Filename: Ep4manufacturing overseas
Hello and welcome back to another episode of Know Better, Be Better. I'm your host, Rebecca. I'm also the co-owner of Miann and Co and also the creative director. Our podcast has been created to share with you some of the knowledge that we have gained over the last nine years owning our own business and today we are sharing our experiences of how to source manufacturers. It is one of our most asked questions or DMs that we get, how do we find our suppliers and how do you make sure that they are ethical suppliers. So I wanted to share a little bit about our journey into how we found our suppliers.
The easiest and most cost effective place to start reaching or searching for supplies is the internet. Search engines such as Google, B2B, Alibaba, Global Sourcing and Madeinchina.com are all websites where you can look for suppliers. There are thousands of suppliers that are listed on these sites and they can streamline your search and increase the number of sources by filtering results for not only entries labeled as golden members, but verified suppliers as well.
More importantly, you can also source with accredited suppliers.
Our preferred method, however, is finding suppliers by visiting trade shows. This is our preferred method. I really enjoy a face to face meeting and I think it's super important that you are investing in your business and taking those steps to invest in your business. So even from when we were solo entrepreneurs, I made the trip out to China to source for our suppliers. So I headed out to trade shows and there are all different kinds of trade shows. There is a Hong Kong trade show. There is Ken Chong trade show, which is huge. There are loads of trade shows. There are even local trade shows here in Australia.
So this is our first port of call where we start the sourcing, we visit stand by stand; I walk those trade fairs by myself, aisle after aisle looking for suppliers. This is super important, mainly because you get a feel for the people that you are going to be working with. I find it so bizarre that people invest their whole business, it's such a huge risk, without even meeting the people that they are going into business with. For us, the supplier is such an integral part of your business. So to start with, in all honesty, it was like our first outsourcing. So there was just me to start with and then we outsourced our production overseas. So it's super important that you meet these people that you are working with.
By attending these trade shows, you get the opportunity to talk to the potential suppliers face to face about their companies, you get a feel for their companies, you see their products in person and the quality that they are producing, which I think is also super important to look through the products that are on the stand to get an understanding of what products they are producing. There is also production capacity, quality control procedures, which are super important in the kids area and if they are familiar with product testing for safety, which is super important as well. You can tell by meeting face to face whether that's something that they are all over or not and so asking that question, you can find out very easily whether they work with accredited testing houses like ITS and SGS.
You can ask about their ethical procedures, their workers, how their products are made. But I guess in this instance you won't get the response that you always want straight off the bat, but you will get an understanding to the supplier and you will get a feel for the supplier and whether they are willing to work with you or not work with you, which is all really hard to communicate over email. In the past when I've communicated over the phone or email, some things get lost in translation, whereas a face to face conversation is always so much easier. Still now when we are doing handovers, a face to face is so much easier than emails. It reduces the amount of emails and it also gives us an understanding for each other and the complications that we may come up against.
I also want to emphasize that sourcing a supplier is a partnership and meeting them face to face you can get an understanding, some of the restrictions or cultural difficulties or issues that they are having that you maybe can overcome. It's a big personal belief to me that I cannot guarantee a supplier is 100% ethical until I've seen with my own eyes, until I've visited their factories and their workplaces and I've seen my products in work and can verify the conditions that the workers are working under, also exactly where it's being made and also making sure that all the safety procedures are in place, there is needle testing machines and things like that. So it's really important to go and visit these suppliers, because before when I've spoken to them, they have said they have had things or they have had procedures in place and then when I've visited the factories, this hasn't been the case at all.
There is a lot of greenwashing in the industry with ethical production. And I guess I want to give a little bit of an insight about where my beliefs come from with this ethical production and it has been a long time working in the industry as well. I've been working the industry for 20 plus years. I've been visiting factories for a very long time to understand some of what happens in the factories. This is why I believe visiting your suppliers, although you may start the research online, it's super crucial to the longevity of your relationship with your supplier and also making sure that what you are saying is ethical actually is what's happening in the factories that you are working with.
My first ever factory visit, I was a very young, naive 21-year-old and the company that I was working for sent me to the Middle East. It was Syria. That was my first ever factory visit. I was working for a large organization at the time and this factory that I was visiting was actually accredited. Even though it was accredited, there were young children working in that factory and so that opened my eyes to things that were going on. On the days that these accreditations would happen, these children would stay home. So we would do surprise visits out to these factories and sometimes there would be children in these factories. This was the first time I've ever seen kids. To be honest, it's been the only time I've seen children in factories and they were probably eight or nine years old.
It was a huge eye opener for an idealistic country girl heading out to the Middle East. It was also very difficult cultural wise. There were not many women working in the factories at that time and I was a woman going over to solve problems. Sent by myself, a young 21-year-old into a country where I, to be honest, didn't know a lot about the belief system or the religion and I wasn't briefed by the company that I was working for at the time.
When I went over I was fully covered. It was a 40-degree heat. I was visiting the factories. I was sent over to try and solve print issues and it was very difficult to be able to, being a woman, to get them to listen to what I had to say because I was surrounded by men. Even though I was in a long shirt and jeans, I was still asked to wrap up in a sheet, which was very difficult to work professionally when you are being sent over for the first time by a company and you are being asked to wear a sheet. It was definitely an experience I will never forget and it definitely opened... It was the start of opening my eyes to the manufacturing. I guess for me, a lot of things built on that for me. I knew one day if I ever owned my own company that I would want to make sure that certain procedures were in place that these things didn't happen.
I also believe that visiting suppliers in the country that you are producing is also super important to understand the production resources that that supplier may have, because from the factories that I've visited from country to country, this varies. For instance, in India and Bangladesh and less established countries, there is a lot more manual hand labour working garments, which then means that printing or other things, the quality might be, you will need to accept a different quality as opposed to in China, there is a lot more technology in factories to enable things like accurate cutting, automated printing machines, and there is a lot less manual work in these factories. So there is a lot less people working in these factories and there is a lot more automation and machines for precision work a lot better.
In regards to that, quite often your print quality is better in these countries. Not saying that it will be, but these are some of the things that you need to look and see with your own eyes. To be honest, that stuff can't be explained over email. That's something that you learn by visiting the factories. I can't tell you how much I've learned from visiting the factories and also understanding the procedures that I can then or understanding the tools they are using. So when you do come up against a problem with your manufacturing, you are able to work with your supplier to solve the problem rather than not understanding why something is happening and therefore it can cause relationship breakdowns between you and the supplier and nobody wants that.
There is a lot of talk about working off your gut and meet and greet and direct interaction can help you evaluate suppliers and verify their abilities, their ethical practices, their safety procedures and most importantly the working conditions of the workers. We currently have two main suppliers who have been working for over 10 years now. One was sourced from a trade fair and the other was a working in the industry relationship that I had from the very beginning. Both suppliers have been huge extensions of our business and the quality and the output that we produce.
As I've had those relationships, it has meant that I've been able to start with really small quantities, even though we are producing in China. We visit our factories most years at least once, but the norm is normally twice a year. We go out and we time it with our summer ranges and our winter range handovers. However, we have had babies and have had operations or new babies arriving, and because of that, and we don't have family around, Terry and I both juggle the family and the business and it does get tricky when one of us is out for an occasion or a period of time.
I normally head out to China solo and have done since the company was, even before the company was established. I've done almost 20 trips and Terry has manned the ship solo parenting and the business while I've been away working in China. We also do the sourcing trip when we were looking for new product categories and we have visited Vietnam and India and the kids came with us on the sourcing trip. Our oldest was six and our youngest was four, which was a challenge. [Inaudible 13:46], our eldest son, I got incredibly sick. So that was an experience we will never forget and our kids will never forget.
We have found visiting suppliers face to face, catch up on product ranges, helps iron out any unforeseen issues that we can see and iron them out. Safety is always crucial for our things, like our toys and some of our homewares, so we all don't also discuss potential issues that could come up from producing my designs and what safety measures that we can put in place that it will meet ITS standing. The two recognized testing houses that we use for child safety are ITS and STS. It's really important to have accredited testing houses. I worked in testing for a year in London, which was great experience as I've mentioned before for understanding how you can produce your garments and what needs to go into your fabrics and what doesn't need to go into your fabrics.
We have managed to get our trips down to China to a one week turn around. We go out on a Monday and normally back on a Friday night or Saturday morning with direct flights to Shanghai regularly and then have a driver pick me up and take us to our suppliers. I guess being a small business, there are many misconceptions around producing your garments or products overseas. We started off sampling our own products and twirling in here in Australia, which some companies still work like this before they then go overseas to overseas manufacturers.
Some of them that are producing in China, and I guess one of the biggest misconceptions is that if you are producing in China that your products are mass produced. We get this a lot in the beginning and it was a really hard thing to swallow, to be honest. When you are a solo entrepreneur, you are a mum, you work from home, you are juggling everything, you are doing the right things by going and visiting your suppliers, testing your products, which all comes at an expensive cost and then you get someone saying that your products are mass produced.
We were super proud of what we set up in the beginning. Our first business, as we have mentioned, was La De Dah Kids and it was all hand made products. Our lead times were a year. Our products weren't made in a factory. They were sampled in a factory, which after their initial sampling happened we would then write the patterns in Chinese. After that, we would then dye our yarns up at the same dye house that we have always used for the last 10 years. After that procedure people would ride in on their motorbikes and one person would get a toy and they would make numerous toys for us.
We started off doing 15 to 20 pieces of a toy. That's how small we started off. It was super small. We only had a couple of products that we were sampling at the time and testing the market. We got a lot of negativity, I guess being a small business and producing in China because the conception or the perception was that our products must be mass produced, which was not the case at all. We were super proud, but honestly, there was a lot of shaming. We were working with our consumers face to face. We were working at a lot of smaller markets and so it was really important to us to get the customer's feedback. But sometimes people would pick those products up and they would see the made in China and they would throw it down like it was a dirty rag.
It was really heart wrenching seeing that and in some respects it made us feel like our product wasn't worthy, even though we put hours of work into these, trying to do it the right way, trying to source the right manufacturers, designing it all, twirling it all here, and then being a solo entrepreneur and heading out to China and meeting our manufacturers and working with them. So when people were doing that, it was actually a little soul crushing. In the beginning we didn't say anything and in the end we did, because it would be people with their made in China phones or things like that. And they would have a strong opinion about a smaller brand being made in China. This was something we had to overcome and we really had to believe in ourselves. And what we were doing was fantastic.
Our production setup was pretty unique. I hadn't seen anything from working in the industry for 20 years. How that was, was we were allowing a lot of farming areas to be able to work from home around their childcare needs. In China there was a one child policy. A lot of people would stay at home or they were grandparents looking after grandchildren. So this enabled them to both farm, because farming was a big part of there. And in the off season, both men and women were able to hand crochet our toys or products, which was amazing.
This unique set up was super amazing. The product after it was finished in the homes would then come back to a factory where it was QC and also tested again. So the product would then pass through metal detectors and things to make sure that the products were safe and then they would be packaged up and sent to us in Australia. This was our procedure and we went with this for a big part of what we were doing, so we were La De Dah Kids.
Another misconception is that you draw a pretty picture and then you just send it off to China and it's so easy to produce overseas, super easy. I can't tell you how many times I've heard this. If done correctly or even incorrectly, it is not an easy procedure and the risk involved is huge for anyone that's starting to undertake manufacturing overseas, especially in 2019 when cyber-attacks are happening and at an all-time high. So because of this, I would say it's even more important to go and visit your manufacturers, see where they are made, establish that relationship with your supplier. I cannot emphasize how important that relationship is with your supplier.
I quite often laugh because quite often people think I go on a holiday when I go to China. Even my own mother thought that. On one of the trips that I went on my mum came with me and I think she was quite shocked at how hands-on the procedure, the designing and the sampling stage was. I think it was a big eye-opener. I think it's really hard to show that behind the scenes. We should do more with a video, but quite often it's me out there by myself and I'm busy. I'm head down working with the suppliers and going through all the colours and safety and testing. So it's quite an involved process despite what people think.
I guess I wanted to cover off some of the risks and highlight some of the risks that happen with manufacturing overseas. I want to give a bit of background into our experience with these risks and what we have experienced. One of the big things for us was copying. Trademarking is super important. Trademarking your name and in the specific product categories you are working in or you want to work in. This is super important because I've heard horror stories and each time I go to China here in new horror story from someone on a plane, but I've heard horror stories of companies that have squatters on their names in China.
Quite often bigger companies that are producing will or haven't trademark their name in a certain product category, China are quite savvy with regards to trademarking and know if they trade marked that name that they have ownership to that name and product in that product category. For instance, I've heard another horror story about someone’s shipment being stopped with their own labels sewn in and even though the company in Australia has designed and made and owned all that, because they weren't trademarked, a Chinese company has trademarked the product. They have been able to stop the shipment.
It really was a legal minefield to start out and something that was super expensive for us as a small business that we were self-funding ourselves, we really boot strapped and at every stage this was our biggest expense, was trademarking, because at that point we were in so many different categories it was a huge expense for us and we wanted to go wide. Hearing a lot of these stories as we were visiting China, we didn't want to come up against that now or in the future. So I guess we did a lot of the legwork in the beginning. I guess be mindful of where you are producing and being mindful of the trademarking issues in those countries and each country has a different trademarking rule too. Trademarking is a whole other podcast and I will go into that. If you do have any questions, do let me know.
Another big risk of exporting which I'm hearing a lot about is the risk of exporting with payments with your supplier. Payment issue is something that I'm hearing more and more and it's getting more and more common. And it is another reason why having that relationship with your supplier is so, so crucial. We have personally lost money with suppliers whose product quality was terrible. We met the supplier, we sourced, we put some product into work, we paid a deposit because every supplier has to buy the raw materials to start with, and it's also building relationship, so you always have to put some deposit down with a new supplier. And then this particular supplier refused to improve the quality and also refused to return the deposit that we had. So we had no option but to cut our losses on this product.
Luckily, it was only one product, so our loss was super small. But this is also not uncommon. I've worked in larger companies that this has happened even after all their due diligence and also being a massive company. It does happen to both the small guys and the big guys and is a big risk that you buy into when you are producing your goods overseas.
Another reason building relationships is so, so important, there is a new payment scheme circulating where company's emails are being intercepted and then gaining the trust of the business and acting on the supplier from overseas and taking payments. They are almost impossible to track down. It's not uncommon for suppliers to have money paid into different bank accounts. One of our suppliers has been changing their bank accounts quite regularly lately, which has made me super nervous. Once she said she hadn't got the payment because it had gone into a different account than she had said.
It happens regularly for us and that's why we always triple check with a mobile number. We have the mobile number of our supplier, we have that relationship with our supplier that we can just ring and say, this is happening. Please can you check and make sure that these bank accounts are correct before we transfer our final payment over. On some of our orders in those initial days, there were large quantities of money. And to be honest, for a small business, for us, it would have sent us under, particularly when we were doing seasonal drops. We were only doing two seasonal drops. We were doing that to get the quantities out. Even though it was over various product categories, we did it for... Our supplier had to pay an export license, so this all adds to the overall cost.
Your raw cost that you are costing with your factory in US dollars is just the start. I think a lot of people or customers don't see all the other costs. There is duty, there is taxes, there is testing, there is the work that I put into design. I want to be paid like everyone else that gets paid for their job. The marketing, the freight forwarder, the warehousing, the distribution, the tissue paper, the envelopes, there is so much that goes into an actual cost price. So I guess that's something to be mindful of when you are purchasing from the big guys. I can't buy a lot of our products for what they retail them as. So I think that's something to think about.
I think consumers are being trained to think that products are cheap when they are made in certain countries like China and it's not the case. China is one of the most expensive countries to produce in at the moment. Their economy is growing hugely and that is why you are seeing less and less made in China tags and more made in India, made in Bangladesh, made in Cambodia because the cost of living is actually a lot less there so in result the cost of the products, the labour costs are a lot less so it brings the product costs down.
I hope this gives you a little bit more of an understanding into manufacturing and if you have any other questions with regards to manufacturing, I would love to cover them off on another episode. I'm super passionate about production. It's a topic I can talk about for a very long time. A lot of my product knowledge comes from visiting the factories, understanding what patent makers they have or whether I need to give them more patent information or not. I can talk about our procedures on how we designed back and forth in another episode. If you've got questions on that, again, let me know.
But I hope you enjoyed this episode and I hope it gives you a little bit more insight into the risks of manufacturing overseas, how it's not so easy and also an eye-opener into the actual costs involved with manufacturing overseas more as a small business as well, because you do pay premium price for smaller quantities. So that is something to be aware of. I won't be paying the same FOB, as they call it, as someone that's producing 30000 pieces. It just doesn't happen, so it is something to be aware of. Even though you are producing in those countries you are not comparing apples for apples and don't think that you are going to get something super cheap just because you are producing in those countries.
Another point I would like to make is about the ethical side and also making sure that your factories are ethical. How do you make sure that your factories are ethical? There are a couple of things that you can do. As I've talked about, there are accreditations which we are going to look into in the future. There is not just one accreditation. It is a long list. Different people have different accreditation and some accreditation is way more than others. For me, as a small business, this is a huge cost on top of already our products and safety testing and QA and all of those other procedures. It is something that we haven't been able to venture down yet, but it is something that we are definitely looking into.
We are just trying to come up with the accreditation that will best show transparency for our consumers on every level. We already know from visiting our suppliers that they are ethical and to be honest, ethical gets thrown around very loosely. There is a lot of green washing in the industry. There are a lot of people throwing ethical around and they have never visited their suppliers. I think as consumers we need to be asking brands, how often do they visit their suppliers? Do they visit their suppliers? Because it's very easy to say one thing and see another. I've seen that from working in the industry for 20 years in bigger companies as well this happens in.
I think it's super important to do your due diligence and make sure that you are asking brands if they are visiting their factories and they can support those ethical claims, because it's super important to visit your suppliers and see and work and know exactly where your products are being made, where everything is being sourced from your dye houses through to your raw materials, et cetera, et cetera. I hope this gives you an understanding into people that are wanting to start an ethical brand. It is a question we get asked a lot and I hope this runs you through starting point through what to do with visiting suppliers.
I will also say in a lot of the countries that you go to, there are a lot of visas that you do need. I found it easier with China to use a visa resource and I've built up to a one year visa now with multiple entries, which just cuts down the amount of times I have to get visas a year when I'm visiting regularly. Some years I've had to go more times because we had an issue with copying. That was huge. Because our products aren't being made in factories as such, the copying thing for our toys was really hard to police, basically. A lot of our workers were getting pictures from outsource people to copy our designs. They would have leftover yarns and then copy our products.
There are advantages and disadvantages to our production set up and there are things... These people work from home, they all have their own devices and there are things that you can't... There are things that you just can't control. So you can trademark and pay all the money for legal things, but sometimes you can't control these issues. Hopefully, that gives you a little bit of more understanding. I hope you love this episode. If you did love this episode, please like our podcast and that would mean the world to us and hopefully this gives you a little bit more insight into the Miann and Co manufacturing world.
If you've got any questions, send us a DM and we would love to hear from you. Thanks again guys. Bye.