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Buyer’s Guide 2016
LED Lighting
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Copyright Notice
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Contact us
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Disclaimer
This document is for informational purposes and is provided solely to supplement, not substitute, professional
expertise and judgment. Asiaimportal Limited provides services of exclusively informative nature (not legal advice)
including but not limited to information related to product specifications and prices examples, product certification
requirements, product safety standards, labelling requirements, as well as customs and shipping procedures. The
certification requirements, prices and rates are frequently subject to change. We make no representations or
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agent of any third party supplier and shall not be held liable for any loss, damage, injury or death resulting from any
such supplier providing you with defective, inadequate, incomplete, poor quality or otherwise unsatisfactory goods or
any such supplier failing to provide you with ordered goods.
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Online Advisor
What is it?
When you order a Buyer’s Guide Package, we provide you with online support through the Ticket system on
ChinaImportal.com. We can answer your questions related to:
● Supplier Sourcing
● Fraud Prevention
● Product Development
● Shipping, Customs & Duties
● Product Certification, Labelling & Testing
Why is the Online Advisor service bundled together with the Buyer's Guide?
We know that you need ​questions ​answered, and guidance ​throughout ​the buying process. As such, the Online
Advisor offers personal assistance, while the Buyer's Guide provide a written roadmap.
How can we access the Online Advisor service?
Go to the ​My Account​​page, login using the ​email address ​and ​password ​you set in the checkout and submit a
support ticket. You can submit as many questions as you want, and we normally get back to you within ​48 hours​. Once
we have ​responded​, you will receive an email notification.
How long do we have access to the Online Advisor Service?
The access duration depends on which Buyer's Guide package you purchased:
● Basic: ​14 days​from the day of purchase
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Can we get extended access to the Online Advisor after the expiration date?
Yes. Please ​Contact us​​for pricing and more information.
ACCESS HERE
SUBMIT ONLINE ADVISOR TICKET
Login using the ​email address​and ​password​you specified in the checkout.
Forgot your password?
Note: ​The waiting time to get a support ticket replied is normally 48 hours, excluding weekends. Delays may also occur
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Table of Content
1. Product Specifications
Introduction
Step-by-Step Guide
I. Draft Product Specification Sheet
Case Study A: Product Specification: GU10 LED Bulb Light
Case Study B: Quality Options: GU10 LED Bulb Light
II. Research Applicable Product Safety Standards & Labelling Requirements
III. Prepare a Request for Quotation (RFQ) File
Sample RFQ Sheet: GU10 LED Bulb Light
Required Supplier Documents
Tips
2. Supplier Research & Assessment
Introduction
Step-by-Step Guide
I. Industry Briefing
II. Supplier Sourcing
a. Selection Criterias
1. Company Overview: First Step of the Supplier Vetting Process
2. TrustPass Profile: Verified Company Information (Alibaba Only)
b. Send RFQ File
c. RFQ Email Template
III. Supplier Assessment
a. Review Data
b. Verify Documents
c. Supplier Selection
d. Supplier Comparison Case Study
Tips
3. Pre-Production Sample Development
Introduction
Step-by-Step Guide
I. Create Sample Order Sheet
Spec Sheet
Order Terms
a. General
b. Mold and Tooling Ownership
c. Subcontracting
d. Payment Terms
e. Compliance Requirements
Supplier Confirmation
II. Sample Production
III. Sample Approval
Tips
4. Production & Quality Assurance
Introduction
Step-by-Step Guide
I. Sales Contract
Recommended Terms
II. Deposit Payment (Order Start)
Account Checklist
Payment Details Checklist
III. Mass Production
IV. Pre-Shipment Quality Inspection
Prepare Quality Control (QC) Protocol
Recommended Quality Inspection Companies
V. Balance Payment (Order Completion)
Tips
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Getting started
This document serves as an introduction to manufacturing and importing products in China. However, before you
start, you must read and understand the following:
Source
The process described in this document is largely based on processes applied by our partners (both for Asiaimportal
Limited, and on behalf of other companies). The methods described here apply broadly to many different product
categories.
Always contact local authorities
Before you apply the methods described in this document, and import goods from overseas, we strongly recommend
you to consult with your local authorities. All countries and markets have their own set of product safety standards,
labelling requirements and customs procedures.
Limitation of our liability
This document shall not be considered as legal advice - and we do not offer insurance, or any other form of
compensation, in case of loss, IP theft, damage, injury or death resulting, as a result of the information in this
document being incorrect, erroneous, misleading, ambiguous, incomplete, outdated or modified.
Regulations are subject to change, and it is within the limits of reason to assume that we may have misinterpreted one
or more of the regulations, and processes, described in this document.
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1. Product Specifications
Introduction
The Product Specification, or Spec Sheet, is the foundation of the entire process. Its purpose is to define the products
quality, appearance and functions.
Normally, a product specification includes design drawings, component lists, materials, dimensions, tolerances,
Pantone color codes and everything else defining the product. The goal of this phase is to draft a ​Request for
Quotation (RFQ) File, ​which you can later send to the suppliers.
Step-by-Step Guide
Phase Description
I. Draft Product Specification Sheet
The first step of the process is to draft a product specification
sheet.
II. Research Applicable Product Safety
Standards & Labelling Requirements
Your product is likely covered by one, or more, mandatory
product safety regulations and labelling requirements. Before
you start the process, you must make an assessment.
III. Prepare Request for Quotation (RFQ) File
The RFQ File is sent to the suppliers. It contains the spec sheet,
information about mandatory regulations and other information
requests.
