Wondering how to stay ahead in today’s factory direct to consumer business trend? We bring with us an electronics design engineer and China business expert on the show – Christopher Oliva. He has been in Shenzhen for a decade and has plenty of knowledge from electronics engineering (he has a degree from France on it) as well as China manufacturing.
We dive deep on this one, Christopher shared a wealth of knowledge and I am certain this will be a top podcast, so please have notebooks out as there is so much value in this one. We had to make it 2 parts – so this is the first of a two part series, enjoy!
Topics Covered in this Episode
Can you introduce you , your company and your activities ?
How do you see the supply chain has been changing ?
supply chain has been compressed: before long time ago -> factory, trading/agent, importer, distributor, retailer; consumer before -> factory, trading/agent, importer, retailer, consumer; now -> factory, importer, retailer, consumer; tomorrow -> factory, consumer
How importers and buyer can still remain competitive and survive whereas factories go direct to consumer
innovate and product differentiation, Ip protection
What do you think about private labelling that more and more importers do to sell on Amazon?
1) Establishing a brand is good to value your product but there is a difference between building a brand and an identity vs putting a logo on a product. 2) I think simple private labelling is a short term strategy of surviving on very thin margins because having the same product than a factory who can afford to make only 10% margin on product BOM to live make the private labeller to be pressurized by cost. To remain competitive they have to push cost down which usually lead the manufacturer to push product quality down. 3) Today, I think we can see the most successful companies run on decent margin and have strong brand recognition. Apple make 50% margin on each iphone. Xiaomi only 10%….I don’t hear so much about Xiaomi anymore…. How to be able to keep product price high is only if your product is really desirable and differentiated from the other players. 4) I believe more in differentiation than on just taking a on the shelf product and putting a logo on it. But I admit that it is the most cost effective and the easiest way to do because it doesn’t require a lot of R&D fees and is quite straight forward, it just require cash flow…
What is the common mistake of start up doing when they arrive in china with new product to develop and manufacture
1) They believe a manufacturer is capable to do product development => actually manufacturer are not capable to do this, and don’t want to do this -> what they want is to manufacturer in high quantity with decent margin, not waste their time in product development. They listen a manufacturer who say they can do something without really evaluating their capability of doing it. 2) Quite often they don’t assess properly the engineering skills of their partners. They don’t assess them well because they don’t have themselves the skills, so obviously they have limited objectivity to evaluate those skills. Still a few simple technical questions usually allow to evaluate engineering capability. 3) manufacturer quite often will subcontract the dev to some product development company behind them, start up usually doesn’t know it. 3.a) design is going everywhere in an uncontrolled way => given to competitor sometimes. 3.b) lack of control on the supply chain , as local chinese engineering company have different business model => they don’t sell design services but product, so they supply pcbs for example but don’t tell where the components are coming from. 3.c) manufacturer will get tired of endless change and tweaking. 4) Startup believe that because a factory have many workers, their product development and manufacturing will be fast and reliable. Actually there are no relationship between both. What count for product development to be fast and reliable are the skills and experience of engineers and designers. 5) They develop product with an unoptimized bill of material (western components), so they are not competitive enough. 6) They give their full idea to chinese manufacturer who then become their competitor sometimes
How do you evaluate properly product development capability of a supplier
1) First I verify if they own the sources files of the product they manufacture. This include PCB design files, BOM, CAD files. If they tell you, “the files are with our engineers and he is not here so we can not show you », it already smell bad. 2) Verify they can make modification quickly on those files. Sometimes they have the files for production but they don’t have the skills to modify them. It means they didn’t design and engineer the product themselves and have limited control on it. 3) I usually challenge them on very deep technical question. I usually never talk with the sales, I would talk with the so called engineer. 4) I know it can be difficult for a start up who have not too much experience on this because if you don’t know yourself how to design a PCB or a mechanical part, then how can you control what the so called engineer tell you is true or not….
