Monthly Archives: June 2010

Chinese Drywall and Working with Chinese Suppliers

Stories like this one are popping up all over the media. People move into a lovely new tract home, bought at a good price, and a year or two later…toxic drywall starts poisoning the occupants and affecting the structure of the building.

I’m not a legal expert, so I’m not going to offer a legal opinion. What I will say is this: Somewhere along the supply chain, someone bought drywall that wasn’t made according to code. Whether the manufacture of toxic drywall on the Chinese side was a purposeful violation of standards for building materials, an unfortunate oversight, or just plain incompetence, somebody in the US, probably several people, sourced and approved the purchase of that drywall.

My guess is that these people had absolutely no idea what they were getting into. They may have hesitated at first and then caved to the pressure to provide materials at lower costs. They may have seen $$ signs in their eyes and gone for it with glee. Who knows what the motivation was? What they probably didn’t realize is that when you source overseas, you have got to be very, very careful about your QC process. You might order one shipment that looks perfect but, six months later, turns out to be defective. You might order a shipment that arrives in perfect order, but the next shipment might be bad. You may think you have the leverage you need to prevent you from getting cheated, only to find out that your definition of leverage is very different from your Chinese partner’s definition.

There are tremendous cost advantages to sourcing overseas, and there are many fine, ethical Chinese suppliers. But in the end, you’re buying something from a country that you probably don’t understand, and from people that you don’t understand. You CANNOT take it for granted that everything will be in order. You have got to put airtight QC/QA procedures in place for every shipment. If that means you have to send a consultant, or hire one in China, to inspect the factory, the materials used, and the finished product for every single shipment, then that’s what you do.

If you don’t do that, then you get to face a bunch of angry homeowners whose lives your poor purchasing practices have destroyed.

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Filed under Business, China, Sourcing in China