I find myself stood thinking this as I navigate miles and miles of bumpy alleys and dusty backstreets via Google maps on my iPad looking to buy my first factory in China.
I came here in February this year with the intention of buying and exporting products I had imported in the past from Taiwan and China. Things I am very familiar with like Bikes, GPS and CCTV. Now I’m about to open a factory manufacturing something that up until a few months ago had never sold before in my life. Is this a leap of faith too far?
China is undoubtedly a great place to export goods from. That statement is undoubtedly pretty obvious, but since being here I have sold a crazy array of goods from mobile phones to diesel engines. Sure, if there is a market out there I have been selling it. To succeed here I guess you have to be adaptable, willing to learn and keep an open mind.
One market I have been moving more and more into is Clothing, both formal, fashion,sports and work wear. I really like these products as unlike something along the lines of complex consumer electronics they have a really low risk ratio in relation to fail rates and faults. This coupled with the fact that there production value allows you to buy a relatively large order for low outlay makes them an attractive investment for importers world wide. I have been selling clothing now for about 5/6 months and have learnt a lot along the way. From materials to the manufacturing techniques that save on production costs I am starting to learn the tricks of the trade.
A lot of the garments I order can be in small runs of around 500-1000 units. This is an order size that some factories are happy to produce but for a premium price, the larger factories that offer better pricing are simply too busy to scale down for an order of this size. This has meant that on these smaller orders I have faced many seemingly unavoidable issues that have frustrated both me and my customers.
The biggest issue I have is long or extended lead times. This is painfully familiar as everyone eagerly quotes a 10 day production lead time before constantly pushing your order around to fit in with bigger more “Important” orders. And if you complain then there is a risk that the product will be rushed and finished to a poorer standard than agreed. Sure you can then complain further and get them made again but kiss goodbye to another 4 weeks.
Another issue I have faced is apparent when dealing with high fashion and seasonal items. Its pretty obvious that if a garment is on trend and in high fashion it is going to command a higher retail price. What this also means though is the factory will charge what they can for the item instead of what it costs. For example the cost of an on trend army style parka jacket now here will be about 12 GBP from a factory even though in 6 months time when it’s not on trend it will be 8 GBP. So you’re paying about 35% extra on a pure supply and demand basis.
I have battled hard here to get around these issues and tried many various methods. From forging some very good relationships with factory owners, buying the material myself and then delivering it to the factories for them to produce the goods, spending hours going over the exact production costs of a garment to understand exactly where the money is going. I have tried everything. I have not tried to hand sew any garments in my apartment….
I reached a tipping point about 2 months ago on a specific type of garment I have been selling for about 4 months now. This garment costs me 4 GBP and has done so from the first 150 unit order I placed to the last 3000 unit order I placed. The price has not come down. I was told every time that I tried to negotiate the price that I was given the best price when I initially bought it because they “Know I am a valued customer” – a line which cuts through me like fingernails on a chalk board.
I’m not stupid and from pricing this item of clothing up from material to manufacturing costs I knew it should come down in price.
I decided that enough was enough and spent 4 days driving to various cities and redneck locations trying to get a better price. I stopped in on various grades of factories from 4 person set ups to 1000 person monsters. All of them were actually more expensive, perhaps I am a valued customer after all? Then on the last day when I was about to pack in I came across the best factory I have ever visited. A young guy about 36 with a super slick set up making just one thing – The garment I was looking for. He was producing 5,000 units of this garment per day in various styles.
I have never seen such a busy operation. Luckily for me he had never seen anyone from England and gave me some of his time to show me around his operation. As things unfolded it turned out he is the main guy for this garment and actually produces it for a lot of other “Factories” out there who had been giving me quotes. Something I could soon see apparent when he showed me a specific machine integral in the manufacture of this piece that none of the other factories had.
Great I thought, this is my guy. His quote came in cheaper than anyone else and I had 100% found the most direct source for this product. The down side was that he couldn’t make my little 3000 unit order for another 6-8 weeks, he was simply too busy and to be fair to him he was not joking.
This was the final straw, I had been eating food from the middle of nowhere for too long and all for nothing. I have to mention that as its winter here it is Dog Season with most local restaurants in suburban areas serving “Hoi-sin Hound” as its believed it keeps you warm!
I decided that if I was to really resolve this problem and minimise the chances of me eating a dog I had to buy my own factory.