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I. Draft Product Specification Sheet
To draft a Spec Sheet, you must identify as many specifications as possible, and the various options for each one. The
options you select affects both the quality of the product, and its price. There is no standardised Spec Sheet template
that applies to all products. However, the following is often included:
Product Data File Attachments
a. Material Specifications
b. Dimensions
c. Weight
d. Colors / Plating
e. Component Brands / Models / Types
f. Standards
g. Functions
a. Design Drawings / Technical Drawing
b. Bill of Materials
c. Print files (Logo / Artwork)
Case Study A: Product Specification: GU10 LED Bulb Light
Part Sub Part Sample Data
A. Product Data
Technical Specs
Type: ODM (Factory Design)
Lamp Wattage: 7 Watts
Base Fitting: GU10
Voltage: 240 V AC
Dimmable: Yes
Power Factor: PF > 85
LED Chip Type: COB
LED Chip Brand: Sharp
LED Chip Model: Unspecified
CRI: Min. Ra > 80
Beam Angle: 60 Degrees
Lens Type: Anti-Glare clear lens
Body type: Aluminium
Color: 2700, 3000, 4000, 6000 Kelvin
Base Color: White
Product Size: ∅50 x 55 mm
IP: 63
Safety Requirements
● Short Circuit Protection: Yes
● Open Circuit Protection: Yes
● Reverse Polarity Protection (RPP): Yes
Packaging
● Material: Paperboard
● Thickness: 420 gsm
● Dimensions: 120 x 120 x 105 mm
● Design: See Attachment
B. File Attachments
Packaging Design File ● packaging-layout.pdf
Print Files
● GU10 Bulb Print: product-print.ai
● Packaging Artwork: packaging-artwork.ai
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Case Study B: Quality Options: GU10 LED Bulb Light
Specification Option A
(Low Cost)
Option B
(Medium Quality)
Option C
(High Quality)
General (Price Related)
Lamp Wattage 4 W 7 W 8.5 W
Power Factor PF > 75 PF > 85 PF > 90
CRI > 72 > 80 > 85
Life Span > 10,000 hours > 20,000 hours > 30,000 hours
Beam Angle 30 Degrees 60 Degrees 100 Degrees
Dimmable No Yes
IP Rating None 63 65
Other (Not Price Related)
Type ODM (Factory Specification) / OEM (Custom Specification)
LED Chip CREE / Sharp / Bridgelux / Epistar (Various models)
Color Temperature 2700, 3000, 4000, 6000 Kelvin
Luminous Flux 380 - 410 lm
Electric Parameters
Input Voltage (AC) AC 100 - 240V / 50 - 60 Hz
Input Current (AC) Around 0.6 A
Power Factor 0.85 - 0.95
Safety Parameters
Short Circuit Protection No Yes
Open Circuit Protection No Yes
Reverse Polarity Protection
(RPP)
No Yes
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II. Research Applicable Product Safety Standards & Labelling Requirements
As you must inform your supplier of which regulations your product must be made in compliance with, all applicable
regulations / standards must be part of your product specification. Below follow some examples:
Market Category Regulations Labelling Requirements
EU Electronics
a. EMC Directive
b. Low Voltage Directive
c. R&TTE Directive
d. RoHS Directive
e. REACH
a. CE Mark
b. WEEE Mark
US Electronics
a. FCC Part 15 Subpart C
b. UL (Not Mandatory)
c. CA Prop 65
a. FCC Mark
b. UL Mark
c. Country of Origin
d. CA Prop 65
Important Notice: ​The table above is for general reference only, and is not listing every applicable (mandatory or
voluntary) standard, regulation or labelling requirement. In addition, different regulations (one or more) apply to
different products, even within the same category. We advise you to contact local authorities for further guidance
on applicable regulations in your market.
III. Prepare a Request for Quotation (RFQ) File
The RFQ file must be submitted to the suppliers. Hence, use a common file format, for example Microsoft Excel or
Word. The RFQ file is an extension of your Product Spec Sheet, as the supplier shall not only provide feedback and
reconfirm your Product Specifications, but also their own order terms. The following must be included in your RFQ file:
Product Specifications Order Terms Required Supplier Documents
a. Spec Sheet
b. Applicable Standards
c. File Attachments
a. Unit Price
b. Tooling Cost
c. Sample Cost
d. Production Time
e. Sample / Tooling Lead Time
f. MOQ
h. Payment Terms
a. Business License
b. Product Certificates
c. Test Reports
d. QMS Certificate
e. CSR Certificate
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Sample RFQ Sheet: GU10 LED Bulb Light
Part / Subpart
Our Specifications
Send to the supplier
Counter Specification
To be filled in by the supplier
1. Product Specifications
Technical
Specifications
(Fixed)
Type: ODM (Factory Design)
Lamp Wattage: 7 Watts
Base Fitting: GU10
Voltage: 240 V AC
Power Factor: PF > 85
IP: 63
SKU: Specify
Lamp Wattage: X Watts
Base Fitting: Specify
Voltage: XXX V AC
Power Factor: PF > XX
IP: XX
Technical
Specifications
(Open)
Dimmable: Yes
LED Chip Type: COB
LED Chip Brand: Sharp
LED Chip Model: Unspecified
CRI: Min. Ra > 80
Beam Angle: 60 Degrees
Lens Type: Anti-Glare clear lens
Body type: Aluminium
Color: 2700, 3000, 4000, 6000 K
Base Color: White
Product Size: ∅50 x 55 mm
Dimmable: Yes / No
LED Chip Type: Specify
LED Chip Brand: Specify
LED Chip Model: Specify
CRI: Min. Ra > XX
Beam Angle: XX Degrees
Lens Type: Specify
Body type: Specify
Color: XXXX, XXXX, XXXX, XXXX K
Base Color: White
Product Size: ∅XX x XX mm
Packaging
Material: Paperboard
Thickness: 420 gsm
Dimensions: 120 x 120 x 105
Material: Specify
Thickness: XXX gsm
Dimensions: XXX x XXX x XXX
2. Product Compliance Standards
RoHS: Mandatory
EMCD: Mandatory
LVD: Mandatory
RoHS: ​Yes ​/ ​No
EMCD: ​Yes ​/ ​No
LVD: ​Yes ​/ ​No
3. Order Terms
Unit Price (FOB)
Quote based on the following
quantity: 1000 pcs & 2000 pcs.
