5 Reasons New Product Development Fails in China and How to Avoid Them

11/5/2021
Mech Engineer
Section 1

Teaser: Your goal is to take your new product from concept to market within a reasonable timeframe and within budget. Straightforward goals, so why do so many companies and projects fail at them?  

New product development (NPD) is not for the faint of heart. Multi-month delays, big cost overruns, unit prices and feature sets that don’t match initial planning – there’s a lot that can go wrong and consequences can be harsh. While every year we see millions of new products developed in China reaching global markets, the chances are that many millions more failed to reach that stage because something went wrong along the way. In some ways, that’s to be expected – there’s a lot of moving parts throughout the development process – and errors can build up from ideation, through design, prototyping and the product launch. In new product development, Murphy’s Law (Wikipedia) reigns – what can go wrong, will.

Avoiding these issues is not always straightforward, but we see so many companies repeating the same mistakes and failing to systematically approach product development, that it’s clear many of these problems can be anticipated and resolved by a more thoughtful approach to product development. In this article, we’ll explore the key reasons why things go wrong with new product development (NPD) in China and how your company can avoid making these same costly mistakes in your next new product introduction (NPI).

Section 2

What gets in the way

There’s a long list of mistakes and failures that can be made with new product development (anywhere that’s happening), but the most common we see in China are the following:

  • Failures in communication and documentation
  • Failing to involve suppliers in the product development process
  • Leaving work on design for manufacture till too late
  • Trying to rush the development process
  • Choosing the wrong supplier (scale or capability)

Each of these factors can lead to costly delays, missed cost targets and outright project failure, and are often compounded by companies making several of them at the same time. Let’s walk through how each of these common errors contribute to project failure, and timeline slippage. In a follow-up article, we will explore how a more disciplined and thoughtful approach to new product development can help you avoid costly mistakes and launch products on time and within budget.

Fig 2: Product assembly

In the end, your goal is to get a good quality product made in-time, at a competitive cost. By spending the time during the planning and development phase, we can avoid these pitfalls.

Section 3

Failures in Communication and Documentation

One of the most common errors in project development in China is the failure to clearly communicate and document all necessary details can often lead to the failure of NPD projects in China. One reason is the sheer complexity of the task, but this is often compounded by language, i.e. does your supplier truly understand what you are saying and are your requirements being understood and digested?

New product development cycle

Fig. 3: New product development

Take a look at the stages of the new product development process and let’s imagine you have screened ideas and have a product concept in mind. The next step is to make a prototype, pilot (usually) production, and then scale to mass production.

Consider how many groups of people within your company and outside have a hand in that process: The product development team and design engineers working on creating the prototype, sub-suppliers, specialized components, standard components, the assembly plans and their engineering and quality teams, etc.

Wherever they are, there must be a relatively smooth flow of information back and forth, if you want your new product development and market launch to go relatively smoothly. To paraphrase Moltke, the famous German general, “no battleplan survives contact with the enemy.” The same is true for any product design or project plan – there will need to be changes to drawings, specifications, functionality, quality planning, packaging, and timelines. The more complex the product, the more changes required, and the greater the need for that information flow to be accurate and documented.

These changes need to be communicated throughout multiple organizations, and if there is no documentation and no disciplined communication, things will be missed / lost / forgotten, and errors will pile up.  It is critical that product specs, functional requirements and other information is clearly documented and explained to suppliers. Not only do complex products require more changes and documentation, they also require more sophisticated documentation and communication – more disciplined, structured, clearer (citation?), or mistakes will compound and the project will slow down.

Proper, timely and clear documentation helps eliminate guesswork. It helps you avoid those inevitable “oops” moments when you realize that a crucial aspect or function you thought had been clearly documented or explained, wasn’t, and which will result in considerable expense or delay or both. Daily standups, project trackers, specification documents, drawing revision trackers – these are all tools to try to avoid these moments.

Imagine a single decision to change a single feature of a product at the prototype stage that does not get communicated properly and fails to be factored into cost estimates, say, for example, your team wants to add a Bluetooth function to your IOT product. If this change is not communicated and processed, then all the subsequent development time, drawings, BOMs, Gerber files and debugging are useless, because your PCBA manufacturer will need to go back to the drawing board to add the correct componentry and functionality if it’s not there. If parts are already made, then costs quickly compound.