How do you work usually with startup who want to develop new products in China
1) I usually first look the project with an investor eyes because after all we have limited time and resources and product development phase is quite complicated, have some risks of failure. Failure can come from many parameters: design, technology availability, price point, market size, competition, lack of marketing. So when someone submit to me a project for product development, I assess the potential success of the project the same way a funding investor would do. 2) PHASE 0: Then I usually check if they have done a feasibility study (technical and economic). If they didn’t and if the product has risk of failure, then I would propose them to make one with us. It usually allow to quickly spot bottlenecks, risks and limitation and we know where we are going in terms of budget. 3) PHASE 1: Product Development phase: Product development phase start with product design, then engineering, then prototyping, then pre certification . This is the most complex part and this is where you really need to have some skills and experienced people: Engineers of course who really know their topic and are good at it, but also a proper PM or CTO who has experience on project management, has engineering skills , but who also understand designers, manufacturer constraints and legal constraints. This phase is the most complicated because it has many parameters to manage simultaneously. If the whole team is not well coordinated or if someone miss the skills to perform well his tasks then the whole product development phase success is at risk. 4) PHASE 2: Pre mass production phase: Typically, here we prepare the procurement phase and the manufacturing phase: This can be tooling establishment, manufacturing procedure via a quality manual, quality assurance. This help to frame tightly the mass production and manufacturing activity and limit the volatility or variance of product quality. The ideal candidate to manage this is someone who know well and is clear about manufacturing process and tooling manufacturing. 5) PHASE 3: Mass production: Procurement,IQC, Assembly, Final QC, Packaging. For me this is the most easy phase because once a product development is stabilized and a reference sample is established, then mass production is only about duplicating. Duplicating with proper quality and speed outcome rely on organization and process, so if you know them and are clear about it, then your production will go smooth. However, I usually insist that you should not only rely on your manufacturer to make all this framing work. Here the ideal candidate to manage this is someone who have experience in troubleshooting manufacturing and quality issue. Someone who had experience in fixing production and quality issue.
X rules for successful manufacturing in china
- understand process of manufacturing your product
- perform deep due diligence and audit on manufacturer skills and process
- anticipate problem by performing risk analysis and bottlenecks on mass production
- always perform quality control before shipment
- keep hand on supply chain procurement if you can
- divide and conquer if you can
X rules for successful product development in china
- have someone who is really technical to manage the product development, someone who is hands on and passionate about engineering and design
- anticipate manufacturing and certification issue very early in the design
- sources engineering skills (brains), not workers skills (hands)
- be clear about what you want from the beginning to be very directive on the product development
- keep hand on product development sources files (the 4 keystones)
- register your IP if you can, it is not that expensive
People / Companies / Resources Mentioned in this Episode
He Has 2 companies:
√ PAG-electronics.com (agency)
√ Asia Quality Control (board member)
√ Christopher Oliva
√ GFA Apprentice Program
√ GFA Local chapters – thanks for work on this Andrew
√ GFA’s new e-commerce series podcast (same GFA channel!)
Today’s podcast is brought to you by Aurelia Pay. I use them for sending money to my Chinese supplier from Hong Kong – it is a cross border payment solution between China, Hong Kong and South East Asia. So when I need to make a payment to a Chinese supplier, I just hop in to place a remittance, pay to their HK bank account, and Aurelia Pay settle RMB within the same business day! Check them out: Aurelia Pay
Episode Length 44:17
Next week – check out part 2 of this series – it is such an amazing show we had to make it a 2 part I didn’t’ want to stop him during the interview! Next week we will dive into overseeing your product manufacturing – specifically for a newly designed and engineered electronic product.
This series is pure gold and I can’t wait to see how people use it in their product based businesses!
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“Once the startup usually makes a mistakes, is they go to visit the manufacturee and then see a lot of worker, maybe some big horizon and this company, because they are big, probably they are capable, but the capability is not measured in terms of hands, it measures in terms of skills and I would say experience.”
Welcome to the Global From Asia podcast where the daunting process of running an international business is broken down into straight up actionable advice and now your host, Michael Michelini.
Mike: Alright! Thank you everybody for tuning into another episode of the globalfromasia.com/episode186 and we’re getting up the numbers, as we get up the numbers and before we kick in the show, Andrew is heading back to Nanjing actually, where are you going now?
Andrew: I’m going back to Nanjing on Monday but then I’ll be travelling around go some movie and the rest of Thailand throughout August. My mom is actually coming out from America to visit the other side of the world, it should be a fun month.