1000 pcs: $XX.X
2000 pcs: $XX.X
ODM Sample
Quote an ODM sample, matching
on our spec sheet and attached
design files.
Sample Price: $XXX
Added Tooling Costs: $XXX
MOQ
Specify the Minimum Order
Quantity.
MOQ: XXX pcs
Payment Terms Specify accepted payment terms
Deposit payment: XX%
Balance payment: XX%
Lead Times None
Production time: XX Days
OEM Sample: XX Days
4. Required Documents
Product
Compliance
RoHS: Required
EMCD: Preferred
LVD: Required
RoHS: ​Yes ​/ ​No
EMCD: ​Yes ​/ ​No
LVD: ​Yes ​/ ​No
Company Docs
Business License: Required
QMS Certificate: Preferred
CSR Certificate: Preferred
Business License: ​Yes ​/ ​No
QMS Certificate: ​Yes ​/ ​No
CSR: Certificate: ​Yes ​/ ​No
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Required Supplier Documents
Type Document Information Available Data
Company Docs
Business License
Every registered company, in Mainland
China, regardless of type, has a
business license. The business license
contains key information about the
company, that can tell many things
about the supplier.
a. Registered Capital
b. Business Scope
c. Legal Representative
d. Registered Address
e. Year of Registration
QMS Certificate
A Quality Management System (QMS)
is a set of rules and processes for
monitoring quality throughout the
production line. There are various
standardized protocols, with ISO 9001
being the most common.
Helps you assess if the
supplier is actively working
to track quality and reduce
the defect rate.
CSR Certificate
Specifies whether the supplier is
certified according to a Social
Compliance Protocol (i.e., BSCI).
Helps you assess if the
supplier is actively working
to maintain, and improve,
workplace conditions.
Product Compliance
Product
Certificates
Compliance documents, such as
product certificates and test reports, is
a major factor when selecting
suppliers.
Helps you assess if the
supplier is capable of
ensuring compliance with
EU and US regulations.Test Reports
Tips
● The Suppliers will only give you the information and documents you request in the RFQ file. Hence, you must
ensure that you have a ​comprehensive product specification sheet​, and require information about their
ability to ​ensure compliance ​with all applicable product safety regulations.
● Leave fields open in your RFQ file for the supplier to fill in the ​counter spec sheet​. They may not be able to
comply with every single specification. Hence, it’s critical that you require them to confirm all relevant
specifications for which their quoted price is valid. In most situations, there are always a number of
specifications or quality requirements which the supplier cannot match.
● The RFQ can also be used to ​research available quality options ​for each specification, from each supplier.
This can help you to better understand what each one can offer.
● You can use external resources, for example ​Alibaba.com​, ​Globalsources.com ​and ​Amazon.com​, to research
various product specifications and quality options.
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2. Supplier Research & Assessment
Introduction
Now that you have an RFQ file, it’s time to shortlist a number of suppliers. In this phase, you will select suppliers using
a two steps procedure. The goal is to shortlist a number of supplier options, from which samples can be ordered in the
next phase.
Step-by-Step Guide
Phase Description
I. Industry Briefing
Before you start to process suppliers, you need to know what standards you
can realistically expect from them, in terms of registered capital, compliance
with overseas safety standards and more. This section explains what you must
know about this particular industry.
II. Supplier Sourcing
This section explains how to draft a supplier shortlist, based on data available
on the two major B2B supplier directories: Alibaba.com and
Globalsources.com. It also explains how to reach out to suppliers, and
maximise your response rate.
III. Supplier Assessment
This section explains how to assess suppliers, based on the data you receive
after sending out your RFQ.
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I. Industry Briefing
Criteria Description Industry Situation
Registered Capital
The Registered Capital indicates the suppliers
scale of operations. A supplier with a very low
capital (i.e., RMB 100,000) is most likely a
trading company, while a supplier with, say,
RMB 20,000,000, is more likely to be a
manufacturer.
Most sophisticated LED manufacturers
can show a Registered Capital of at least
RMB 5,000,000​. When possible, avoid
suppliers with less Registered Capital.
Product Compliance
LED Bulb Lights are regulated in the US, EU
and many other markets. Most LED
manufacturers (70 - 80%) in China cannot
ensure product compliance. Hence, it’s an
important selection criteria.
Consider only supplier that can ​provide
compliance documents ​for at least two
of the following standards and
regulations: EMC Directive (EU), LVD (EU),
RoHS (EU), FCC (USA), UL (USA). ​Exclude
all suppliers that for any reason fail to
provide such documents.
Quality Management
System (QMS)
Specifies whether the supplier is certified
according to a Quality Management System,
such as ​ISO 9001:2008​.
Most sophisticated, exporting oriented,
LED manufacturers are ISO 9001:2008
certified. Hence, ISO 9001:2008 is
strongly preferred​.
Corporate Social
Responsibility (CSR)
Specifies whether the supplier is certified
according to a CSR standard, such as BSCI
and SEDEX.
Very few, if any, LED manufacturers are
CSR certified. Hence, you should ​not
disqualify ​suppliers ​without CSR
certification​.
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II. Supplier Sourcing
a. Selection Criterias
Alibaba.com and Globalsources.com are the most comprehensive databases of manufacturers in Asia. It’s also
misunderstood. While some expect it to be some sort of ‘one stop shop’, we prefer to see it as a comprehensive self
service supplier database. Here, we explain how to source and vet suppliers, using data available on these supplier
directories.
Disclaimer​: This section only explains how to make an initial supplier shortlist. Before moving forward, the
suppliers must be verified. The sole purpose of the initial selection is to ensure that you don’t waste time on
suppliers that are obviously not qualified.
1. Company Overview: First Step of the Supplier Vetting Process
The company overview is, unlike the Alibaba TrustPass profile, not made of up verified information. However, it can tell
enough to decide whether or not you should further analyze this supplier:
a. Company Name: ​Virtually all company names in China includes a location identifier. Companies with province
names are larger, and more well capitalised, than those with city names. As such, a province based company
name is therefore one such factor. Below follows an example:
- Shenzhen Company Co., Limited (Smaller)
- Guangdong Company Co., Limited (Larger)
b. Product Scope​: This lists the suppliers ‘main products’. For clear reasons, you want your product to be
mentioned here. Suppliers listing a very diverse range of products are mostly buying agents or trading
companies, as manufacturers have far more narrow product scopes.
c. Product Compliance​: Suppliers listing overseas product standards and certificates (i.e., REACH, Low Voltage
Directive and CPSIA) are more likely to be experience manufacturing goods in compliance with EU and US
product regulations.
d. Quality Management System & CSR / Social Compliance​: Specifies whether the supplier is certified
according to a Quality Management System (i.e., ISO 9001:2015) or complies with a Social Compliance Protocol
(i.e., BSCI).
Notice:​As mentioned, this information shall not be taken at face value. The suppliers are free to edit their
Company introduction as they wish, and compliance and QMS documents must, for obvious reasons, be verified.
2. TrustPass Profile: Verified Company Information (Alibaba Only)
All Gold Suppliers on Alibaba have a TrustPass profile, listing verified information, parts of which are very valuable
when vetting suppliers on Alibaba. This data is pulled directly from their business license, and can be very telling about
a supplier:
a. Registered capital​: The Registered Capital indicates the suppliers scale of operations. A supplier with a very
low capital (i.e., RMB 100,000) is most likely a trading company, while a supplier with, say, RMB 20,000,000, is
likely a manufacturer.
b. Year of Registration: ​Albeit not the most important criteria, a supplier's history has some significance.
c. Registered Address​: The suppliers, registered, operational address. However, these often tend to be
outdated.
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Notice:​Try to identify at least 8 to 10 suppliers. Otherwise you may end up with too few supplier options. Expect
that 50% of the suppliers will either not respond, or be unqualified. However, each supplier you add to the list takes
at least 1 to 2 hours to process. Hence, you only want to list suppliers that are seemingly qualified.
b. Send RFQ File
This is the hard part. Now you must contact the shortlisted suppliers, and send your RFQ file. This file shall then be
filled in by the suppliers, and returned by email, together with the documents requested.
Sending a long list of technical specifications, design files, information and document requests is asking quite a lot
from any company. Sales representatives are also human beings, with a limited amount of time. Gathering documents
and making price calculations requires a lot of work. They tend to ignore specifications, or only provide parts of what
you initially asked for. Sometimes they just stop responding all together.
Managing communication with suppliers is a tedious work, which requires that you keep track of plenty of data and
documents, for each one. However, without this data, you have nothing to base your final supplier selection on.
a. Begin with a Skype or Phone call, and follow up by sending your RFQ file right after. Before you hang up, make
sure to set a deadline.
b. Keep sending reminders, every two to three days. by email or Skype until they have provided a first draft.
c. The first draft will not come out perfectly. There will be gaps and conflicting information. Ask for revisions until
everything has been specified and answered in full.
d. Make sure to store all the information in a main document, for easy comparison.
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c. RFQ Email Template
Hello,
My name is [Name], Procurement Manager of [Company]. We are currently researching new supplier options in China.
We hereby contact you for an initial screening and price research procedure. Please see the attached RFQ file. Fill it in,
and return it by email, together with the following documents:
● Product Certificates (i.e., REACH, RoHS, CE) (Very important!)
● Business License Number / Business License (Very important!)
● QMS Certificate/s (i.e., ISO 9001:2008) (if any)
● CSR Certificate/s (i.e., BSCI and SEDEX) (if any)
The purpose of this is to research your prices, order terms and other capabilities. Based on this information, we will
select a number of suppliers for sample orders. As we are based in [Country], we need to ensure compliance with local
product safety standards. Hence I want to stress the importance of you sending us product certificates and test
reports.
About us
● Name:
● Position:
● Company:
● Website:
● Email:
● Phone:
● Skype:
Please respond to this email within 3 working days.
Best Regards, [Name], Procurement Manager of [Company]
Notice:​The first impression you make when sending the RFQ email is very important. A supplier may receive
hundreds of quotation requests on a daily basis, and will only respond to those which (seemingly) have a higher
chance of conversion.
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III. Supplier Assessment
Once the RFQ file is returned, together with all requested documents, you can make a final supplier selection. This
supplier selection is based on all data points you received from the suppliers, including product specifications, order
terms, prices and the documents.
a. Review Data
Document Comments
Product Specifications
The supplier provides counter specifications. If they leave something out, you
cannot make a proper quality comparison, and the quoted price itself is
irrelevant.
Order Terms
The supplier must provide information on their MOQ, production time, unit
pricing and tooling costs.
Product Compliance
Don’t expect suppliers to share a full set of compliance documents. However,
they must confirm whether the price is based on compliance with the listed
regulations and standards.
b. Verify Documents
Document Verification Method
Business License National Online Company Database (gsxt.saic.gov.cn)
Product Certificates
/ Test Reports
Issuing Company (As stated on the document)
QMS / CSR Certificates Issuing Company (As stated on the document)
c. Supplier Selection
The final supplier selection is based on a comparison between the remaining candidate suppliers. You must take all
data points into consideration when making this selection, including your general impression of the company when
communicating with them.
