How to Prevent Corruption in QC Inspections in China

July 25, 2017 Posted by China Briefing Reading Time: 6 minutes

By John Niggl, Client Manager for InTouch Manufacturing Services

This is Part 2 of a two-part article about quality control inspections in China. In Part 1, we discussed how corruption typically appears in the quality control process, and some specific problems it may cause.

Confronting the possibility of integrity risks during your product’s quality control (QC) inspection process in China can be a challenge, especially when doing so from halfway around the world. But there are some actionable steps you and your QC partner can take now that will help you to minimize your risk.

Offer competitive pay to inspection staff

Let’s say you hire two inspectors in China’s Guangdong province to inspect an order of furniture at your supplier’s factory there. You agree to pay the first inspector the local minimum wage. You pay the second inspector, with similar experience, 20 percent more. Assuming all other factors are equal, which of the two inspectors would you trust more to conduct a satisfactory inspection? Which inspector do you think would be a higher integrity risk?

If you’re like most importers, you’d probably say the first inspector would be the risky one. And it makes sense. Competitive compensation helps to promote loyalty and job satisfaction among employees in almost any field. The quality control industry is no different. Paying your staff as much as or more than the market rate for inspectors at their experience level will help you limit your risk of integrity issues.

Ask integrity-focused questions during the interview process

Preventing corruption and extortion in your inspections starts with checking it at the source — the values and experiences of the people you hire. Identifying integrity risk with inspection staff requires you to screen potential hires during the interview process to look for particular vulnerabilities. A few questions that can help you spot potential problems include:

What types of rewards or gratuities do you think could be inappropriate to accept from factory staff?
Has someone, other than an employer, ever offered you a reward in exchange for a certain result on the job? If so, how did you react?
What procedures do you, or did your previous employer, have in place to handle corruption during the inspection process?

Ask open-ended questions. And if you are not getting the specific responses you expect, try explaining a particular scenario of potential corruption and asking them to comment on how they would react. Similar questions apply to any third-party inspection company you are considering working with. In fact, you should expect very specific responses from this kind of company, since they likely will have considered integrity issues before.

Prevent integrity issues with training, documentation, and policy

One of the main factors that makes an inspector vulnerable to corruption is a lack of procedures to handle integrity breaches. Inspectors need to be educated on how to identify bribery and other more subtle attempts at corruption. It should be standard practice to notify the customer, by way of the inspector directly or their supervisor, whenever factory management or staff have made any such attempt.

Many established QC companies also require inspectors to submit written documentation signed by a representative at their supplier’s facility and attesting to any gifts, meals, or other favors provided. Sometimes there is a reasonable explanation for why staff at the factory drove your inspector to the nearby bus terminal, for example. Having this document in place ensures greater transparency and accountability between your supplier and inspection staff.

A clear code of ethics is also an important element to relay policy and expectations for conduct to your inspectors. You probably cannot always be present for every inspection to police your staff. But clearly outlining your policies in a code of ethics, or similar document written in their local language, helps your inspectors know right from wrong.

Audit your inspectors to verify their conduct

If internal affairs can work for law enforcement, it can work for your QC team. Schedule regular, randomized audits of inspectors in the field. For obvious reasons, you will probably get more reliable results if your inspectors do not know they are being watched and evaluated. But even when they are aware, regular auditing can still help you prevent integrity issues and other misconduct.

Rotate inspectors to prevent overly familiar relationships with factory staff

Do you think if your inspector spends Monday through Friday working with the same people at the same factory for 10 weeks, they might form relationships that could compromise your inspector’s judgement?

It is easy to see how an inspector might sympathize with friends they have made at a factory and, in turn, submit more lenient and inaccurate reports to you, the customer. The more time a given inspector spends around the same factory staff, the more likely they are to be influenced by them. That is why familiarity with workers at a particular facility is a risk factor for integrity problems.

Rotating inspectors is a common practice to limit this risk. Third-party inspection companies typically have multiple staff with similar expertise available in each service area. This allows them to rotate inspectors regularly and prevent inappropriate closeness with factory staff. If you are hiring individual contractors for ongoing inspections at a single facility, consider alternating between multiple staff to limit your risk.

Limit your risk

If inspector integrity is not one or your concerns when it comes to the quality of your products, it should be. Many importers, both novice and experienced, have been burned by corruption and extortion in their QC processes. Consequences ranging from substandard goods and shipping delays to failure to comply with retailer standards and even litigation have occurred.

But follow these steps designed to limit your risk of integrity issues and you can protect yourself, your customers, and your business.

This is Part 2 of a two-part article about QC inspections in China. In Part 1, we discussed how corruption typically appears in the QC process, and some specific problems it may cause.

About Us

Founded in 2008, InTouch Manufacturing Services is an American-owned, third-party QC firm headquartered in Shenzhen, China. Specializing in product inspections, factory audits, lab testing and product sourcing, InTouch operates widely in China, India, Vietnam and throughout much of Asia. With emphasis on high integrity and personalized attention from a dedicated bilingual point of contact, InTouch primarily serves importers from North America, the EU and Australia.

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Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at china@dezshira.com or visit us at www.dezshira.com