If you are planning to start a business for some finished goods, the best country to source your goods is China as it has the best infrastructure for manufacturing.
China has the largest population in the world. The leaders of China realized the importance of human resources at the right time, they created such regulations and legislations, which laid the foundation of the modern China that we see today. Today, China is also known as the factory of the world. This is because China manufactures up to 30% of the global manufacturing. The infrastructure and pool of labour have made China the favourite destination for all the manufacturers to huddle there.
Companies globally outsource their manufacturing to China, although they have to pay for the shipment and the customs, still the overall cost is much less than the cost of production in the local market. This is due to the low cost of labour in China which has proven to be a gem for the Chinese economy. If you are a company or an entrepreneur, then you must outsource your manufacturing to China.
Sourcing the products from China
Many companies think that a simple search on Alibaba or Global Sources will allow them to finalize the manufacturer and everything will be done easily. This is not the case, however. There are a lot of details and modalities, which need to be paid very much attention to. If you rely on a mere online chat or a phone call, then you will more likely get cheated.
It is very common for individuals who want to source their products from China to dedicate 3-4 hours a day to supplier sourcing and management, and it is the time that you spend on each supplier. This time will be spent on:
1- Finding new suppliers who can produce the products for you at the right price and in the required quality.
2- Developing new products with these suppliers.
3- Managing the supplier relationship and doing things like communication, quality control, shipment management, etc.
Ideally, you must focus on running the business, spreading it and maximizing the profit. If you want to avoid doing all these things, then you must hire a manufacturing agent in China who will act as your foot soldier and your proxy in China. He will do all the tasks that you are expected to do and will do even more.
Different ways of sourcing products from China
Let’s discuss what all options are available with the importer to get his products.
1- Purchase directly - this is the thing that the majority of the purchasers do. Since this sourcing process has its advantages like it cuts the commission taken by a middle man and you can have complete control over the production process. This is ideal for those companies that have sufficient resources to take care of all these processes.
To buy directly from the manufacturer, you must fulfil the basic creation like meeting the minimum order quantity. Only organized and established purchasers can afford to do business directly with the manufacturer.
2- Make a deal with a trading company - in those cases where you do not meet the minimum order quantity, this option will come to rescue you. This is perhaps the ideal course of action for small businesses. The main role of a trading company is that places the order in a small workshop, which can meet smaller orders.
3- Engage an agent to source products - we will talk in detail about the agent in the later part of this article. However, this is the ideal way to get in contact with the manufacturer if manpower and time are limited and you cannot afford to oversee every step.
Introducing you to manufacturing agents
A manufacturing agent in China is a professional who is based in China. Since he is a native of China, he knows all the ins and outs of the Chinese markets. This will allow you to get the best deal possible because you are taking the benefit and help of the agent.
Your manufacturing agent in China will help you in finalizing the supplier for your goods. When you tell the desired requirements to him, then he will carefully analyse different suppliers and then get you the best supplier possible. Since these agents have been working in China for a long time, they have a huge network of manufacturers.
Further, when you deal with a Chinese OEM manufacturer, you will face the trouble of language. The most spoken language in China is Mandarin and hence ineffective communication will take place. However, your manufacturing agent in China will be proficient in English and since he is based in China, he will be fluent in mandarin, too.
Thus, whatever message you want to be delivered to the manufacturer can be communicated to the manufacturing agent in China and he will make sure that your message is effectively communicated to the manufacturer. These professionals are good at negotiation and communication skills. This makes them ideal for the work.
The agent will help you reach a deal with the manufacturer at the best price possible. He will conduct all the bargaining and negotiations on your behalf. Further, all the formalities and trivial activities will be handled by him. Your agent will also make sure that all the shipping and other activities are done properly.
An agent will also provide inspection service in China. He will drop factory visits and once the raw materials arrive then he will check the quality of the raw materials. After that, he will also ensure that the right processes are undertaken to manufacture the product and that the finished products are of the right quality.
Who qualifies to be a manufacturing agent?
There is no qualification bar as such, which makes a person a sourcing agent. There is no institutional recognition of these agents, however, there are a few considerations, which you can keep in mind while choosing the right product sourcing agent in China. You must discuss the following things before finalizing the agent:
1- How do they get paid?
If your sourcing agent is getting paid or is receiving a cut from the manufacturer, then it is a red flag because the opinion of the sourcing agent will be biased and influenced. Your sourcing agent must be paid only by you and they must not receive any reimbursement from the other party to maintain their neutrality and commitment towards you.
2- Can you visit the factories during production?
Since these decisions are going to have an impact on your business, it is you who must be kept updated with the details of the proceedings. You must be allowed to analyse and witness the whole manufacturing process whenever you please to see it. Your agent must facilitate you in doing so.
3- Can they offer testimonials or referrals ? Testimonials or refereals from happy customers who are opting for his services and buying the similar kind of merchandise as you is a good sign. The word of mouth especially from previous customers is the most effective way of advertising. You must ask your agent to provide a few referrals from the customer who has received their service. You must contact a few of them to ensure that you are putting your money in the right place.
4- How do they conduct their China quality control? Do they have a quality inspections team in place? Or do they have a specialized third party alternative? – It is very important that they oversee all the processes by themselves because this is what an agent is meant for. Your agent must be like your proxy in China and must do everything to ensure that the work is done properly and on time.
5- How often will you get an update on the production status? – Your manufacturing agent must report the status of the product regularly to you. You must not be kept in the dark by the agent. Ideally, he must report to you about the leads in the production status every week.
6- Will they charge less if you repeat the order? – Ideally, if you repeat the order from the same source then you must be required to pay less than the initial order. You must discuss this with the agent and only finalize him after the relevant information is communicated.
The manufacturing agents are like your own shadow in China to do all the work that you are expected to do in China. You must ensure that you first finalize the right manufacturing agent in China for your products.