This presented me with two small problems. Firstly I don’t really know anything about running a clothing factory and secondly I cannot say “How much is this factory please” in Chinese. Both of these problems I felt I could resolve with the help of some staff so that was it, my mind was made up.
In my defense I do feel this is a reasonably calculated move. It won’t really increase my profit too much but this is not why I want to do this. I need to find a solution to the issues mentioned above thus allowing me to offer my customers a quicker turnaround, more realistic pricing and ultimately a better service.
As I have built up some good relationships with other factory owners I decided this was the most realistic place for me to start this journey. I was not greeted with the warmest of welcomes with this idea and in reality I think they are certain I am insane. I get that though. If a guy who didn’t speak a word of English and didn’t know how to build bikes came to England and wanted to buy my bike company 8 years ago I would have thought he was insane too. So…… it soon became known that an insane English boy wanted to buy a factory in China and the offers soon came flooding in.
I was aware that my greatest issue here is going to be getting ripped off because I’m a foreigner. I am used to it now and I get it tried on me on a daily basis. Its all part of the routine of doing business in China and now by default I don’t trust anyone or anything. I know for a fact when I get back to England I will be opening my Starbucks to check there is really coffee inside.
I have a few times been mistaken as someone from North China as apparently the Muslims from this area have a tan, dark eyes and a shaved head. So, I decided to roll with the punches, shave my head and pretend I was from North China. Yes I am aware I am sounding more insane as this story progresses.
I spent a lot of time looking in some remote locations for the perfect set up. I was looking for somewhere that was struggling for new orders (so they would be looking to sell), not too big, reasonably clean with safe electrics and close to a community of quality workers. It became apparent that a lot of factories are struggling for orders and it was quite sad to see. Most memorable of which is this factory shown below which was manufacturing sportswear clothing for one large sportswear customer and no one else.
This is a brand that you will all know but it seems to have disappeared off the map now and thus so will this factory. They were paying the bills by knocking out the odd over order from other factories near by and it really was a skeleton operation with the staff sleeping on beds next to the machines they were working on and the owner living in his office.
It was for sale for a reasonable price but the place was in terrible state and would require rewiring and gutting – a project I didn’t want to take on for my first factory.
After trawling through countless suburban areas I came across what I felt was an amazing deal a few days later and decided to go for it. The price was pretty high but the machinery was all under 2 years old. Definitely far too big for my current needs but with it being pretty close to my office I figured I could use the extra space as overspill for my stock from the trading company.
I took a dislike to the current owner as he was pretty vile to the staff that were still there. It became apparent that he was blaming the failure of his business on his staff and equally unfathomable mother. Still the factory was great and it was obvious he had been making good money at one point as it had clearly had money spent on it.
At the last moment the owner decided he wanted me to give him a substantial cash kicker to close the deal, in my mind absolutely out of the question and I was pretty angry that he tried to sneak it in. I decided to walk away as I had now lost the little amount of trust I had with him.
So around 30 factories later, two long weeks in and a lot of miles added to my Chinese Jeep I was no further forward and beginning to think maybe I would not be able to get this done.
Enter Ken and Coco. I have been buying garments from these two for about 6 months and they are perhaps 2 of the nicest, straightest people I have met in China. Hard working and both at 28 years old they have gone from factory floor workers from a village in north China to owners of a factory here in Guangzhou along with 2 clothing shops selling products both retail and wholesale.
I was in Kens office the day after the deal I mentioned above and in passing my assistant brought it up. He was aware of me trying to buy a factory and had given me some advice along the way such as location and what machinery to look out for. Ken was blown by the price and said that I was still being taken advantage of due to being a foreigner. Granted my hair had started to grow back at this stage.
Ken mentioned a factory close to his that he knew was for sale and felt it would be a good place for me to take a look at. Later that day we headed over.
This factory was owned and lived in by a nice couple who once had a pretty good business making coats. Rises in wages and material costs have squeezed the margins so much for them that they could no longer compete with the larger factories in the area. They had been here for 7 years and at its peak the factory employed around 30 staff over its 2 floors. They have not produced any garments for over 4 months and have decided to move back to their home town some 8 hours away to open another business.
I really liked this place from the off for a few reasons. Firstly it is right next to Ken and Coco’s factory which is an area I already know and am aware that a lot of very skilled workers live within this community. Secondly the owner installed a new air conditioning system here about a year ago as a way of ensuring he would get the best possible workers as naturally good working conditions mean you will attract the better skilled workers. And lastly the machines he has are all less than 2 years old.
I felt like this was a good starting point for my venture into owning and operating a factory here and decided to do a deal on the spot. A decision I was not expecting to make when I got out of bed that morning but one I was very happy with when I went to bed that night. One contract, some green tea and a painful exchange of money later I was in possession of around 986 keys and my own factory.
The next morning it was time to assess what needed to happen next and how I was going to do it. The factory already had the majority of machines I needed. Namely 14 flat bed machines, 6 edge seam machines, a crazy pressure steam iron machine which I swear looks like its capable of time travel, a large 6m cutting bed with sheet and pattern cutting machines and several other assembly machines. All in all I have a good range of machines meaning I can produce most garments at a rate of around 500 units per day. Pretty intense.
As I am planning to produce some rather specialist garments I needed to buy a few other specialist machines especially some machines that the locals here call the “special machine”. This special machine is pretty important for me as quite a few garments that i sell use the very specific 3 and 4 cross stitch seam that his machine can make.
I decided to buy the best possible machines for this as the quality of this stitch is important to me and I know that if the staff complain about how hard it is to get this stitch to look perfect then they can not blame the machine, as my grandad used to say – a good workman never blames his tools. Well in china they seem to like to blame their tools so a least I can minimise the things to complain about. To save some money I ended up importing these machines from Taiwan and I was like a kid at Christmas when we started getting them set up ready for production.
During this time i was also looking for staff for the factory with the help of two of my office staff from my trading company. This was a pretty long and difficult process as I was being very picky about the level of staff I wanted to hire. We posted many adverts and chased up many leads to find the type of staff I was looking for. It was interesting to see the response from locals as we put up adverts, they were visibly baffled by it all.
Another thing that was interesting was adverts from local prisons where the inmates are also available to sew garments while serving time. Apparently this is quite popular with factories as wage costs rise here.
When hiring staff you are also responsible for living accommodation and food. I had a bit of a problem with this. One factory I visited was just preparing supper for the workers when I arrived. Out of interest I asked what they ate. Being mostly from one rural northern province I was told that they eat field mice as this is what they would eat back home. Problem here being that the field mice you get in down town Guangzhou are rats.
I was pretty mortified at the thought of being responsible for my staff eating something like this and decided that if they want to eat this type of thing then fine but I don’t want anything to do with it. I decided it best to pay them directly to find their own dining arrangements.
In an effort to leverage the best staff possible from other factories I also decided to offer a 25% wage increase on what other factories were offering along with giving a bonus structure and living expenses contribution.
This seemed to have the desired effect and soon we got some great staff pop in and show us what they could do. In an interview method I’m sure most of them thought was ludicrous i asked each of them to show me 5 examples of work they did as I sat and watched. Some actually refused to do so, perhaps they found it insulting of me to ask them to do this but I didn’t mean anything by it, I just needed to know they could do what I needed and this seemed the most logical way to me.
After about 10 days and a few hundred meters of fabric I had the basis of my factory workforce sorted. No, none of them speak any English.
It was obvious I would need a very good member of staff as a go between for the factory boss Mr Xi and me. I had now been working at the factory from 8am till 11pm pretty much 7 days a week as this is the standard opening hours of a factory here. This meant I was more than aware of the long hours and stress that would be associated with this job role which meant only one thing. This staff member would be expensive.
After a long and fruitless effort to find this member of staff I looked back at the workforce already at my disposal and approached one of my office girls who I already know is an extremely hard worker and I have a good degree of trust in her. At 28 this job role is a good opportunity for Jessie to further enhance her experience and perhaps move towards a stable career in mid management keeping an eye on these 14 new workers.
I felt a great deal of weight lifted from my shoulders when she agreed to take the job as I know with her relaying information to and from the factory the operation should be as smooth as possible. Of course this resulted in a considerable salary increase for her but I was more than happy to do so, I feel it is entirely worth paying for something that is worth paying for and nothing is worth paying for more than a member of staff who will minimise problems and make the running of this factory as efficient as I would like.
My idea now is to slowly move production of garments and accessories I am already manufacturing at third party factories to my own factory over the coming months. By moving them over one production run at a time I can iron out any problems – as let’s face it there will some, while carefully monitoring production times and costings of each product.
In addition to my existing wholesale orders I also plan to then produce the top selling garments on eBay in house here at very high quality and what I hope to be very competitive prices. In theory this should work pretty well as now I’m not just at the source I am the source.
So three weeks after taking on the factory all machines are in place, staff are hired and material is in stock. Now to produce my first order.