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d. Supplier Comparison Case Study
Data
Supplier A
(Highly Qualified)
Supplier B
(Qualified)
Supplier C
(Not Qualified)
Supplier Information
Registered Capital (CNY)
1 Chinese Yuan = 0.155 U.S. Dollars
10,000,000 2,000,000 100,000
Product Certification
United States / European Union
✔ ✔ ✘
QMS Certification
Quality Management System
✔ ✘ ✘
CSR Audits / Certification
Corporate Social Responsibility
✘ ✘ ✘
Order Terms
MOQ (Pcs)
Minimum Order Quantity
1000 500 50
Production Time (Days)
Varies depending on order volume
50 45 30
Payment Terms
T/T Accepted
Telegraphic Transfer
✔ ✔ ✔
T/T Terms
Pre-Production / Post-Production
Deposit: 30%
Balance: 70%
Deposit: 30%
Balance: 70%
100% Prepayment
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Tips
● The RFQ file must be sent to ​at least 8 to 10 suppliers ​for various reasons, as explained below:
a. The ​response rate is rarely above 60%​. Hence, a low number of suppliers will likely result in few, or even
zero, supplier candidates to choose between.
b. In order to make a proper ​market price assessment and comparison​, you need price data from more
than one or two supplier. With only a few price samples, you cannot determine whether the quoted price is
too high, or perhaps even too low. The latter may indicate that the supplier is trying to offer a below market
price, which are normally increased later in the process.
● You can find supplier contact details on the suppliers ​contact us ​pages on their Alibaba, GlobalSources page
or private website.
● Calling the supplier ​can set you apart from other companies sending RFQ. This can give you more attention
from the sales representatives, and therefore increase the chance of them responding with accurate
information.
● The ​business license ​can be verified on ​gsxt.saic.gov.cn​. However, the verification system is only available in
Chinese.
● While a ​product certificate ​may be verified as authentic, you must also assess whether it’s relevant for your
manufacturer, and product. Review the following:
- Owner / Applicant / Held by: The certificate should be issued in the name of the same company. If not, you
cannot assess if the supplier has the capability to manufacture products in compliance with the relevant
standard or regulation.
- Product name / Article ID / SKU: The product certificate should be valid for a product within the same
category as yours. Otherwise you cannot assess the supplier's ability to manufacture products in compliance
with the relevant standard or regulation.
● A ​previously issued test report or product certificate ​cannot be reused for new products, as such
documents are only valid for the specific batch of products. In many cases, such compliance documents are
tied to the buyer, and can only be issued and held by the buyer. Hence, previously issued test reports and
product certificates are used to ​assess the supplier's capability to manufacture ​products in compliance
with a certain standard or regulation.
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3. Pre-Production Sample Development
Introduction
At this stage, you have selected ​at least one supplier ​to be put through the first ​practical test ​of the process: making
a pre-production sample. In this chapter, you will learn how to ​prepare your sample order​, and ​manage revisions​.
The goal of this part is to obtain a ​fully acceptable pre-production sample​, thereby assessing the supplier's ​ability
to manufacture the product according to your spec sheet.
Step-by-Step Guide
Phase Description
I. Create Sample Order Sheet
This document contains all product specifications and sample order terms,
including terms for sample revisions, lead time, tooling and payments.
II. Sample Production
Samples rarely come out perfectly on the first try. Depending on the product
and its complexity, you should expect two to three sample revisions - before a
product is ready for mass production.
III. Sample Approval
The purpose of the sample is to demonstrate the supplier's capability to
produce a product according to your product specifications. Hence, the
pre-production sample can be approved once it passes the listed checks.
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I. Create Sample Order Sheet
Spec Sheet
The Spec Sheet, including its attachments, is the most essential part of the Sample Order Sheet. The product sample is
manufactured entirely according to the specifications. Hence, you must ensure the following:
a. The specifications and quality options must be tweaked according to the supplier's capability
b. All attachments (i.e., design drawings and logo files) must be final
Order Terms
Samples seldom come out perfectly on the first try. Depending on the product and its complexity, you should expect
two to three sample revisions . However, you don’t want to end up in a situation where the supplier is asking you for
additional payments, because they failed to get your approval on the pre-production samples. ​For this reason,
include the following terms:
a. General
1.​The supplier must produce an unlimited number of sample revisions (in case the previous sample batches don’t
comply with the product specifications and quality requirements in this document).
2.​The seller may not request additional payments from the buyer, unless the buyer makes changes to the product
designs, materials, quality requirements or compliance requirements.
3.​Pre-Production Sample Revision Time:
● 1st Sample: XX days
● 2nd Sample: XX days
● Nth Sample: XX days
4.​If the supplier fails to produce an acceptable sample after X revisions, the buyer may request a full refund ($XXX)
from the supplier.
5.​If the supplier fails to produce samples within the time limits set under ‘Pre-Production Sample Revision Time’,
the buyer may request a full refund ($XXX) from the supplier.
As you may already understand, the main purpose of these terms are to put pressure on the supplier to:
1. Comply with all design requirements and product specifications
2. Limit the number of revisions needed (as they end up on the losing side by neglecting your requirements), and
thereby speed up the development process.
3. Limit the time spent to produce each sample revision
Note: ​These terms are void if you change the specification, after the supplier starts working on the pre-production
samples. Again, get your spec sheet right before you move forward.
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b. Mold and Tooling Ownership
When buying custom designed products, injection molds and other tooling are generally required. Tooling is always
paid for by the buyer, and can make up a large share of the product development cost. As such, you want to avoid any
of the following situations:
1. The supplier is using your tooling for other buyers
2. The supplier is refusing to transfer the tooling to you or your new supplier
The first scenario requires more than just a written clause. As for the second scenario, add the following two clauses to
your Sample Order Terms:
1.​All tooling (as listed below) is the property of the buyer, and may not be used in production, for the seller
(supplier) itself or its other customers (domestic or international) without the buyer's written approval.
2.​The tooling may be transferred from to the buyer, or its representative in China, at any time. Upon such a
request, the seller must send the tooling to the buyer within 3 working days. The buyer must pay for all
transportation costs (Maximum $XXX).
c. Subcontracting
The whole point of buying pre-production samples is to test the manufacturer's capability to produce your design.
What if the manufacturer contracts sample production to another factory? That is a major issue, as you have no
indication of the supplier capability to actually make your products. Thus, new quality issues, that you thought were
already corrected during the sample development phase, may arise.
1.​The seller may not subcontract the sample production to any other party or company, entity (excluding
procurement of components and materials).
2.​The pre-production sample must be made in the supplier’s production facility at the following address: [Insert
Address]
3.​The buyer, or its representative in China, may inspect the seller’s facilities without prior notice, to verify that
sample production is made at the specified address.
4.​Failure to comply with the subcontracting terms shall result in an immediate refund ($XXX).
d. Payment Terms
If the sample costs are counted in the hundreds of dollars, product samples are usually paid for 100% upfront.
However, more complex developments, for example OEM electronics and custom plastic parts requiring injection
molds, can result in costs counted in the thousands – sometimes tens of thousands – of dollars. When the stakes are
higher, risks must be managed accordingly. For these situations, we advise you apply the following terms:
● 40% Deposit before production of tooling and pre-production samples.
● 60% Balance after the buyer's written approval of tooling and pre-production sample.
e. Compliance Requirements
If you intend to submit the sample for compliance testing, you must specify this, to prevent the supplier from using
materials and components which renders the product non-compliant. Many suppliers considers pre-production
samples as for reference only. Hence, they may not consider your compliance requirements for the samples, unless
explicitly instructed to do so.
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Supplier Confirmation
The supplier shall print and stamp the Sample order document. It is, however, sufficient to require a scanned copy
returned by the supplier. Do not accept approvals made via electronic communication, such as email or Skype. A
document which is stamped is more likely to be reviewed by the management of the company, which in turn may
result in them giving your orders a higher priority.
II. Sample Production
As mentioned, a sample may not come out perfectly on the first try. As such, it’s important to tolerate, and expect,
quality issues. The purpose of the sample order is, after all, to identify any quality issues before mass production
starts. This is what you must think about:
a. Provide the supplier with bullet points, when communicating sample defects
b. Provide images and video, detailing the defects
c. Provide suggestions for preventing the defect from occurring
d. 2 to 3 revisions is to be expected in many cases. However, a supplier which continuously fails to adhere to your
quality requirements shall be disqualified.
III. Sample Approval
As mentioned, the purpose of the sample is to demonstrate the supplier's capability to produce a product according to
your product specifications. Hence, the pre-production sample can be approved once it passes the following checks:
a. Design requirements adheres to the product specification
b. Material requirements adheres to the product specification
c. Functional requirements adheres to the product specification
d. Compliance requirements adheres to the product specification
e. Labelling requirements adheres to the product specification
Tips
● The ​failure rate​when developing pre-production samples is sometimes as high as 50%. As such, we
recommend you to buy samples from ​at least three to five different suppliers​. This enables you to
disqualify failing suppliers, without the need to restart the process.
● Compliance testing ​on pre-production samples is often necessary, as test failures on the mass produced
batch will render it worthless. However, ensure that ​materials and components ​are the same on the
pre-production sample, as the mass produced product. Otherwise, the pre-production sample compliance test
is not representative.
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4. Production & Quality Assurance
Introduction
This is the final, and most critical, phase of the procurement process. This phase involves a series of measures to both
prevent quality issues, and verify the state of the production on site, before the cargo is shipped from the
manufacturer. The goal of this final part is to ensure that the orders are produced according to your product
specifications and quality requirements.
Step-by-Step Guide
Phase Description
I. Sales Contract
The Sales Contract is a critical mechanism, that serves to clearly communicate
all ​product specifications ​and ​quality requirements​, and the consequences
the supplier will face if they fail to comply. The Sales Contract can therefore
prevent misunderstandings ​concerning your products, which in turn
prevents severe quality and compliance issues.
It shall also act as a framework, detailing all relevant order terms. As such, it
simplifies all future orders. Below follows an overview of all terms that must be
included in the Sales Contract.
II. Deposit Payment
The deposit (normally set at 30%) is paid ​before the supplier starts the
production​. However, there is also a risk of being defrauded at this stage. In
this section, we explain the various ​bank account types​used by both legit
suppliers, and fraudsters.
III. Mass Production
The mass production phase begins at the very moment the supplier confirms
the arrival of the deposit payment. Time is ticking, and the shall now execute
the steps outlined in the production plan.
IV. Pre-Shipment Quality
Inspection
The purpose of the Pre-Shipment Quality Inspection is to verify that the
products ​adhere to the product specifications and quality requirements
outlined in the Sales Contract. The Pre-Shipment Quality Inspection is
performed in the factory, by a third party service provider.
V. Balance Payment
There is no return after you’ve settled the balance payment. At this stage, you
must be sure that the products ​match your quality requirements​, and are
made in compliance with all applicable regulations ​in your market.
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I. Sales Contract
Recommended Terms
Part Terms Sample Data / Description
Header
Date Contract date
Buyer Company Name, Address
Seller Company Name, Address
Choice of Law People’s Republic of China
Court of Arbitration Specify Arbitration Court in Mainland China
Contract Language English
Product Specifications
Product Specifications
1. All relevant technical details, material specifications,
colors, functions and other information that defines the
design, quality and functionality of the product.