Mike: She smuggled or well brought some gear for our show with her. I bought up in Amazon and ship to your mom’s house in Florida. Now, really excited to get that stuff we’re gonna get another microphone, so we’ll gonna have 3 different mics. Also, I get a new LAN’s for the videos. So exciting. I’m excited about that. I wish I could meet her, she’s pretty awesome and.
Andrew: She’s cool. She’ll be around. She’s doing some cross border ecommerce here and bringing the products back to China.
Mike: Yeah. So that’s all we’re getting our guests, experienced some crossing borders here, awesome dude. It’s been great working with you and we’re definitely keep working together, we’re discussing earlier, while you’re up in Nanjing, you can do some meet ups, we gonna meet up in Nanjing, right? Mid August, August 24th.
Andrew: Yes, that’s gotta be August 24th, there’s going to be 1 in Hanjou which is near Nanjing. I know a lot of people with that listeners they probably aren’t too familiar with that area because the city aren’t that big, basically around Shanghai, and really populated, there’s like 8 million people probably both in Hanjou where Alibaba started and Nanjing has a lot of corners, too. We want to try and start some Global From Asia meetups and events up there.
Mike: Definitely! Pretty awesome. we got one in Shanghai for September and already get speakers and sponsors, reaching out, so check out at the thing, Oliver events at experts.GlobalFromAsia.com/events/calendar, kinda long one or just a shownotes will link everything up but it’s going to be one awesome. We just have one in Saigon last week, not of us were there, Carol was the speaker, our guest few weeks ago and births some chapter, organizer, he was pretty excited we’ll gonna have a speaker for the next month in Saigon, things are really moving up. And I have to Andrew create job and even just the last couple of months only working with us. It’s definitely started to come together and thanks for that.
Andrew: Yeah. Thank you. It’s been a good time. It’s been opportunity and wanna keep going forward here, we’ve done a great job in Vietnam, check out Hong Kong, I miss the wotn here in Shenzhen, let’s see what else we can do in the future.
Mike: Rock on! And the e-commerce series has just started. First episode just this past Friday. So just so you guys know, we didn’t make a new feed, we kept the same iTune feeds, hopefully you guys like both of this but the idea is Tuesday 10 am, would be the regular interview series with different guests, more educational, and Fridays I’m thinking like 2 pm, kinda like 2 pm China time, end of the week, will put a recap of what happened or what’s happening in e-commerce series, these past we’ve been answering questions, it’s been overwhelming, even last night, answering questions from people, applications coming in, really really exciting time for that, a lots of this year, Global From Asia, thanks everybody for listening, it’s really about you guys listening. We also have sponsor AureliaPay, so they are cross border payment company, they help, I use them myself, and I’ve been taking on sponsor honestly but I really like the founding team, their startup, they’re helping people get more into China get money into South East Asia, kinda transfer wire in Asia. He was also on the show, Simon Lim, was given some great value and supporting our events from Shenzhen and Hong Kong. So really guys checkout AureliaPay it’s longer name, and will link it on the show notes, A U R E L I A P A Y aureliapay.com and basically makes it easy for you send money into different kinda like Asian countries for easily the same day too. I used it myself to get people’s payment right away. For this week’s show, we have Christopher Oliva, he is an expert, this guy were trying to get him as speaker on cross border summit. He will probably wanting this coming April, he’s an electrical engineer from France, he’s been out here in Shenzhen for longer than I have and he’s been on the ground doing custom electronics design in manufacturing, as well as quality control and he uses dropping crazy value I think there should be a pay one, he was giving us insights, electronics, manufacturing and i had to break into 2 parts, it was so long, and also amazing, I didn’t want to stop them, we have, this one’s more about, we call it differentiating yourself as a not factory, so he and I and a lot of people like factory to see, kinda taking over the world, people even Amazon want to kinda caught everybody else out. But there’s still a lot of opportunity. What he did he wanna talk about how everybody can still make money and manufacturing, how to compete even though the world might be looking to go FTC, definitely take out your notebook, this thing is jampack, he help me with show notes, we have a massive massive amount of show notes on this series, check out globalfromasia.com/episode186 and without further adieu let’s go to Christopher.
Mike: Okay. Thank you everybody for tuning Global From Asia podcast. We have with us Christopher Oliva, thank you for being here Christopher.
Chris: Same to you Mike, nice to meet you.
Mik : That’s great.
Chris: Hello to all your readers, listeners sorry.
Mike: Sure. Thanks for coming on. We’ve done some work preparing for this today. I’m excited to talk about product development and surviving as you know, I think the Chinese brands and manufactures continue to go direct so i’m excited for this. I’m excited for today’s show. Do you mind first introducing a little more about yourself and what year, you and your company doing here?
Chris: Sure. So typically, I’m a French Engineer. I’ve been in China for 8 years now. I’ve been living in Shanghai also mostly in Shenzhen. I’m a – I have electronic engineering background, business administration background, I arrived in China as an intern long time ago in 2007. I never work actually in France so or anywhere else, and I quickly start my career in China by doing some quality control, inspection, factory audit, laboratory testing, and it moved to sourcing, procurement, manufacturing then to product development with manufacturer, and in the end product development in-house and manufacturing in-house. So typically I’m working for 2 companies one is called Crescent Asia. One of the PagElectronics and we do some product development mostly in electronic products. We accompany some start up to do some product development and manufacturing in China and I’m actually a board member of the company name Asia Quality Control where we do some quality inspection, factory audit, lab test to management all over Asia.
Mike: Very cool. So yeah. You definitely have a lot of experience. 8 years here and whole career in China, right? You came here directly after university then.
Chris: Yeah. Actually, I came here even before the university. The first time I came in China was an intern and I came back after my graduation directly working in China. I have career spend all my career in China from the beginning to now. Mostly, I have the product development manufacturing, quality experience, quality control.
Mike: Great, great. So yeah. We’ve been here of almost the same time. We’ve definitely seen a lot of changes happening with the supply chain. I think just like our team of the show, I guess the world is flat you know, the information with technology e-commerce and different technologies have really made the supply chain change a lot, can you give us kinda like, high level idea where’s going?
Chris: Since I’ve been here, I have been seen Shenzhen changing a lot. The internet is really change the deal. I mean long time ago, you have the typical modern where you have the factories and producing the goods and then you are trading nation which are supervising the factory and then you are importer, in this nation country, it’s important was in charge of importing the goods and resell them to distributor and distributor to retailer, and retailer to consumer, today with internet everything has changed it’s more about factory, importer, retailer, consumer or more and more probably tomorrow is become factory to consumer, cutting the importer and probably the retailer, this is what I’ve seen the supply chain have been compressed very highly.
Mike: Definitely agree! We have this keywords. B2B, B2C, there’s F2C which had also talks on the show on other episode factory to consumer or M2C some people used but more commonly F2C which is definitely happening very fast. Since we’ve all been here. So of course you know, I hate to be the scary guy or bearer of bad news to listeners but what we’ll talk about today in more detail some high level ideas how this importers and buyers stay competitive and survive in this changes.
Chris: Yeah. Typically, this is one big challenge for losing importer we need to probably change a bit the ways we are doing business. And typically in the past used to buy some product made by factory and usually sticks our logo and market. But now the factory are also doing this put their own logo sometimes create certain brand, not the Chinese brand, but the Chinese name, they used western name and start to penetrate also the western market, right. So typically what is happening is you see the importer is sometimes in competition with own supplier and since the supplier is making margin between bigger materials and the same price, the importer are actually know, no space no margin to be in between this factory and the consumer and also how can we survive, it’s very difficult they have the same product the competitor the factory because they buy from them. So how can they differentiate why having the higher price the consumer will not accept this, so for me I mean, when I started this business, I used to have some importer to do this, to do some private, but I quickly found out that the customer are actually under pressure of price because they were telling me, hey I have a lot of competitors and so, when I check who are the competitors, I found out it was the manufacturer, so how they couldn’t compete them because the factory was i mean was their competitor to the market putting pressure on the price.
Chris: So actually, I decide to change my business model to come back on product development because product development are load importer or start up or whatever it is which is on the target market to have a product which is different than the manufacturer and so typically I found out that if importer or someone who will import goods from China or so on. I want to survive this is on the margin, right? If you have no margin, whatever the volume you have you know you are not, you are going to die, so you need to have some margin to have some margin, you need to have different products which is better on a competition. So to be better, what you have to do is you have create innovation and product differentiation so this doesn’t go doing some picking on the shelf product its go on by developing your product which are better this is the reason i have decided to turn my business into consideration, importer to develop new product which are not the same what you can find on the marker.
