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Key Advantages of Global Sourcing from China

2023-12-22
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Key Advantages of Global Sourcing from China

Across the globe, the business environment is becoming highly competitive. The emergence of E-commerce and internet penetration revolutionized the way we do business, global sourcing has become a “must” choice for many businesses.

For global sourcing, major companies prefer Asian and Latin American countries. Most of these countries are investing heavily in infrastructure creation. This is facilitating the emergence of numerous manufacturing hubs focused on specific sectors. Due to this, they are becoming the hot spots of global sourcing.

Among these countries, China is an early mover and still a leader in global procurement. Many global companies have either direct manufacturing facilities or sourcing partners in China. Labor is cheap bringing the total operational cost below the global average. The government provides tax incentives for promoting manufacturing. It also has vast maritime logistics capabilities with multiple shipping ports.

Due to all these factors, there are numerous advantages of global sourcing from China.

Trends in product procurement

Global sourcing - Nowadays, companies are looking beyond their domestic markets for product procurement. This is mainly due to cost considerations. The improved logistics are making it easy for sourcing from other countries. Most companies buy products from China because it is one of the low-cost sourcing destinations. Global sourcing is not strictly limited to cheap production, but it aims to tap into new talents or resources that are domestically unavailable. 

Green logistics - Green logistics is not limited to transportation or delivery methods. It includes warehousing, packaging, material handling, transport terminal, distribution, and disposal. The green logistic process minimizes environmental damage while maintaining efficiency. Eco-friendly customers can buy products from China because the country’s initiative towards green logistic technology is better than other foreign countries. Sustainability is taking the center stage in business growth. Companies are taking serious measures to reduce their carbon footprint. The same trend is visible in logistics during sourcing.

Global quality standards - Ordering products from China is possible, but quality is a  concern. Quality assurance is a major step in sourcing. Comparing to domestic sourcing, quality control for global sourcing is much more difficult.   

If you plan to order products from China, then we suggest you approach a right sourcing agency. Make sure they offer complete transparency, quality, and pricing. Sourcing agencies offer -

1. Product sourcing - The initial step is to understand your business objectives and quality needs. The sourcing agent obtains quotes from the best manufacturers and determines an appropriate one based on lead-time, cost, and quality. They send samples for review after accepting the quotation. After samples are approved, a trial run is arranged, and after you gain confidence, mass production is started.

2. Manufacturing control – It is crucial that proper follow-ups are handled in the manufacturing control procedure. It saves time and probable issues that can pop up later. The merchandizing team should have good experience to make sure the manufacturing process works on proven practices and industry know-how.

3. Quality inspection - Quality inspection services include pre-production inspection, on-line inspection, and pre-shipment inspection as well as pre container loading check. The QC professionals monitor your manufacturers to ensure compliance with safety, function, and visual standards. 

4. Order monitoring – The full details for an order must be properly monitored, project management should adhere to good practices, which ensures that information regarding possible snags or hitches are delivered to the manufacturing team promptly. This reduces hitches in the production and boosts the overall process. 

Benefits of global sourcing from China

China is proven to be a successful global sourcing destination for many organizations. Various advantages of global sourcing are: 

Low-cost production

Your aim is growth and expansion, so it becomes essential to partner with Chinese manufacturers. A successful organization can outsource its labor-intensive processes to developing nations offering cheap human labor. This allows lower production costs and ultimately the savings can be shared with potential customers.  

High capacity

If businesses approach China, they can use the infrastructure and population of labors to produce goods in large volumes at a speedy rate. With a higher product volume, the cost per unit is lessened. 

Multiple choices

In China, global manufacturing hubs are designed as clusters. You are likely to get multiple suppliers and factories in China. This widens your choice and helps in procuring the best quality products at competitive rates.

Product diversification

Business growth is highly dependent on your product offerings. Sometimes, the in-house manufacturing capabilities of your firm are not enough for product diversification. Global sourcing from China can facilitate diversification and lead to business expansion.

Stages of global sourcing from China

Investigation & research -  Identify operational activities, market needs and assess your competitors. It helps to understand business goals and the target market to position your brand in the global market. A solid procurement plan helps to detect sourcing scope.

Evaluate market & supplier - Create parameters for hiring reliable suppliers. The sourcing agent will help in determining the suppliers’ choosing parameters and prepare a list. Requests for information are sent to the listed suppliers.

Choose a suitable supplier - Based on the response from suppliers, the sourcing expert will prepare a final supplier list as many will not respond to the request for information. The chosen suppliers will offer an estimate or quote. After thorough research and comparison, the suitable supplier is informed about the deadline of product delivery.

Implement sourcing process - The sourcing agency will create a strategy and work schedule. It is a stage where resources, as well as shared supply & logistic arrangements, are made. The sourcing agency even monitors regular performance and sends reports to your company.

Monitor performance - Suppliers' performance is evaluated based on resources and procedures employed. The report helps to understand communication extent with suppliers. In case of collaboration issues, efforts can be taken to reduce it. Performance monitoring helps to maintain an effective global sourcing process. 

Things to consider while sourcing from China

Easy accessibility - Ensure that traveling to China is easy, whenever needed. After entering a partnership with a sourcing company in another nation, you will often need to pay visits.

Supplier’s flexibility – It’s important that your Chinese suppliers respond to your demand changes, and are flexible to your order scale, lead time and requirements. They must have the ability to stop flawed products reaching your customers, and keep good business relationship with you.

Clear communication - You need to understand the country’s language and culture as you plan to establish long-term business relations. If you cannot speak Chinese, it’s better to hire someone on the ground to help you.

Reasons you need a sourcing agency

The key reason to partner with a sourcing agency is that it is hard to follow up with Chinese suppliers and you cannot monitor the product quality you ordered. Unlike face-to-face, communication is also unclear and inefficient between you and the supplier. 

A sourcing agent representing you means they belong to your supplier’s country and are aware of how to navigate better than you.

They can spot scams instantly. As you are in a different nation, you are unaware of the supplier’s integrity. Sourcing experts are aware of such scam suppliers and keep you alerted. 

They can pay your suppliers only after you are 100% sure about product quality. The sourcing team performs an onsite in-person quality check, so you are 100% certain about product quality.

They can discover new suppliers, which offer quality level products at fair rates. They do all the legworks. They can also help the suppliers develop new styles of products.

They assist in quality control, market research, pre-shipment inspection, supplier network development, and customs clearance. Therefore, investing in sourcing agencies reduces the overall operating cost and increases revenue. 

A professional sourcing company ensures that you gain access to trustworthy suppliers and attain the right merchandise at possibly low cost. They help you minimize costs, maximize profits, and save time. 

Conclusion

Global sourcing from China offers various advantages, however, monitoring the whole order process and assure product quality is very difficult. By outsourcing your procurement to the best sourcing partner, you can enjoy consistent quality and supply at a low cost. Simultaneously, you can avoid unreliable supply, quality problems, cultural differences, language barriers, and currency handling. With their help, your orders are mass-produced as per the standards.

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