How to Set Up Quality Control for Your China Supply Chain

Factory audits should cover five dimensions: (1) quality management system — do they have documented procedures and follow them? (2) production capability — can their equipment achieve your tolerances? (3) social compliance — are working conditions acceptable? (4) financial health — are they stable enough to complete your order? (5) export experience — have they shipped similar products to your market? A one-day audit can assess all five with a proper checklist.

Total landed cost is the only number that matters when comparing Chinese suppliers. It includes: factory price, inland freight to port, export customs fees, ocean/air freight, insurance, import duties, VAT, customs brokerage, and inland freight from destination port. A $10 product FOB can easily become $14-16 landed. Most first-time importers forget at least three cost components and end up with negative margins.

Payment terms follow a standard progression in China. Transaction 1: 30% deposit, 70% before shipment. Transaction 2-3: 30% deposit, 70% against B/L copy. After 1 year: possible 30% deposit, 70% 30 days after B/L date. L/C at sight is standard for large transactions. Never jump ahead in this progression — let the track record justify each step. Trust is earned through consistent performance.