2. Relevant Attachments
Applicable & Regulations
1. Product Safety Standards / Technical Standards
2. Required Documents
3. Labelling Requirements
4. Substance Restrictions / Maximum Amounts
5. Relevant Attachments
Defects
Definition of Defective
Products
1. A list of defects, for which the buyer is eligible for
compensation. This shall include both functional defects
and cosmetic defects (i.e., holes, dirt, marks).
2. Defects may be classified in different categories:
Minor, Major and Critical.
Accepted Defect Rate
1. The buyer is normally required to accept (pay for and
not request compensation for) a maximum number of
defective units.
2. The Accepted Defect Rate (ADR) is normally set
between 0.25% to 1.0%. Defect quantities above the
ADR is to be covered by the compensation terms.
However, the ADR is subtracted from the defect rate.
Compensation Terms
1. Specifies under which conditions a supplier shall
compensate a buyer.
2. Options include money refunds, repairs and remakes.
These terms must also specify in detail how, and within
which time frames, the transaction shall be executed.
Claim Filing Terms
1. Details how the buyer shall submit a compensation
claim. This term explains what information the supplier
can request from the buyer.
2. Example: Photos, Video, Excel File List
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3. May also specify a certain time limit (counting from
balance payment date), until which compensation claims
can be filed (Normally 90 - 180 days).
Intellectual Property (IP) Brand Ownership
1. Defining the Intellectual Property held by the buyer.
2. Stipulating penalties that apply if the seller would use
the buyer’s Intellectual Property (without permission).
Payment Terms
Payment Method
1. Telegraphic Transfer (T/T) (Standard)
2. Letter of Credit (L/C)
Deposit Payment
1. The payment made prior to the production start
2. Normally set at 30%
Balance Payment (70%)
1. The payment made after the production is completed.
2. Specify that the buyer can withhold the balance
payment until the quality inspection and compliance
testing are complete, and successful.
3. Normally set at 70%
Beneficiary Account
Details
1. Beneficiary name
2. Beneficiary address
3. Country
4. Bank name
5. Bank address
6. SWIFT / BIC Code
7. Currency (USD)
Freight Terms
Transportation Mode 1. Options: Sea Freight, Air Freight
Incoterm
1. Options: EXW (Ex Works), FOB (Free on Board), CIF
(Cost Insurance Freight), DAT (Delivered at Terminal),
DAP (Delivered at Place).
2. Port of Loading and Port of Destination
Export Packaging
1. Outer Cartons
2. Inner Cartons
3. Pallets / Plastic Cover / Other Protection
4. Freight Remark Print
Document
Requirements
1. Bill of Lading
2. Commercial Invoice
3. Packing List
4. Country of Origin / Form A
5. Fumigation certificate
6. Other documents
Cargo Insurance
1. Covered value
2. Covered transportation
3. Insurance company
Lead Time Production Time
1. The specified (maximum) production time
2. Counting from date of deposit payment, until the
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production is 100% completed and ready for inspection.
Late Delivery Clause
1. Stipulates a daily deduction (set amount or
percentage) from the balance payment, for each day of
delay.
Quality Assurance
Quality Control
1. Specify that the buyer, or a representative, has the
right to perform a quality inspection in the supplier's
production facility.
2. Specify that the buyer can withhold the balance
payment until the quality inspection is performed, and
successful.
Compliance Testing
1. List of product safety standards / technical standards
for which the product will be tested.
2. Required Documents (Which the supplier must
provide)
3. Specify that the buyer can withhold the balance
payment until the product testing is performed, and
successful.
Other
Attachment List
1. Product Photocopies
2. Design Drawings
3. Color Samples
4. Technical Standards
5. Datasheets
6. Labels / Graphical Files
Validity 1. Valid from 20XX-XX-XX until 20XX-XX-XX
Signature
1. Buyer signature
2. Supplier signature (Legal representative)
Stamp 1. Supplier stamp
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II. Deposit Payment (Order Start)
Account Checklist
Bank Account Type Criteria Risk Level Description
Company Account
Matching Beneficiary
✔ Account beneficiary is matching
the supplier's company name.
✔ Account address is matching the
suppliers registered address.
✔ Account is held in Mainland
China
Low
A company account, held by the very
company you intend to do business
with, may be taken for granted in most
countries. However, in China, far from
all suppliers offer this setup.
Export Agent Account
✘ Account beneficiary is ​not
matching the supplier's company
name.
✘ Account address is ​not
matching the suppliers registered
address.
✔ Account is held in Mainland
China.
Low
Some suppliers outsource all export
related procedures to specialised
export agent companies. In these
cases, the payment is made to the
export agents account.
HK Offshore Account
Matching Beneficiary
✔ Account beneficiary name is
matching, or related to, the
supplier's company name.
✘ Account address is ​not
matching the suppliers registered
address.
✘ Account is held in Hong Kong.
Average
Many suppliers use offshore
companies, registered in Hong Kong,
to receive payments from overseas. As
such accounts cannot be directly
linked to the manufacturers, which are
always based in Mainland China, the
risk is therefore higher.
Company Account
Not Matching Beneficiary
✘ Account beneficiary is ​not
matching the supplier's company
name.
✘ Account address is ​not
matching the suppliers registered
address.
✔ Account is held in Mainland
China.
High
Avoid payments to company entities
which are not related to the supplier's
company name.
HK Offshore Account
Not Matching Beneficiary
✘ Account beneficiary name is ​not
matching, or related to, the
supplier's company name.
✘ Account address is ​not
matching the suppliers registered
address.
✘ Account is held in Hong Kong.
High
Avoid payments to Hong Kong
registered accounts, if the beneficiary
is not matching, or related, to the
company registered in Mainland
China.
Private Account
✘ Account beneficiary name is ​not
held by a registered company.
High
Never make payments to accounts
held by individuals.
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Payment Details Checklist
The beneficiary details must be correct, as the receiving bank in China will otherwise return the money. To avoid such
waste of time, you need to know the following:
a. Beneficiary name​: It shall be as specified by the supplier. Chinese company names are often quite long,
and you cannot cut it in half, even if your bank doesn’t allow you to enter the full name. If that is the case,
enter the remaining characters in the message field.
b. Beneficiary address​: Same goes for the beneficiary address. Don’t leave anything out, or the payment may
be returned by the Chinese bank. If the address is too long, try to shorten it a bit (i.e., 333 Hao Zhang Yang
Road can be shortened to 333 Zhangyang Rd).
c. Bank Account Number​: Same as specified by the supplier. Chinese bank accounts just have one account
number, for both international and domestic use (unlike, for example, the EU which use IBAN for
international transactions).
d. Beneficiary Bank Account​: You may either input the SWIFT code or Bank name combined with branch and
bank address.
III. Mass Production
The mass production phase begins at the very moment the supplier confirms the arrival of the deposit payment. The
supplier is now to execute the steps outlined in its production plan. The process varies depending on the product, but
this is what it might look like:
● Purchase Components & Material​: 10 – 20 days (from subcontractors)
● Process Components & Materials​: 10 – 15 days (in house)
● Batch Sample Completed​: 1 – 3 days (Recommended for the 1st batch)
● Assembly​: 5 – 8 days
● Packing​: 1 – 2 days
While you should have received prototypes before you decided to go forward and place an order with the supplier, it’s
still highly recommended, at least for the first batch, to require the supplier to first produce a number of batch
samples, for your approval – before mass production proceeds. Indeed, this may put production to a halt, especially if
such samples are to be delivered to your office (rather than approved on site by an inspector). Yet, misunderstandings
and neglect are common, and this is your last chance to prevent quality issues from spreading further.
You may also request general status updates, and photos, on a weekly basis. When the batch is nearing completion,
you need to get a confirmation on the inspection date. Such dates are prone to change, but notify your quality
inspection well in advance, and start working on inspection checklists as early as possible.
Note​: The production plan assumes that all tooling (i.e., Injection molds) is already completed prior to mass
production, as this is required to make pre-production samples.
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IV. Pre-Shipment Quality Inspection
The purpose of the Pre-Shipment Quality Inspection is to verify that the products adhere to the product specifications
and quality requirements outlined in the Sales Contract. The Pre-Shipment Quality Inspection is performed in the
factory, by a third party service provider.
Prepare Quality Control (QC) Protocol
A Quality Inspection is performed in accordance with a pre-defined protocol. The protocol is drafted by the buyer,
therefore requiring you to specify what sort of checks the inspection agency must carry out while in the factory. Below
follows an overview of various types of defects.
Type Description Sample Checks
Visual Inspection
Shall identify visible cosmetic defects on the
product and its packaging.
a. Dust
b. Dirty
c. Visible marks
d. Scratches
Functional Testing Shall verify if the product is fully functional. n/a
Dimensions
Shall verify the product's dimensions, and
whether it is within the set dimensional
tolerances (if any).
a. Height
b. Width
c. Length
d. Diameter
Performance Testing
Shall verify various usage and quality aspects
of the product.
a. Fire retardance
b. Water pressure / absorption
c. Dust resistance
d. Mechanical testing
e. Weight
Product Packaging
Check the quality, dimensions and labelling
of the product packaging (if any).
a. Dimensions
b. Artwork and labelling
c. Material
Export Packaging
Check the quality, dimensions and labelling
of the export packaging.
a. Outer cartons
b. Inner cartons
c. Protection
d. Pallets
e. Freight remarks
Notice: ​Most quality inspection companies can help you to draft the protocol. That said, you must provide them
with the information they need to check the product according to your product specification.
Recommended Quality Inspection Companies
Company Contact Details Website
Sofeast Ltd planning@sofeast.com www.sofeast.com
Asiainspection Contact Form (External link) www.asiainspection.com
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V. Balance Payment (Order Completion)
There is no return after you’ve settled the balance payment. At this stage, you must be sure that the products ​match
your quality requirements​, and are ​made in compliance with all applicable regulations ​in your market. However,
if there are any issues that must be corrected, hold on to the balance payment until said corrections has been made.
Once settled, send a ‘payment proof’ and follow up until the payment is confirmed by the supplier. Most suppliers
require payment before the ship to the port of loading. However, the specific terms depend on what you’ve negotiated
in the contract. Some suppliers may also accept balance payment after sending the bill of lading copy, but not the
original document (which is required to release the cargo).
Tips
● It’s recommended to write a ​Chinese language sales contract​, with help from a lawyer, trained Chinese
commercial legislation. However, of that is not an option, due to budget constraints, an English language
contract is still highly recommended for the following reasons:
a. The contract communicates all your product specifications, quality and compliance requirements. This is
reducing the risk for misunderstandings​, which is the most common cause of quality and compliance
related issues.
b. The contract communicates that you will ​verify the quality and compliance ​of the products, prior to
making the balance payment. This is reducing the supplier's incentive to use cheap and substandard materials
and components.
● Compliance testing ​can made either before the mass production, using a pre-production sample, or after
mass production, using a batch sample. In the latter case, batch samples can either be submitted by the
quality inspection company, or sent directly to the testing company by the supplier.
● It is extremely important to ​withhold the balance payment ​until the quality of the products is verified by an
independent third party (i.e. an inspection company). Once you have paid in full, you have very little leverage
towards the supplier. Hence, you may find it very hard to request any form of remakes or repairs.
● Provide clear instructions to the ​quality inspection company​. This includes the following:
a. Required tests
b. Suggested number of units per test
c. Whether batch samples shall be collected
d. Product photos
e. Defined “accepted result” and “rejected result” (for each test)
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