Chris: Already or at least a bit different. So I think if tomorrow the importer want to survive, they will need to do some innovation product differentiation and to protect the IP also.
Mike: Yeah. IP is huge one that we always hear about and talk on the show. It’s great and I definitely agree with your point here so you kinda want to the next point here, but maybe, some of this mistakes maybe in choosing the supplier or just in the new product development process.
Chris: Okay. You are talking about, let’s say the common mistake.
Chris: Start up and the importer are doing? Yeah. Typically, I have seen quite, I mean a lot of starter because most of the time people would come to me to ask sometimes it is also some importer, mostly startup. And sometimes, I mean most of the time they don’t know very well how the business model and the supply chain is structure in China. So one of the biggest common mistake I see from startup is to believe that manufacture is necessary capable to do product development because they manufacture product but actually in China, the manufacturer sometime are not capable or don’t want to do it. Because this is not the activity. The activity is to do some mass production of a product at the very low RMB cost and they don’t really like to do the product development. Another startup I know quite a lot of manufacture don’t do the engineering by themselves, they don’t do product development by themselves, they contract this to some product development company. And then the manufacturer the product development company or the engineering company has design for them. So if first starter go to manufacturer, actually they don’t know because quite often the manufacturer will not get know the starter, they don’t do the engineering by themselves, there’s a flow of IP and ID doing somewhere that you cannot control.
Mike: I think we’ve both seen that, right? I’ve seen that myself, it’s crazy.
Chris: I have suffer this at the beginning when I started the TBT by 7 or 8 years ago. I had these, I discover this myself on a know that I had an order running on and we have some problem with quality, and when I push the factory to tell me hey where the product is coming from. I actually found out that they didn’t know, how come they don’t know because they have an engineer in the factory, but actually digging information I found out that the engineer actually was just a technician, he was not an engineer. And I found out they are worker of the company behind which they never told me. So this was one of the what made me to turn to do the product development myself was to find it factory had no control on the design, and the typically what they’re doing the electronic extremely common, factory which is an assembler would purchase for example the PCV directly from the engineering company, they don’t buy the fibre and the source and the IP and then produce by themselves, no. they buy the PCV directly to the engineering company. Actually when they buy the PCV they don’t know the component on it. They dont have the control of the supply of this component, they don’t know if this component is recycled. They don’t know anything. This is one of the problem and actually quite a lot of startups believe that manufacture produce a product but actually quite often they don’t do it by themselves, when problem come out then it becomes very difficult to solve problem because you are a blind man, you don’t know who is the people doing the engineering because the manufacturer will not like to tell you who is this.
Mike: It’s true.
Chris: So this is one of the problem I would say, the biggest I sit all the time because I recover quite a lot of project for startup it turns out the manufacture cannot finish it, when I dig all the time I found out the manufacture doesn’t do the engineering by themselves.
Mike: Yeah. That’s right. Ii like your point in and outline here. I think at least I used to think, product development, I don’t know where I learned that or got that idea, I assumed they make a lot of products, so it was experienced making process but actually they’re not really, there’s different ways making up. There is mass production, there’s design, right?
Chris: Yeah. Definitely.
Mike: People don’t know. I think a lot of listeners don’t really understand the difference of manufacturing and design, they are totally different things. That is, I think like Apple still design a lot of products in-house, and they have Foxconn manufacturing but Foxconn is taking the design and making it from the design not making the design themselves.
Chris: Yeah. Correct.
Mike: This is a big issues a lot startups have. It’s I think they justs tell the factory this is what they want. And the factory can make it.
Chris: Because as I was saying you know, to do some design and engineering and so you need to have some really high technical skills, you know I usually image this saying for engineering and product development you need to have some brain, you need to have some skills, you need to have some experience, good understanding even the manufacturing to have a really a brain right? For the manufacturing you need to have some hand, what you need is to scale up and duplicating a product which is existing need to duplicate the mass production you need some hand, what the startup usually make a mistake is to visit a manufacturer and they see a lot of worker exactly oh this is company probably capable. But the capability is not measured in terms hands, it’s measured in terms of skills and I would say experience, so this is actually one of the fake idea that the factory is being show they might be capable.
Mike: I like that too. Just because doesn’t mean they have the right. I think everywhere a lot of times. I don’t know if you get this too, all science spend too much time in US professional either but in China it’s how big is your company measure by the amount of workers you have, right? Why to see amount of workers i have equal the size of my company, you know.
Chris: Yeah. This is the point. You’re right, the factory in France is quite small. If you go to Taiwan, you’ll find some Taiwanese factory, they have the same output in terms for example at quantity, Chinese company they just have high number of worker, but that’s because they are more efficient or something like this, size of the company can often impress, I would agree with you actually. You know what we say in engineering company, we share that 100 made of engineer will never equal 1 very good engineer.
Mike: I like it. This is so nice. I guess usually admit I have my learning. I was always impressed when I came wow look at these people in China, there’s people the most populated in the world kinda impress this offices have hundreds workers, were talking about Amazon, too. You know Amazon sellers, you see 1 people 1 online worker and then in Chinese Amazon like hundreds of workers like it’s crazy but the output, the sales might be better this really skilled sellers, they can sell as much as maybe a team of others can do. So it’s I think yeah hope people don’t measure the success, the company among their staff.
Chris: Yeah. It’s efficiency actually company was only maybe 50 worker but great output many worker but very poor sales something like this. Yeah. You’re right.
Mike: So, let’s say you want a value with a company maybe like expressing the point how do you supply I mean? If thousand workers, hundred workers or ten workers I mean that’s not a good parameter, what should we look at?
Chris: If you want to choose, for example a manufacturer for product development, the first thing I would look at is actually if they really have an engineering inside on company. Quite often they going to tell you hey we have engineer, what does engineer are capable to do you don’t really know, are they able to find PCV, yes ok, can you modify it 3D catfile yes ok, but can you modify the part very quickly, if I need it or not. So quite often I would verify if there are engineering department access to the source file of the project for electronic product to be, but also the PCV design file, the schematic of the file and the firmware for example source code there some micro chip on the device and mostly and the 3D catfile of course. All of these are good start but then i would verify as I say if they can do some modification quickly if i need because having file doesn’t mean they are accredited that they have it. If I want to modify it because if I go to manufacturing before developing a product there will be some modification to do in existing product but how long it’s going to take and i will be, will i be able to discuss directly with the engineering in front of time to guide him, to do the modification quickly or not this is something I would verify in terms of product development capability, so i would modify a bit of some file in front of me just to verify if they can do it and know how to do it. Each buttons change something is, not a very good sign I would say, this is something you have to care about and I would usually say I’m a bit of technical question the typical we have a problem in China if you go to manufacturer, you are going to face the typical sales girl.
Mike: The language.
Chris: The sales girl
Mike: The sales people and they’re gonna say they don’t speak English.
Chris: She speaks English. She doesn’t know anything about the technical.
Mike: I totally, no idea they’re like, usually fresh graduates, right in college and they are Skype all they in Alibaba. So I know you’re gonna say talk to engineer. I know a lot of listeners they are frustrated. A lot of them go crazy like I used to go crazy for us here and talk in skype in the middle of the night, you know you talk to English speaking skills rep. Usually it’s a female, it doesn’t matter, but usually talking to sales rep who doesn’t have experience with a product. So how do you talk to engineer, you tell them I need, they’re gonna say the engineer doesn’t speak English, right?
Chris: Yeah. This is one of the big problem in China you are one side to people, you speak English and doesn’t know anything technical, and then on another side someone, people but doesn’t speak English.
Chris: So here you need to be a bit smart. I mean, either you have a chance to be able to speak Chinese and you can discuss a bit with them, I sometimes do it or you need to find a way to have someone maybe in your team who can be able to speak Chinese but with background a bit in engineering to ask them the right question because of course when you’re going to ask the sales to translate is going to say, what does this mean? I don’t know, PCV. Okay, I know what is PCV but what is the capacitor ah I don’t know, you know, it’s a bit complicated, you need to use translation actually or google translate to discuss with the engineer. Yeah this is one point you can do and of course to discuss with engineer, you need to have also a minimum skills for yourself because if you don’t know which question to ask and how to evaluate the answer of the engineer is going to send you back is complicated. You cannot really evaluate, you can ask question but how do you evaluate the answer.
Mike: I agree, yeah this kinda goes to the next point which is again really a good one for the listener is the phases or the process like, you know if I think if some points if you’re doing a really unique product not just a private label. Buy not something from the shelf, I think they really gonna have to come to China at least some part of this, maybe we can include that but you have a pretty good process here of multiple phases if you don’t know mind sharing with the listeners some of the process.
Chris: Yeah, no problem when I was just starting, you know it’s always a bit difficult.
Mike: Like the kick, I don’t know, the kickstarter, a lot of this guys and they’re in trouble like before they even start because they sold it for less than, they have no, I don’t know they have different process but there’s, I think you talk to them more than I do.
Chris: Those kind of guys sometimes you need to start the fire of something and it’s just and it’s terrible because the starter the people can do anything and they can promise everything without adding the if it doable or not, sometimes I look at it with starter and I see some project knowing myself the technical, I found that I think this is insane, this product cannot be made because for example they have the same product and I know myself for example, the smallest component cannot even fit the size of what’s the purpose.
Mike: We should be laughing at this time.
Chris: I’m a bit around me I check a bit actually, bankrupt after doing kickstarter and observe something they cannot make and everybody shouting on kickstarter, this is terrible situation so I don’t recommend to say something if you are not sure or what you’re doing my framework is a big different. Of course, I’m not going to say yes on everything. I usually assess a bit the project team and starter investor. I don’t consider myself as a supplier or service contractor because you know engineering is product development, complete activity, and time consuming require a lot of skills, people in term of activities you need to when you put someone on the project, it’s going to be actually intensive. So I reject quite a lot of request because they have some stuff I don’t find relevant into approach. It can be some technical stuff which are not relevant can be the team which is not enough, people don’t have experience on this and that, can be lack of potential marketing on the discretion channel, can be some market size issues price point issues, this is my first review I see myself when somebody sent me the request for starter project, but I would say the 3 phase. I mean, the fourth phase which come after typically you have the phase 0 usually say I would say feasibility study which need to be done before starting the product. If you want to do something new and bit innovative, before starting to invest in the engineering design and so on, tooling and certification, you will want to make sure that the product can be done and you will want to assess the risk of starting the product development process. So quite often when the project a bit dangerous i would say there are some risk i can smell, i would propose the starter to do the technical feasibility study and cost analysis and this allow us to first taste where are we going to go what is going to be the price front after the mass production so they can they know they will be competitive on the market or not.
Mike: Got it.
Chris: What are the limitation in terms of component size, what are the limitation in terms of physical? I learn physics aspect sometimes, sometimes you have some radiofrequency, customer ask you some crazy things, in terms of range of distance. So normally, I propose this component and cost analysis and it gives them clear what to expect in terms of product development and manufacturing, tooling and certification and so on and gives them real view of where are the limitation for to know, what where when need to compromise on the product. This is the first phase which is the phase 0. So after you have the phase 1 and this one is the most complicated as i say, conventional skills, you need to design the product, you need to have engineering, quite often you have to make mechanical engineering for the mechanical part, engineer for PCV design. Then you need firmware engineer to do embed software on the electronics, and you need maybe a software engineer.
Mike: There’s so many, so much.
Chris: Yeah. Exactly. Then you need to walk together because the mechanical engineer will design the case based on the PCV, sometimes if you are lucky, you have PCV designer, you need to walk with them, mechanical engineer to make the PCV inside the case the so this is part is a bit quite complex and it’s never perfect the first time, so you’re not going to do engineering you’re not going to do a prototype to validate your engineering.
Mike: Got it.
Chris: The first prototype is not going to be perfect and so you need so you really need to do some feedback which is not perfect on the prototype and move forward this a bit small iteration. So this phase is a bit long not very I mean I wouldn’t say not straightforward sometimes they have some surprise, sometimes you mave have discover some surprise, but the goal of the feasibility study is to anticipate those bad surprise that you can have during the engineering so this is a bit of mass complex it require engineering you have also the project manager which managing all those engineer who should have explained the engineering, and should have experienced on the manufacturing, should have experienced on the sourcing. or solve the certification process because normally when you design a product. I. of course, you have the requirement of the customer which is also a requirement for certification, if you design something and in the end you cannot satisfy you need to comeback at the beginning and restart again you know. so it’s very, you need to know the requirement and same for manufacturing, if you start the design of the plastic part and you cannot remove it from the tooling when it’s molded then you have some problem, this phase of the product development is the most complex, then the phase 2 is typically pre mass production phase and this one is very small phase but this is necessary phase where you are going to do your tooling to be ready for producing your plastic part and metal part. and we normal use part of quality as actions manners management at this time because we don’t feed the manufacture to do by itself, we are going to guide them about how to do these things. i would say this documentation, a product quality manual, which explains all the product should be assembled, how the product should be tested, what are the the requirement for the procurement and so on should be done by the people who have done the engineering or the startup and this is going to mitigate the risk of quality on mass production because you close a framework for the manufacturing to respect if you don’t give them anything they will have to do in their own way. I believe the Murphy’s Law, everything but can happen.
Mike: Yes, negative but smarter.
Chris: So Yeah. You should anticipate on the problems that may happen for mass production and should prepare the necessary documentation yourself and give the documentation to the manufacture. I think after this data actually when they walk with Foxconn, prepare the documentation and then give this to Foxconn to execute. But they don’t get Foxconn to do it. this hard should be done. And finally the last is the phase 3 the mass production, so this is typically my procurement phase on manufacture, and you’re going to do procurement, initial quality control, assembly, final quality control, and packaging. For me this is the most easy phase because once duplicating a product as i said before is just having some hand you need to have people, you need to have an organization you need to have some process, this is well control, normally they should have come many problem on the production. So this is for me the easy part. I mean to do the mass production because it just about controlling the procurement, controlling the supply chain, very important component, and you know in China the manufacture are quite specialize on swapping, some materials, some components because quite often, it seems they are on big quantity let’s say 5,000 mass production or 10,000 pieces can save maybe high for dollar on the plastic material, it’s already making maybe 500 or 5,000 dollar I know profit, when maybe 500. But still, as long as you control the procurement of raw material, the procurement of the component, as long as you control the manufacturing process, and the QC process normally this phase is quite ok, I would say, but if you have any mistake then it’s going to scale the mistake on many many parts, so. it actually leverage.
Mike: Okay, everybody, Thank you, Christopher. That was amazing and we will have to get back next week, next Tuesday. So as I said in the intro, we’re gonna have another e-commerce series episode 2 this coming Friday where we would be talking about Amazon sellers account incorporation for this ecommerce to incorporate we have an expert coming on to share about that. Then next Tuesday would be second part of this series on interview series with Christopher where we would dive deeper into overseeing your custom manufacturing project and managing your factory worker, which is more amazing stuff, so don’t miss out next week. And again the show notes here at globalfromasia.com/episode186 and another thank you to our media sponsor and event sponsor Aureliapay for cross border payment if I use it myself. So I’m always comfortable recommending them so basic use case if your Hong Kong company and your bank account in Asian country they have different currencies you’ll get money into Vietnam, Thailand, Philippines, Mainland China or other ways Singapore you could easily get your money sent from one another and they do it the same day and it’s all online. So basically just say I wanna send say how much you wanna say how much other person to received, you are to Aureliapay’s bank account and that currency and they take care of it on local country very convenient very easy to use, and very nice founder, founding team and supporting the show. So definitely if you’re looking into cross border in Asia check on Aureliapay. They’ll be on the shownotes, see you guys next week, thanks for listening, thanks for supporting. and thanks for seeing us. I hope you get guys involved. So overwhelmed in applications. So please, if you haven’t applied in e-commerce series, get involved with the FBA business please apply August 8 next Tuesday so when this next show airs will be closing the applications so you still have some time for listening when the show is publish, and if you don’t apply or you don’t get selected we will, I still figure out some kinda bonus for everybody who applied, so if you do apply you have some bonus at least from me, you know follow ecommerce series, same show, I don’t want to make another itune feeds, another website. feel like similar and the coolest part Andrew, here is my wife supports this finally, she was thinking you know i think we make a good match, I’m kinda creative crazy person and she’s the more management making sure the short term is working so she felt that was a little bit distracting or not focus, but now she sees so much interest from everywhere in China, chinese people been contacting her, we get a lot people from western world, and will really gonna try do that, we’ll make a team with cross culture cross border team as well as cross border ecommerce so see you on Tuesday for that and next Tuesday for the second part of the series. Thanks everybody and take care.
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