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China Business » Business Tips » Tips before Medical Outsourcing to China
Tips before Medical Outsourcing to China
China has become a more realistic outsourcing country for medical devices in the last few years. Regardless of quality issues in the past, the country values the economic benefits it derives from producing medical products. From relatively simple medical items, China has progressed into one of the world leaders in high tech medical supplies.
Some steps which should be considered for medical outsourcing projects, along with a few precautionary measures, are listed below.
A. Find the best product manufacturers.
The Chinese are becoming more tech-savvy and are producing high quality web sites to feature the products they produce. Many of these sites have an English language page for the benefit of western users.
Search engines can help to find Chinese medical device manufacturers in China. Also, business to business sites have lists of companies and their products.
Once you have found such web sites, notice whether it seems the English version is somewhat shorter than the Chinese version. It may even be worthwhile to find someone who can read Chinese to compare the two versions.
One should always be dubious, however, when getting information from the Internet. The information may not be accurate or updated. It can even be misleading to the extent of being untrue. Do your best to establish the veracity of claims on the web site.
B. Do some initial planning and communicating.
Even if a web site has an English version, their office staff may not be fluent in English. If you try telephone contact, you should have a fluent speaker of Chinese in your office to help with the communication. An email may be the wise first approach to companies whom you are considering.
Be aware of time differences between where you are and in China. Thus, any telephone calls should be done during regular business hours in China. Emails and phone calls can help to build trust and help you to become acquainted with different people in the Chinese company's office.
When in the initial communication stage, find out if the company actually produces the product you want or if they buy from another company and put their name on it.
You need to be sure of components and measurements of the product. China is on the metric system and may not be comfortable with non-metric measurements such as pounds, ounces, inches and feet. You need to reach an understanding of the costs involved in the products you want. Will the prices remain stable or fluctuate? How much extra will shipping cost you? Are there hidden costs besides the quoted price?
C. Be sure you understand the difference between factories and trading companies.
Trading companies still exist in China. They are go-betweens for the factory and the foreign buyers.
Trading companies have definite benefits, especially for the novice buyer. They are experienced in Chinese exporting and can take some of the burden from the foreign company. They also often have access to a wider range of products than the factories. They can sometimes assist if a foreign company does not want to buy the minimum required order from a factory since they may have other foreign companies which also do not want to buy the minimum. They can combine the orders to the factories.
However, trading companies are in business for profit so they must make a charge for their services. You should determine your future buying needs before deciding to use a trading company. If you will need to buy the same types of products or make some changes in technical needs in the future, it could be better to find a factory to establish a long-term relationship. If you need only a few items on a one-time basis, a trading company may be the better choice.
D. Be ready before going to China to visit factories.
Doing some research about factories is a must. Although many are good businesses for you to consider, others could be sweat shops or about ready to go bankrupt or have other significant negative features. Negative surprises are not acceptable so do your studies.
One aspect of research is to hire an inspection company in China to get the facts about any manufacturer you are considering. The inspectors should report the number of actual employees working at a factory, the facility problems such as power outages. Have the inspectors take photos to be sent to you of the factory in action.
A good web site for helping to get information about manufacturers in China is www.cmdi.gov.cn. It is the Chinese Medical Device Information Network and has information on Chinese companies' licenses and registration with the Chinese State Food and Drug Administration.
E. Visit the factory or factories.
When you are somewhat more sure of the factories you would consider using, make arrangements to visit. Be prepared to be appropriate yourself by studying what type of person the Chinese will want to do business with.
When there, try to learn whether the factory is privately-owned or part of a joint venture ownership or even government-owned. Study any certificates that are pointed out to you to see if they are current and actually are for the factory you are visiting.
Study the quality control of the factory. Find out what percentage of products are actually tested before being shipped.
F. Find out about regulations which will concern you.
Find out if all products comply with the regulations of your home country. Learn of any problems with shipping and receiving the products and the amount of time involved in the process. Learn of any customs problems you may encounter.
G. Sign pertinent contracts.
Be sure of all details including time constraints. Be sure that the products will be produced and shipped within a timeframe which is acceptable to you. Be sure that costs will remain constant. Get shipping information spelled out in the contract including who is responsible for clearing the goods for import and for export. Be sure that the receiving port is the one you want.
Contracts should spell out explicitly what country's laws will prevail in case of a dispute.
H. Quality control issues.
If the shipment is made FOB, the buyer will pay for the shipping from a port in China but will not inspect the shipment until it arrives in the buyer's home country.
One option is to send a team from your company to China to inspect the products. Another option involves using a testing laboratory in China to test samples of the products.
Quality control is important since some products from China have had related problems in the recent past.
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