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Product Testing—Are You Sure That You Didn’t Pass? Are You Sure That You Did? How Do You Really Know?

We’ve been involved in the sample and testing processes for 4 different clients and about 18 different SKU’s of product for the last year and a half.  Why has it taken so long to get the testing done? you might ask.  And I’d be glad to tell you, if you did ask, that CPSIA is a huge pain in the butt.  A complete racket from every angle.

First the rules are a complete burden to US businesses.  Well, a burden to everyone except for testing companies, that is.  We have one client that has closed down specifically because of the onerous requirements of CPSIA on their small start up company.  We’ve had at least three others (that I know of) that have changed design and/or target markets and/or components so as get out from under the CPSIA regulations.  The regulations are real nightmare.

Second, the actual testing process is a complete scam too.  You can only use a testing company from a US govt approved list—and of course, those on the list charge more for their certification than companies who are not on the list.  In addition to that, some large box stores also “strongly suggest” that if you want to place product in their stores you have to use a specific testing company.  Why the hell should it make any difference?!  That’s like forcing everyone that sells to you to deliver their goods in Ford trucks even though Chevy, Audi, Toyota, Buick, VW, Honda and BMW (wow, can you tell I live in China?) all have legit truck options too.

Three clients switched testing companies after products failed their first round of tests.  ALL three had the exact same products pass the tests after they switched to a different testing company!!  (And they all switched in and out of the same two testing companies!)  We pulled and sent all the SAME samples for ALL three clients and mailed them ourselves to the two different testing companies so I can personally testify that NOTHING changed in the samples between tests.  But the results were different—radically different.

When testing, the responsibility is on whomever requested the tests to make sure that everything is done correctly—and really, how in the world can you know if it was done correctly or not?!  Unfortunately, the reality is that if there are problems in the methodology, you’ll never be told about it.  We have one client with a personal connection to one of the testing companies US sales office and they were able to get some inside info and some help.  The other two?  Paid for everything twice (or three times).

FYI: If there are problems with the testing methodology you can get the tests redone for free (at least that’s the policy of the two companies that we’ve been working with).  The problem is, unless you get them to admit themselves that there is a mistake/problem, you’ll never know that maybe you could have either passed the tests or you could have your stuff retested again for free.  This is significant when testing for a single item can cost thousands of dollars.

Third, despite what our suppliers told us before we started samples and testing, CPSIA standards and the strictness of the processes that must be followed are not fully understood here in China.  The fact that we’d be testing both before and during each and every production run was seen as unnecessary.  The fact that we would still test production when suppliers already had other clients that they were sure had already passed testing was again not understood.

One Taiwanese/Chinese supplier, who has been exporting to the US in this industry for more than 25 years, was advertising “CPSIA CERTIFIED” at a trade show in the US this year and last.  But when called, not only did his factory/staff not know what CPSIA standards were, they had NEVER testing anything.  He had sold one item to a customer in the past who had told him that he had passed CPSIA tests, and apparently that was enough for him.  Despite the fact that this supplier has hundreds of different products made from different materials and with different processes, he was selling his “certification” as a done deal based on the hearsay from one clinet.  He did have some testing doc’s from the EU, but no CPSIA.  Over 50% of the product that we tested from this supplier failed tests (at two different testing companies).

When called on this fact, his answer was this:

“There are more than 300 colors and patterns available in XX. No one would send all to test CPSIA one by one. You may find tens [suppliers] in China, who can show you 300 certificates of XX? Who will prepare 300 kinds of XX material any time to be tested by CPSIA?”

Stupid me!  Why should I think that if he advertised as being “certified” that he actually was?!  Obviously, no one in their right mind would ever spend that kind of money!  Duh?!

Without exception, the fact that we are actually testing our own products when suppliers could either buy fake certificates of completed tests (ANY test you want: LHAMA, RohS, CPSIA, ASTM, etc., 1,500RMB) or just change the dates on older tests (“It’s all the same materials.”) was completely not understood either.  In fact, the idea that we would be testing and were tying payments to test results made more than one factory very nervous.  We had one back out completely and two others expressed concerns along the lines of, “But we’re not sure if we can control all the materials.  What do we do if they don’t pass the tests?”  Which is precisely the point—you need to “control all the materials.”

For us the processes usually goes something like this.  Contract out with the supplier for the testing sample process—these means that we pay for what is often free, but we get agreements (in Chinese) that we can enforce later when we have to make sure that production matches 100%.  Pull our own samples, send to independent third party testing company, sign new contracts and initiate PO’s with suppliers and then pull, test and repeat.

While suppliers might not understand the necessity of strictly following the testing standards they know how to work the process. Where it gets really frustrating for us is either just before the PO’s are placed or just after testing of actual production samples is completed.  We sign agreements before we start because we know what’s coming—suppliers realize after we’ve spent $10k or more and taken 6 months to test (and re-test) that they now have the upper hand.  Since they are now “legit” they figure that can raise the price as much as they want (and request copies of our testing results) to release any goods.

Usually the new price requests result in a pretty big argument since we’ve already completed contracts in the US months before and contracts in China to ensure against this very thing with the suppliers too. This type of problem is difficult, but usually resolvable; even though getting past these changes and into actual production can sometimes cost a lot (time, money, face, emotion).

What’s not resolvable is when a factory decides that they need to save money (aka: make more profit of this one order) and change either some of the raw materials or change part of the already approved production processes.  If either of these things happens when doing both pre-production and in-line testing the supplier is going to get caught almost every time–but it still happens, often.  Of course, now the entire production run will be rejected.  And if you didn’t have a fight on your hands before, you most likely will now.

If you can get correct production and pass the tests, the question, if you’re not in the factory 24/7, still is: “Am I getting the product that I tested?”  If you can ship to a secure 3rd party storage facility without paying the balance before the testing is completed, I encourage you to negotiate that—but we’ve never been able to do that.  Usually we seal and sign all boxes to make try to minimize the chances of “replacements” being shipped to us after testing has been completed.

After having gone through this process over the last 18 months with 4 different clients in completely different industries, I would be completely shocked if all the product in the US that is “CPSIA Certified” really is, in fact, certified.  There are just too many tantalizing options for individuals in the process to cut corners and take a huge one-off profit; there are too many people that just don’t understand how important testing standards are; and there are just too many people involved that will NOT be held accountable if, in 5 years, some component is found to not comply with the standards.

China is different now? Really? How?

It’s be more than 20 years now since my first work experience in Asia, 15 years this month since I first came to China.  So much is different, so much is so new, so much is much more developed.  Buildings are new, technology has not just made it here, but taken over.  Cars, shopping, manufacturing, education and income levels—it’s almost a different planet than the China of 1995.  Almost.

Whenever my Utopian vision of what Asia is pops up (yes, I still have dreams of Shangri-La) it’s usually quickly beaten down a few times with the baseball bat of reality.  Here are a few of the most recent bruisers.

1. Conversation at a factory: “You know how fake LV is much cheaper than real LV?  It’s like that.  It looks the same.  The quality isn’t too bad.  But it’s much much less expensive.”

This is the analysis from a factory manager (800 people, 11 years in business in Shenzhen, over 80% of their volume goes to the US/EU).  He also confided in me that they can buy any testing certification their customers need for about $150 per item—ANY ONE HE NEEDS!  That’s RoHS, LHAMA, ASTM, CPSIA 2008, TRA.  You name it, it’s for sale.

Wasn’t China supposed to have significantly improved enforcement of things like this?  I usually agree with Dan, but I’m not seeing ANYTHING different today than 10 years ago.  Maybe we disagree on the definition of IP, but it’s not getting a lot better down here in the trenches.

2. Comments from a conversation with a group of about 10 men, all working for large (VERY LARGE) multinationals:

“Let’s just say that my company will never build another plant in China.”

“I can’t tell you what’s next, but “next” for us isn’t China.”

“We have too much here already for how risky it still is.”

3. Conversation with a newspaper reporter about China vs. Vietnam.  He asked me about the increasing preference for doing projects in VN.  Me: “Sure Vietnam has cheaper labor.  But the supply chain and infrastructure are so much less developed.  Unless I can get the components, packaging and fulfillment all done in the same city there, it’s still faster, more convenient and about the same price to do things in Guangdong.”  And even though I love Pho, I have to have more than coffee and bread shops to break up a week long trip there.

