International businesses consider it a practice to manufacture goods from China to avail lower costs in labour. Numerous brands take advantage of this opportunity, and because of this, Chinese manufacturing has become a core of successful production. Due to China's cheap labour, product sourcing companies in China find it advantageous to source a lot of their products from there.
Over the past several years, a lot of small and medium-sized firms, as well as some of the top brands, have realized how crucial it is to directly source from China. If done successfully, buying products from Chinese manufacturers will help you boost your ratio, reduce labour costs, and ensure continuous supply all year long. Sadly, there are still a lot of misconceptions and inadequate information out there. Some claim that it is impossible to get high-quality products made in China.
But the truth is that sourcing from China can be your best option.
Small or large businesses now prefer getting products or part of their products procurement outsourcing from China. However, often you will hear from western countries about the challenges they face while dealing with sourcing companies in China. This is major because of the language and culture barrier.
Every country has its specific rules and regulations, and China is no different from them. The shipping rules by air or ocean also play an important role. Sometimes the parts or material which is legal in China may not be legal in western countries, which can ban the entire product leading to heavy penalties.
Thus, a little bit of knowledge, expertise, strategies, and tips can keep your product sourcing streamlined.
Do your research
If you want to excel in marketing strategies, you first need to know which product is a best seller in the market. This way product sourcing in China will also become easier. The key is to find the right balance between conducting thorough research, learning a lot about your target market, selecting the right product, and assuring its quality before putting it on your store's shelves.
For example, if you want to buy outdoor products from China, be sure to try to perform your research on customer demand. This can help you supply goods that are in high demand and stay away from products that won't sell well.
Most suppliers have years of manufacturing experience and are thus familiar with the entire production process. They also understand the best and most affordable ways to gather high-grade supplies and already possess the equipment required to maintain a sterling standard of quality. Most Chinese manufacturers even possess extensive knowledge and years of experience in global supply chain management. Each of these factors enables them to increase production as and when necessary.
Determine the cost and profit margin
Many businesses place an order without realizing the end profit margin they’ll incur. Every manufacturing process includes the cost of raw material, manufacturing process, and supply chain cost. Not calculating all these costs may result in higher expenses. Thus, it is necessary to determine your overall costs which should include everything.
The reduced cost of labour in China is one of the key factors in determining overall costs in the manufacturing sector. China is one of the most densely populated nations in the world, making it simpler to locate both skilled and unskilled labour locally. Sourcing companies in China can cut production costs due to the abundance of local workers.
Numerous government regulations also allow for the confirmation of excellent work standards without increasing labour costs. The majority of staff even have years of training or specialization in their respective fields. Therefore, as a buyer, you do not need to spend time or money on training, especially if you are sourcing generic goods.
Understand supply chain to avoid disruption
Establish big international purchases is still difficult. The frequent unpredictability of overseas shipments and package deliveries is one of the main causes of this. The shipping method, which includes product size, package size, and delivery time, must be known before placing your order if you're purchasing product from China. The best solution would be to shop for products that are easy to ship, such as those made for retail purposes.
These items are also more cost-effective and less likely to be damaged or stolen during transportation. Even if your goods are supplied in smaller amounts or for a larger price than usual, it will make sure that it arrives on time. You should analyse hurdles on the way to streamlining an import-based supply chain. Identifying disruptions in advance can help you and your service providers create a proactive backup plan.
These disruptions can be:
Bad weather and unfortunate events.
Workplace disputes and ports.
Capacity crises (sea or land).
Chinese New Year as well as other international festivals.
Know all rules and regulations
It is imperative to know all laws and regulations before dealing with sourcing companies in China. The number of restrictions can vary depending on the kind of product you are trading. This is always a requirement for imports, but in the case of China, you must be very certain about the situation. That's because a sizable number of Chinese vendors do not produce goods that comply with such standards. Only about 5% of Chinese export providers in various industries adhere to the regulations and legislation based on your country.
Each country has its special regulations regarding the import of certain goods. Due to this, it is best to do your research and confirm precisely which rules your products may need to adhere to in order to be accepted into your country and avoid problems at customs.
Consider Incoterms for international trade before signing contract
Incoterms define responsibilities related to international transport that are negotiated between the customer and the supplier. There are various Incoterms and choosing one over another will significantly change the total cost of the purchase. As a result, it is strongly recommended that you just settle this before you put your final signature on the sales contract.
Suppliers must carry out shipments under the Incoterm EXW (Ex Works) when trading from China since it is beneficial for them. It places the most responsibility on the customer and the least on the vendor who is only responsible for getting the products ready. It is frequently used since the provider lacks export authorization. In these circumstances, finding an intermediary agency to handle the export is necessary to manage the risk.
Maintaining transit times and be patient with delayed shipment
Unexpected delays are one of the biggest obstacles you'll have to overcome if you start buying goods from China. Delays are unavoidable, whether they are caused by bad weather, a public holiday, or simply because your supplier is behind schedule. The easiest way to address them is to wait and consult with your sourcing agent.
You must be careful about the time frame if your items are time-sensitive and won't last for weeks. Otherwise, select the earliest possible date that they could be delivered. This will prevent you from being taken off guard if something goes wrong.
Ordering small quantities from separate vendors is another wise move to prevent delays. By diversifying your supply chain, you can be sure that there will always be someone who can deliver orders on time.
For almost all shippers, the typical transportation period from China is between 28-35 days. However, this time can vary depending on the port of origin and the collection point. You should also consider the intervals at which your product will be shipped from China to your country. Keep in mind that the arrival of your goods could be severely delayed if any of the given paperwork isn't accurate or full, or if for some reason your product needs to pass an audit.
Sourcing products from an inexpensive country like China can seem like a tiring process for a small business. You can navigate the process from start to finish with the help of sourcing agents. In the end, their goal is to help you provide confidently by lowering the risk, freeing you of the hassle, and negotiating rates and terms that benefit your company. A trustworthy sourcing agent acts as your right hand to ensure that each strategy is successful.
Many companies choose to operate independently, but the reality is that many firms lack the time and resources necessary to take on this responsibility entirely on their own, thus sourcing agent is an answer for them.
If you're looking for a sourcing agent, start by determining exactly what you need help with. From there you may start your search and avail of their services by checking if they meet your criteria. It is best to go for a one-on-one before getting them your business. You can also give them a small task to accomplish which will help you to judge their potential.
Buying products directly from sourcing companies in China is cost-effective as it eliminates the middlemen fees. However, the language, culture, and country barriers often leave businessmen exhausted. Even if you don’t want to hire a sourcing agent, then follow the tips mentioned above to avail a smooth import process while sourcing products from China.