I had to post this as living in Hong Kong, every month I get an email from someone or a friend of someone who says “Hey I have this idea, can you help me get it made?”.
This is the typical answer I am given when I ask what the person is trying to achieve:
Build a prototype in China of this napkin sketch I have.
Then I will get investors.
Then I will get Wl-mart to buy the product.
Then I will manufacture the product.
Then I will be rich.
I do not wish to put down the inventive spirit, I just wish some people would take a few minutes on the business side of things also. Below are a few of my comments.
Normally when I ask for a detailed business plan these people give me a blank stare. What investor is going to give someone money without a detailed business plan?!!!
When I ask for User research information I get another blank stare. !!!
The Chinese have been burned too many times now on the future rich inventors. Don’t expect them to get excited.
If you send your drawings to 5 Chinese manufacturers for quotes and you pick one, the other four manufacturers will be making the knock-offs of your product. Make relationships and pick your manufacturer before ever giving any product details. In China you need to be friends before being business partners. Expect to make a few trips over in order to find your friend.
The only person who makes money off of a Wal-mart deal is Wal-mart. If you follow this route please scratch number 5 off the list above.
I know that most of you in the ID community understand the above, so next time you have someone who starts talking like this please beat them against the head until they start listening to what needs to be done and for Gods sake stop sending them to us, in Hong Kong!
I am actually in this exact position right now. I have a friend who just patented an invention, and came to me for help with the design and engineering. We’ve done initial user research, built an SLA prototype, and now in order to complete a detailed business plan we need to know what our manufacturing costs and transportation costs are going to be.
So what is the best way to contact a manufacturer? I don’t speak Cantonese or Mandarin, don’t have the resources to travel to China several times a year, and am not sure where to start.
You have just hit one of the fundamental business culture differences that cause most China-made and US-sold products to never make it out of the factory.
You can’t think of the friendship making and the trips over as a “nice to do if I have the time”. These two points are “must do for success” and must be figured into the business plan. I have seen inventors, companies and consulting firms misunderstand the importance of this and fail.
Most of my friends who are successful in producing products or consulting in China come over a minimum of three times a year and most come over more. On top of this they do weekly Skype video conferences to check in on the progress of the project. Remember the video conferences are secondary to the visit not in place of.
To the Chinese, the important projects are the ones that are seen to be very important to the higher people in a US company. Otherwise they feel that the US/European company does not have a lot of faith in the success of the product if they do not visit and check up on it all the time. They say “out of sight is out of mind”, meaning if they don’t see you then the project is not very important so they put lower importance on it as well.
You can have a consultant but it still shows less importance to the project as you do not feel it is important enough to spend your time on. consultants were big in the 90’s but for the people who want to be successful, they have little to no use.
Also, don’t worry about not speaking Chinese. They all speak English (or a least a few people in the company do). Also a secret of success is drawing with the factory engineers on a dry erase board. It is the most effective way of communicating because for some reason throwing ideas out in drawing form seems to not allow someone to lose face (I don’t quite understand this yet and am still trying to learn the “why?”).
Sorry if this does not fit your needs but the above will increase your success level.
There is a network of “connected” people in both the US and China that can make things happen quickly for projects like these. I’ve been traveling to China for 20 years and am still learning the subtle ways to get things done. TimF is on target with his observations about getting a “great idea” actually made. The right factory can get things done, the wrong factory will kill your product. The trick is connecting with the right guy and then look important enough to get their “A” list people working on your project.
I’ve lost track of the number of times my wife has told me about a million-dollar-idea she has that I should get made. To her it looks easy - I design and engineer the product, then trot it over on one of my China trips and get it made at one of the factories I work with. My reply always lists the costs involved - starting with patents - then tooling. The $10,000 for a decent utility patent typically ends the discussion quickly.
The other piece to this conundrum is that retailers like Wal-Mart and Target don’t buy “items”, they buy “lines”. Even with a line you run up against a situation where a single vendor controls a whole department, which locks-out any one hit wonders. We just got shut-out of Target because of this with a new line we developed. Really innovative, priced-right - but they want to continue to one-stop-shop the department. Too bad.
Also - read the article in this month’s INC Magazine about reverse auctions. We’ve taken a bath because of the the retail business model for manufacturers to bid against each other to win commodity business. NIGHTMARE!!
Back to the China discussion. I’m writing this post from our factory in Shenzhen. They just laid off a bunch of people because of soft business and the high cost of wages in the Shenzhen area. The exchange rate of the Chinese RMB is also impacting our prices to US customers. If it’s not one thing, it’s another!!!
Bottom line: Connections are critical to getting a product made in the Orient. Lots of factories will say “No Problem”, but the good manufacturer will ask a lot of questions. Listen to the quality of the questions…
Thanks for your well informed insights. I can see how developing relationships with manufacturers is important to the success of a product. Especially in my situation where I am not looking to be carried in Target, but smaller retail shops. We are also thinking about licensing, but this limits our control, and there is good potential to develop a line.
One of the factors in our decision to license or to try and develop this on our own, is what are the manufacturing costs. Is there any way to get a ballpark figure on tooling and shipping costs without going to China, and without revealing too much about our product?
Also, I hate it when people go to another country and don’t even speak any of the language. If I were to go to China to directly contact manufacturers, would it be better to start learning Cantonese or Mandarin? I know it is a difficult language language to learn, but it is my understanding that the majority of the Chinese business world speaks Mandarin. Is this correct?
Unless you plan to do a lot of development in the Orient I wouldn’t worry about learning Chinese. Most factories have a liaison person that can speak English and understand technical details. I would worry about a factory that couldn’t communicate with you. It’s the cost of doing business with the US for a Chinese factory.
You’ll need to “open your kimono” in order to get your product costed and to develop the tooling quotes. If you haven’t patented your product yet this is when it gets risky to show your design to an unknown source.
A good quote spec includes:
All of the details of the component or product. Include part weights if you are using a solid modeling software package.
If you want to quote various different plastic materials make sure you have details about the grades and manufacturers.
Peak production volume (to determine cavitation)?
Any special finishing or co-molding?
Are you going to pay for the tools or do you want the factory to amortize the tools into the part price? Some factories will do this if you promise big quantities (and deliver).
Packaging specs and quality expectations
There will be overland China transportation as well as ocean transportation. Will you be shipping full 20’ or 40’ containers or LTC loads?
You’ll want to check the duty rates to make sure there aren’t any crazy dumping duties.
Hey guys! You all have made some good points regarding Chinese manufacturers. But of course I can see some misunderstanding through your posts, and I fully understand that this is a culture difference that causes misunderstanding. I’m a Chinese manufacturer, as well as a former staff working for Walmart. So, I think I’m qualified to answer some of your questions and make some comments to your ideas towards Chinese manufacturer, especially when I’m now as a supplier of Costco Wholesale in North America.
Everything has double sides and everything has its inner ‘reasons’ why it is so…