Now imagine the impact of several such decisions going undocumented and failing to be clearly communicated / understood. That is the stuff of new product development nightmares, and something you do not want to experience.

Yes, it is tough. Communications can be painstaking. Documentation is complicated and a potential time sink. Too much can go wrong. But if your NPD project in China is to succeed you need to nail it down to perfection.

How to avoid mistakes of communication and documentation

Establish good communication channels and put someone directly in charge of documentation. Someone at your end needs to be in charge of documenting all the decisions that get made and communicating them to all relevant parties on a timely basis (Alicke et al.). Intense and careful attention to detail in this process would be critical for the success of any NPD project in China.

Consider adopting the balanced communication strategy that Toyota uses, with your Chinese suppliers avoiding the extremes of predominantly written or predominantly oral communications (“Another Look at How Toyota Integrates Product Development”). Use succinct written reports, but, have meetings for intensive problem solving. Do not assume that everyone understands your specifications just because you gave them a document, mentioned it in a meeting or sent an email. It is your interest to ensure that the specifications are clearly understood.

Design manufacturing and assembly - working together

Fig 4: Design, manufacturing, and assembly – working together

Cultivate rapport with Chinese partners. Get to know the individual factory managers and supervisors in charge of your products. Often, the nominated person at the manufacturer’s or assembly plant’s end has many other projects on their plate. Sometimes, language and cultural issues can complicate things. Even without those factors in play, getting a prototype of a new product with multiple components, including standardized and customized parts, is extremely complicated. If you can get them to put a face to your name, then it is much easier to get them to put forth the extra effort needed to push through problem projects.

Be ready to communicate a lot more than you think is necessary. There must be designated people at your manufacturers who have access to the most updated recent documentation and decisions regarding the products. Establish a routine for periodic checkups, calls and updates to keep them in the loop. This way you will know when issues arise, problems develop or things begin to slip. Constant communications will prevent unpleasant surprises down the road and give you time to troubleshoot and avoid delays.

Section 4

Failure to involve your suppliers in product design

Suppliers are vital sources of information about the local supply chain and know best what their capabilities and limitations are. They can offer a great deal of practical advice and guidance on how to realize cost savings, improve design for manufacturability and even provide practical advice on how to resolve design issues you are facing. In general, the earlier you begin collaborating with your suppliers in the new product design, the higher the chance of success and the more likely the product will launch with the right feature set and cost.

The need to involve your component suppliers and manufacturers in the product design cannot be stressed enough. You will be hard pressed to find a country that can beat China in affordable custom manufacturing of products and components. However, ultimately, your success entirely depends on your supplier being able to produce the product you have designed at a reasonable cost using those local components and capabilities.

If you are planning to go to China thinking, “I am getting my product done through a design house, then I am handing it over to manufacturers,” that is a recipe for disaster. In general, most design companies will not know the capabilities of your end supplier, and do not have access to standard Chinese part libraries. This means products are often designed using off the shelf components, dimensions, and specifications where it is designed, NOT where it will be manufactured. That means your supplier will need to do a lot to address those issues for the part to be manufacturable in China, without the use of costly imported components or machinery.

Addressing assembly and manufacturing concerns from the beginning of a new product design is imperative because most of the cost is already baked into the product architecture at the design stage (K. Fixson). Optimizing manufacturability of a finished, existing design will only provide marginal gains. Resolving those issues BEFORE the design is fixed is where much more substantial progress can be made.

However good a contract manufacturer is, they can only produce what is in front of them. If you complete the design process in the United States or in Europe, and give them a product specification with all custom or imported components, then their input and room for improvement will be limited. Don’t expect very significant cost reductions from production efficiencies once a certain volume is reached.

How to avoid this mistake

Give up linear thinking and adopt a collaborative design process. Design > Prototype > Manufacturing is never a linear process. Depending on the complexity of your product design, expect to go back and forth in a cyclical process until you finalize the product design to move to the manufacturing stage.

Involve suppliers and manufacturers in the design process early and work in close proximity (if possible). Nothing can replace the efficiency of meeting in-person and troubleshooting products at the site of production. Communication is face to face, decisions can be made quickly, and rapport can be built rapidly. There’s no need to wait for the next conference call, exchange of documents, for a sample to be shipped halfway round the word.