4. Conversation with a QC manager working in Zhejiang.  “I hate working in Zhejiang.  It’s 10 years behind factories in Guangdong.  No one understands that contracted quality standards really do need to be met.  It’s a nightmare.”  I guess it’s all relative, huh?

5. Conversation with a local in a bar after the US beat Algeria in the World Cup last week: “How come the US can get to the elimination round but China can’t even get in?!  We have 1.3 billion people, a national program for football and it’s our favorite sport.  America is only 300 years old and American’s don’t even like football.”  I had this conversation in 2006, 2002, 1998, and 1990 in Asia.  Remember when students were jumping out of dorm windows in 1996 as China tried and failed to qualify for the 1998 world cup (they lost to Korea and complained about the population then too).

Quick side note on China a soccer performance:

My theory is that collectivist cultures deny the development of most of the great individuals that they would otherwise have and that are necessary to win.  China’s Olympic medal haul in so many individual sports may seem to contradict this, but if you look at what they won it does not.  They only won in sports that they specifically targeted because there was no great Western presence.  They picked unpopular sports that the West didn’t care about so they could win the gold medal count.  So my theory still holds— they themselves know that they could not create the greatest athletes in the most popular sports.

6. In our church group of about 150 foreigners here in SZ, 4 families (total of 20 people) are moving out within the month.  Either business is not as good, opportunities are better elsewhere or factors of health/safety/education have prompted them all to move to other countries.  8 years ago there were less than 20 people, in 2007 there were about 200. Now it’s down to a buck 25.  Not sure why I included this one.  I thought it was interesting.

7. Money: I was passed counterfeit money twice in the last week; once in a taxi and once at restaurant.  I can’t believe that I didn’t check either time—I’m obviously not getting any smarter either.

8. My phone didn’t work with the new software upgrades this last week.  I took it to the “Official Apple Retail Store” in our local “International” shopping mall where I bought it.  They charged me 100RMB, spent about 15 minutes with it plugged into a “jailbreak” program (yes, it said “jailbreak” in English and Chinese right on the overhead screen in the shop in the middle of the mall) and now it works fine.  Of course, Apple won’t register it and they tell me it came from Australia.

9.  Of ten new projects/orders started in the last two weeks 7 of them had price/component issues because what was spec’d out in signed contracts and approved in samples and what was “meant” by the factory for production were two different things.  No, none of the 7 changes made any of the orders cheaper.  But thanks for asking.

10. We have an English teacher in our apartment complex whose English is so, um, accented that none of my kids can understand her (or my wife when the teacher speaks English).  I can usually figure out what’s being said only because I speak Chinese and so have learned the art of simultaneous language deconstruction (“If I say that sentence word-for-word in Chinese, what does it mean?”).  15 years ago, a high school English teacher asked me the same mis-spoken question over and over again while translating a much more interesting conversation back to her friends.

11.  After my last triathlon in Bali (50 minutes faster and 4kg lighter than the first one last year, thank you very much), I had my wife bring my bike back into China while I was updating some paperwork in HK—she was stopped at the border for 2 hours (and was furious with me).  I’ve crossed the China/HK border with the same bike, in the same box (and unboxed too) more than 15 times—never stopped once.  I’d love to be able to say that the US border is different/better.  But it’s not.  It’s worse.  My father in law said the most accurate thing I’ve heard to date about the US bureaucracy, “At least with the Chinese government, if you pay some one you get what you paid for!”  I can think of very few things I hate more in life than having to deal with the US govt (IRS, TSA, Immigration, Embassies, etc.).

12. This is what’s officially happening in China: labor laws are impacting workers and wages, RMB valuation is change prices, labor shortages are stretching out lead times and raising costs, inflation and raw materials prices are rising, factories have still not recovered from the lowest points of 2009 so fixed costs are still higher per order, new international express mail rules are making it much more difficult to send samples out of China.  You’d think that China would be running pell mell from the Obama method: tax, spend and make it hard to do business.  Nope.

Finally, GE boss Immelt on the current situation in China:

Mr Immelt acknowledged the importance of the Chinese market, which contributed $5.3bn to the group’s revenues last year, but declared GE was encountering its toughest business conditions there in 25 years.

The more things change, the more they stay the same.