LED Display Quality Inspection Cost in China

Understanding the cost of QC inspections in China

Some importers get to talk about their project for some time, see where we would help them, and finally (almost as an afterthought) ask: “How much does a quality inspection for led display/sigange in China cost?”

When quoted: “299 USD per day of work”, I can nearly hear them thinking “wow these guys are cheap”.

They compare this fee to the costs of professional services in their country, or maybe to the total amount of the order, or to the cost of their best alternative (taking a flight to China). So it sounds really low.

Breaking down how much quality inspections cost in China

1 man-day of work (which is sufficient for  a 20-40 sqm led video wall) costs 299 USD.

Travel expenses might apply, on top of the cost of labor, if the factory is far away from the closest importer. Let’s take 3 typical examples:

  • If the trip is only 60 km, it is included in the price.(in most of the case the price can cover,because our office is in shenzhen)
  • If the trip is 120 km, an extra 50 USD might be charged.( as there growing numbers factories move to nearby cities like Dongguan or Huizhou)

(Exact costs are quoted on a case-by-case basis, depending on transportation options available. Contact us if you’d like to discuss quality inspections now.)

I am always surprised by the expectations of some other importers regarding the cost of led display quality inspections in a Chinese factory. In their minds, even 100 USD would be a rip-off.

They compare it to the salary of a typical English-speaking employee in China (6,000-8000 RMB), they divide it by 30 days, and they think we make an insane margin.

These buyers seem to forget about the main costs of a company that has set up a network in the main regions:

  • Training/supervisory/internal control overheads
  • Travel expenses to factories
  • Client communication
  • Taxes and social security
  • And more….

The buyers who value better service and reliability

The first category is ready to pay more for better service and higher reliability. They tend to be medium- or large-scale companies, or they have developed their own product and getting all the details rights is what helps them charge a premium. These buyers allow quality assurance firms like ours (Sofeast) to exist.

They want to make sure they are paying fees within the market band (i.e. not twice as much as their competitors). They are looking for convenience, reliability, and speed, more than a ‘great deal’.

The buyers who prefer the lowest possible cost

I learned that the second category of buyers, unless they absolutely have to, will never accept to pay the market price for quality control inspections. They prefer to roll the dice and let the factory ship out. In some cases, if they work with a ‘sourcing agent‘ who spends 20 min looking at a few products and taking a few photos, it is already plenty.

Is it rational? Not always. Are they worse off? Sometimes. If they buy off-the-shelf products that are purely decorative (or to be given away as part of a marketing campaign), that might make sense!

Conclusion

What is our conclusion, knowing all this?

Our main target is companies who have recognized the value of a inspection, for those who have been in led display industry for years,those who suffer from endless quality problems. In the QA department, we help them get better organized, specify what their QC checklist is, and take better advantage of QC inspections.

And those buyers who always look for the best deal? We let them choose the cheapest suppliers and run the highest risks. They are not a part of our client base … We are just not a good fit.

    Factory Audits To Qualify Your Chinese LED Display Suppliers

    layered process audit.

    When I talk to someone who is contemplating whether they should work with a particular supplier, I advise them to visit the factory and/or have it audited.

    And this can lead to confusion, as the next question is usually “what type of audit?” Let’s look at your factory audit options…

    Exploring the main factory audits you may utilize

    If one takes a step back, the main options are shown in this graph.

    Factory audit options

    First, can someone actually go to the factory?

    In 2020 and 2021, that’s not always a given.

    If the factory is open but nobody can go there, a review of their key SOPs and of the most meaningful records can be useful. It can confirm the fact that they have a quality system (even if going on-site can provide a much more complete picture).

    In addition, in some countries, such as China, some information can be gathered in the government databases, as a complement to an audit.

    Second, does the supplier accept an audit?

    If you are planning to place an order that is very small for the manufacturer, they are likely to decline.

    One way to meet in a ‘happy middle ground” is to call it a “factory visit”. It can still be done by a professional auditor, who can take advantage of being on-site to ask some questions and gather some evidence, but not in the traditional way — not in a structured approach. He then writes some comments that are useful to the decision-maker.

    And then, the most important question is:

    What do you want to check?

    a) In most cases, the focus is on the quality system. But we distinguish between 3 cases:

    1. Small factories that haven’t implemented their own systems don’t need to be evaluated on all the traditional criteria — they will be made to look bad, but they may actually be a good fit for relatively small buyers.
    2. Factories that pretend to have a quality management system (they might hold an ISO 9001 certification, for example) can be assessed in more depth.
    3. And, when the buyer wants an evaluation of the factory’s manufacturing processes and various good practices, the situation calls for a process audit. The focus is on whether they know what they are doing.

    b) Some companies need evidence that their suppliers are socially compliant:

    • Sometimes all the focus is on social compliance (no child labor, no forced labor, above minimum wage…). If you sell your goods to a retailer that has their own program, that retailer’s standard is usually the basis for the audit checklist.
    • Sometimes the customer also wants an evaluation of the quality system. It can be a “blended audit”.

     c) Sometimes the key concern is the manufacturer’s readiness to take a certain order (based on their in-house production capacity, their supply chain, their validation of a new product…)

    d) There are many other types of audits — environmental impact, supply chain security, building structural strength, and so on and so forth.

    Is it a one-time audit or is it part of a program?

    If all you want to do is qualify a potential supplier, a one-time assessment is sufficient. However, you probably need to keep tabs on what happens to the led display manufacturer.

    Maybe their No. 1 customer leaves them. Maybe the opposite is happening, and they are growing very fast. How do their systems and practices hold up? Have someone check on your key suppliers at least once a year…

    Another reason to set up a program is to push a factory to improve their processes & systems, with what is commonly called a layered process audit. 

    What kinds of factory audits are you performing? Do you have any questions about which audits best suit your needs? Let me know by commenting, please.

    The Four Levels of Chinese LED Display factories

    visionpi manufacturing
    • Level 1: the recently-created and unstructured workshop; and the factories only make the assembly work with all the half-completed product purchased from other suppliers, there are thousands of factories like this.
    • Level 2: the semi-organized factory that got out of level 1 but is still struggling to keep quality & timing under control, they have SMT machines, they can produce led panels themself, and focus on the segmented market, like led poster, rental display, transparent.
    • Level 3: the factory that made big efforts to get organized, with the objective of pleasing large customers, and they usually with many years of experience and their own R&D team and overseas sales team. here we can name a few, chip show, GCL, SBC.Yestech.
    • Level 4: that rare birds like Yaham, Unilumin that applies Lean manufacturing, and that avoids level 3’s rigidity.

    In this article, I am excluding Chinese state-owned enterprises, which are a breed on their own.

    Most manufacturers are at level 1 or level 2:The 4 levels of Chinese manufacturers

    Level 1: the unstructured led display workshop

    Typical profile:

    • 0-50 workers, engaged in simple processing (often assembly);
    • Managed by the owner and his family;
    • Not mature quality system and quality control staff;
    • No ability or time to work on complex prototypes before production starts;
    • Focused only on “making production” fast and on the cheap;
    • Can accept small orders, as long as purchasing components in small quantity is possible;
    • Seldom works directly for export customers;
    • Count on other manufacturers or trading companies to get business.

    Result: low costs and low MOQs, but needs to be followed very closely by customers.

    Level 2: the semi-organized led display manufacturer

    This category is a mixed bag. Some export 100% of their output and are very familiar with their market’s quality & safety standards. Others focus more on the domestic market or the most price-sensitive countries (Middle East, India…), and should be avoided by importers from North America and Europe.

    Still, it is possible to draw a somewhat typical profile:

    • 50-100 workers
    • Has grown out of the “disorganized workshop” stage
    • Has had to hire a few professional managers because of the growing complexity of operations
    • Has had to hire a few QC employees, to avoid big disasters.
    • But still, low concern for quality among staff and managers (in most cases).
    • May have English-speaking salespeople if direct relationships with foreign customers is a goal.
    • May still get orders mostly from trading companies and other factories.

    Result: costs are relatively low, and quality & timing are relatively unstable. The owner’s motivation for your orders still determines their reliability.

    Level 3: the organized/Listed led screen manufacturer

    Typical profile: 200+ workers, usually established before 2010 with decade experience.

    They have tried hard to comply with demanding buyers’ requirements:

    • Every aspect of production is specified in detail;
    • Production is checked thoroughly by QC department;
    • Own R&D team and updating led
    • Hopefully, strong staff discipline to follow the system;
    • a team for export business,and 60-80% of their sales is come from exporting.

    Result: few quality issues, but high indirect labor costs (QC, middle management) and low flexibility. Top 10 led sign board manufacturers

    Level 4: the continuously improving led display manufacturer

    Typical profiles:

    • Part of a large multinational group or a joint venture.
    • Midsize factory with a process-oriented/engineering-oriented general manager.
    • dedicated to segment markets, like transparent led display or soft led display.

    They follow the lean model:

    • Regular improvements to material flow and to each process;
    • Errors are prevented or corrected at the source;
    • Staff is trained and supports the philosophy.

    Result: high customer satisfaction (close to zero defects; production cycle below 5 days) and relatively low cost (high productivity of operators, limited QC staff, and rework).

    Unfortunately, these companies are a very small minority. They usually don’t advertise themselves on B2B directories. They are very hard to find.

    What kind of Chinese factories should you work with?

    First, a couple of rules to keep in mind:

    • If you work with a supplier that is too large relative to your orders (e.g. you would occupy 1% of their annual capacity), you will be quoted high prices and given poor service.
    • If you work with a small supplier that cannot produce the quantities you order, they will be forced to subcontract production and you will probably be in for a disaster.

    My general advice would be as follows:

    • If your orders are very small, you might need to work with a trading company/quality assurance team that will place your orders in a level 1 factory and follow production.
    • If your orders are large enough to work directly with a manufacturer, but not big enough to be interesting to big factories, go for level 2, but you will still need a final inspection service before the shipment to make sure everything settled.
    • If your order is considered large and even big companies actively fight for your business, go for level 3.
    • If you are in a very quality-sensitive market and you cannot afford even 1% of defects, spend time and search for level 4 (but you might not find any in your vertical).

    Small importers tend to have the feeling that buying from a large factory is more expensive but more reassuring. There is some truth regarding the higher prices, but risks are not necessarily lower. the fierce competition makes the industry more of chaos. after all, the company needs to survive, if the price allows them little profit, they will have to find a way to saving the cost from the raw material. smaller companies who dedicated one or few product line can be a good one to work with. 

    We believe the core comptiveness is on the supply chain managment of a whole supply chain not between companies. VISIONPI dedicated in the supply chain management since the very beginning of the led display industry,back to 2000. we works with hundreds to thousand of importers to make the full adavantage of the supply chain in china.our professionla quality control team and managing system allow us to take the most advantage of the supply chain to provide our cusotmer with the best products.

    What do you think?

    Factory Supplier Background Check

    Are you sure your potential supplier is who they say they are? Visionpi does the due diligence to uncover the truth with a comprehensive background check. We‘ve all heard horror stories about ‘scammers’ posing as factories who take your money and disappear! This very real risk is heavy on a buyer’s mind when they‘re considering a potential supplier, especially for led display industry, hundreds of small factories bankrupted every year which is why Visionpi offers a supplier background check to vet potential suppliers for you. Our focus is on assuring that your supplier is legitimate (no scams), has their story straight, is offering competitive pricing, and is, more generally, a good match for your business. If you are afraid of being scammed or working with a middleman posing as a manufacturer, Visionpi’s supplier background check will flag suspicious signs and advise on how to dig deeper.

    What is a supplier background check or ‘due diligence?

    Visionpi’s supply chain specialist performs a thorough investigation to uncover the truth about a potential supplier, covertly interviewing them, fact-checking, and confirming that they’re a legitimate manufacturer who is capable of producing your order. It takes 5 working days to compile the report.

    Why choose to perform background checks? Any importers who are afraid that their potential suppliers may misrepresent information about their company (including scammers, but also simply ‘creative sales people’) need to conduct supplier due diligence before agreeing to work with a new supplier.

    What type of factory should this type of due diligence be performed on?

    All potential suppliers’ factories of any size, prior to deciding to spend much time on boarding them and on developing products with them. When to perform these background checks? Usually, the best time to carry out any due diligence is after sending out Request for Quotation (RFQ) information, but before any samples are requested and orders are placed.

    Why choose supplier management?

    The main benefits we offer are strong planning (based on our experience), a state-of-the-art process for organizing your led display supply chain, good communication, close follow-up, and quick reporting. All this helps you, as the buyer, get what you need: Faster project completion at the expected quality and cost.

    Who needs this solution?

    If you don’t have a local office in China, and you need to fly back to Asia very often (or follow unhealthy sleep patterns), these are the signs that you need a team on the ground you can rely on. Many of our clients already work with an ‘agent’, a partner, or freelancer(s) on the ground. They work with Visionpi because they value some of our in-house competencies and processes.

    What is performed in SM?

    The very first step is setting up a plan that addresses your objectives and considers the realities of your supply chain in China. Your suppliers get into “just do it” mode at the snap of a finger. However, has someone paused and considered what is in your long-term interest?We listen to you, see what has worked and not worked with led display factories, and suggest an action plan as well as realistic objectives.Then, based on your needs, we propose the profile (bios) of a project manager that would best fit them. This project manager, together with his/her team, starts implementing the plan.

    We have 4 teams composed of 1 project manager and several assistant managers.Our project managers are in close contact with your suppliers, using their language as well as their preferred communication tools (Wechat, QQ, etc.), in order to keep your projects moving.We also have a support team with individuals who specialize in laboratory testing, in sourcing, in procurement, and in export & logistics.We go to the factory when needed. Our project management team is located in 4 different areas(Beijing,Hu nan,guangdong,zhejiang) and our inspection & audit team is nearly all along the coasts of China (where 80% led display manufactures are in Guangdong province )

    How is SM reported?

    One of our project managers is in frequent contact with you and updates you all along (as your single point of contact). We typically use collaborative software such as Trello or Asana, to make communication as fluid as possible.You also get a weekly summary of the work done. What does it cost? We bill 30 USD an hour* for project management and supply chain-related work. As a guide, it is not uncommon for us to quote 10 hours for the first block of work.Expenses, if any, are charged separately.

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