Fig 5: Business meeting

The earlier you involve the suppliers, the better off you are. Suppliers know their supply chain and capabilities better than you do and they can suggest improvements to product design and ways to minimize costs. Their suggestions—on materials, replacing custom components with standardized components, and “good enough” components or processes—can speed up production and cut down on costs.

Be open to using standardized components rather than trying to invent everything from scratch. Be flexible about what is possible and what is desirable. Take on design changes that make business sense. Keep product to market timeline in mind. That is one secret of keeping costs under control and design for manufacture and assembly - emphasize the cost / lead time / quality benefits of standard parts.

Section 5

Leaving work on process engineering till too late

Process engineering is about getting ready all the systems that are necessary to manufacture and assemble your product to scale. All the manufacturing and assembly systems also need to be ready to churn out your product by the time you have a prototype ready for manufacturing and assembly. And of course, you must get the right people in place to make it all happen. Both these take time.

If you develop a robust design for manufacturing process, and work carefully and diligently on meeting milestones, you may be able to scale up manufacturing smoothly, step by step. Getting your systems up and tested in parallel with product development is the best approach. If you wait until the product development is over to begin on process engineering, this is going to delay your time to market. Trying to do things quickly can increase your setting up costs, and the potential for errors and mistakes.

Design for Manufacturing and Assembly

Design for Manufacturing (DFM) is about designing the product, including its parts and components, to ensure ease of manufacturing. Design for assembly (DFA) is about designing your new product in a way to make assembly of its parts as smooth and easy as possible. Most products are likely to require design for both manufacture and assembly, or DFMA for short.

To understand how broad the design implications are, let us look at its definition (David M Anderson):

Design for manufacturability (DFM) is the process of proactively designing products to (1) optimize all the manufacturing functions: fabrication, assembly, test, procurement, shipping, delivery, service, and repair, and (2) ensure the best cost, quality, reliability, regulatory compliance, safety, time-to-market, and customer satisfaction; and (3) ensure that lack of manufacturability does not compromise functionality, styling, new product introductions, product delivery, improvement programs, or strategic initiatives  and make it difficult to respond to unexpected surges in product demand or limit growth.

In the end, it is not the label—DFM, DFA or DFMA—that matters here. It is understanding the basics as well as the complexities of manufacturing and assembly of products far away from your home market.

Here's how to avoid this mistake

Get process engineers involved throughout the design process. Keep them in the loop. This is a key element of DFMA. As your product goes through and iterative development process, the process engineering aspects must also change accordingly and keep up. Exchanging of documentation and information is an imperative to have your processes tested and ready to roll when the product design and testing are completed.

Scaling up can take time. That is why it is important to begin process engineering early and go in parallel with product development. Starting early gives time for ample testing of processes, troubleshooting and process improvement.

Be open to suggestions about standardization. As with products, process standardization too can save money. Your suppliers and assemblers would know the most cost-effective means of getting things done. If you insist, they may do things your way and not fuss too much about it. But it is to your advantage to listen because, as always, customizing can mean it costs more and takes longer.

Keep revising your plans, costs and timelines for process engineering just as you do with your product development. Make sure that the process requirements change according to product changes.

Section 6

Picking the wrong type of supplier for your project

Suppliers will range widely in their scale and their capabilities. When selecting one, it’s crucial to balance supplier size, quality, cost and capacity.

Large-scale suppliers, who may be very capable, but for whom your business is a tiny fraction of their income, may not give your project the attention it deserves. Your work will generally not be a priority and they may not even make time to meet with you.  Do not expect much cooperation on collaborative design efforts either, simply because they have more lucrative and urgent things to do. As a result, there will often be delays in responding to emails and request for updates on progress.

A small supplier who offers you the lowest cost estimates may have neither the knowhow nor the experience to get your job done. Despite the promises, you may experience cost overruns due to issues with rework, poor supplier selection, quality control, etc. They may perhaps not even exist when you come again later.

Cost is another factor here – somewhat counterintuitively, larger factories in China can sometimes be considerably more expensive than small workshops. This reflects overhead considerations, the importance of your business and compliance costs. If your product is extremely price sensitive, you may need to work with a smaller supplier and try to compensate for reduced capabilities with external quality control or boots on the ground.

Where you have an extremely complex product or a steep production ramp-up, you may need to find a contract manufacturer with similar expertise and experience. Factories with relevant experience in new product development, product ramping, and DFM may be better able to handle, than a large facility more focused on mass production.

How to avoid this mistake

Pick a supplier to whom your business matters (but not too much). As an optimal rule of thumb, pick a supplier for whom your business would come to at least 5 percent of their income. Less than that is asking for trouble, as when push comes to shove, other customers will get priority for engineering and production resources. At the same time, a supplier for whom your business is too high a percentage (40% or more) could be financially unstable or uncompetitive.

Fig. 6  Warehouse

Fig. 6: A Warehouse and an assembly line

Do your research well and verify customer references you have been given. Avoid inexperienced smaller suppliers, however good they look on their website. You want a solid business partner who will be there when you come again and who will preferably grow with you.

Get recommendations from trusted parties. If you are new to business in China, you want to go with solid recommendations. Look at their experience, ask for references, meet up with them and see their facilities.

Make sure to visit the supplier facilities and meet those in charge, rather than dealing with agents or trying to do it over long distance. This is a good way to get a clear idea about your potential suppliers, their strengths and weaknesses.

Section 7

Trying to rush the process

Developing a new product, even relatively simple ones, is a painstaking process. The sheer time involved to do development in a methodical way means trying to skip a few steps in order to increase speed to market is often too tempting for companies to resist

Depending on how complex your product is, you may have dozens or hundreds of parts, detailed notes and dimensions. Each of these need to be considered, specified, confirmed and documented before you can begin finding and working with multiple sub-suppliers or part vendors. There will be testing plans to be worked out, timelines for manufacturing, quality inspection and delivery.

Taking shortcuts, whether at the documentation, sourcing, development or pre-production phases, can quickly result in issues. Not only can this spell trouble in terms of product quality, but it can also lead to product recalls, lawsuits, and reputational damage for your business.

A bit more planning and a lot more forethought can help avoid the need to rush things.

How to avoid rushing and cutting corners in NPD projects

Adopt integrated product development. Also referred to as concurrent engineering or simultaneous engineering, this simply means you work in parallel, with your design, manufacturing, and assembly teams. You can cut time to market, and it enables you get the inputs from assemblers and manufacturers to improve product design. Adopting this instead of a time consuming, linear process helps you make a better-quality product, faster and possibly at a lower cost.

Have an integrative role that drives end-to-end coordination. Think about how your company organizes your new product development and supply chain functions to a cohesive whole. Avoid having to rush in the first place. Plan, plan, plan, well before you even find a supplier or step your foot in China. Getting your supply chain organized into a cohesive whole, due diligence in supplier selection, spending time in documentation, getting your process engineering running in parallel and developing strong relationships will eliminate the need to rush and cut corners later in the process when the time to market gets tighter.

Develop a calendar with all critical milestones including finding suppliers, prototype, lab and customer testing, setting up, scaling, manufacturing, assembly, quality testing, shipping and market launch. Build sufficient time for testing. Be open and flexible to some delays if it has no significant strategic or market impact, and may help improve your product, its function or safety. Continue to review and revise your costs and timelines. For example, after finding a supplier, you may have to revise both time and cost calculations. Then periodically, after different iterations in the design process, you will have to change them again. This is natural and to be expected.

Do not underestimate the value of customer testing in real life situations. There is simply no alternative to that. Trying to short circuit this and lab testing / certification can spell disaster.  A product recall or a failed launch are more costly in terms of time and money then product testing both in and out of the field.

Fig. 7: Engineers testing a new product

Develop realistic expectations about costs and timelines for completion and time to market. This means going beyond your home market design team and business teams to get suppliers, manufacturers and assemblers involved early in the design process. It means considering the time necessary for getting your process designs to scale in planning. Be flexible to accept product and process changes that improve the product quality, cost or time to market. Adopting SMART goal setting—ensuring that your goals are specific, measurable, attainable, relevant and time bound—though simple, can be an effective way to ensure plans can actually be achieved.

Section 8

To sum up

We discussed the main reasons why new product developments in China and everywhere else can result in failures, delays and frustrations. These include failures in communications and documentation, choosing the wrong suppliers, failing to involve suppliers early in the new product development process and waiting till late to work on process engineering. These and trying to rush the development process by cutting corners can be shortsighted and costly mistakes. We have offered suggestions on what you can do to ensure that your new product developments in China go well, delivering the products to you customers timely, smoothly and within budget.

Keep these thoughts in mind next when you want to go for an NPD project in China.

Section 9

Works Cited: