t know who the sub suppliers are
b) there is compensation from the sub suppliers to the engineering partner.
Here is why:
Non-Disclosure/ Non-Compete Agreements are very hard to monitor and enforce with partners who don’t disclose the identity of the suppliers, as is usually the case with engineering firms who also conduct trading. There is also a concern about design/engineering bias. If the engineering firm is being compensated by the sell side in anyway, then there is a risk they will engineer the product as they see fit in a way that benefits them (trader and hidden supplier), rather than you, the most. For example, the engineering may be tailored to the production methods of that particular factory partner of the engineering/trading company, which may or may not be the design which leverages the best production efficiencies and technologies available in China at a national level.
For your reference, the list of various experts I use to support my projects are made available to the public at http://chinasourcinginfo.org/endorsed-service-providers/ and if you would like me to make an introduction for you, just let me know. Happy to help.
Wishing you successful China sourcing!
Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.
Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )