China Supply Chain Risk – Oh My
China is a great country, but you need to stay a step ahead. Take a look at this out of this world China supply chain risk story from China Inspection Blog
I relate briefly here.
You check the product at the shop floor, and see it gets on the truck with all QR codes attached. The driver takes the 40 foot container and goes to the port. Unbeknownst to you, he stops along the way. He has already had the QR codes copied and attached to fake goods to replace the good goods. They keep your good product and deliver the bad product, and you cannot figure out what happened. Do you think that driver had inside help in the factory? Highly likely.
I think those of us from the West could not dream up such a fantasy story, but in China it is possible. In the US the NDA was good to protect your IP. In China, it proved to be useless. Everyone uses the NNN non-disclosure, non-use, and non-circumvention which means the Chinese were three times craftier than the West.
Contracts to Chinese entities read like this:
These terms and conditions are between “company A” and/or any subsidiaries or related bodies trading through separate brand names.
It is not enough to say Company A. We never think of this kind of conniving thing in our own world, but it is a standard risk here.
China Supply Chain Risk Starts at Home
Given all these out of our world risks in China, why do we choose to believe that people have told us the truth in the interview? Why do we think that because we hired them that they will not be working against us in such a shocking way?
Following from this, you should not just get a resume, interview, ask for references and call them, and then trust your new purchasing, finance, production, sales or general manager knowing that they can think of things three times trickier than you can.
You need a China ready NNN and contracts, and you need a China focused recruiting model. Then you will have closed the big doors and only need to worry about the truck driver. China supply chain risk is faceable, and this can be a great place to manufacture due to its great infrastructure and skilled labor. However, we do well to dig deeper than we ever imagined in the West to get the right people. We also might like to think more about shipping.