In the present scenario, China has really emerged as one of the leading manufacturing hubs of the world. Right from electronic items to metal products made in China, there are tremendous options. So, it is not at all a matter of surprise that nowadays, more companies are looking for certain products to source from China.
As far as the variety and pricing are concerned, there are very few countries at present that can offer competition against China.
All business owners or purchase managers, everyone has just a single goal to find a new source and certain products at the lowest price from China. Getting any reasonable quality products at very low prices can surely enhance the cost-effectiveness and also profitability of your business.
Those of you who generally source their products from different overseas countries are now wondering whether sourcing from China will be a viable option or not. Whether it is really worth taking this risk?
However, to source from any overseas countries, and especially from a country like China you must have a certain strategy in place. We will talk about a few tips of overseas sourcing and particularly keeping China in mind.
Usually, most companies prefer to source from any overseas countries for the following 2 reasons.
• Firstly, to have a long-term goal to establish a domestic market presence to serve their economy.
• Secondly, a short-term goal for taking advantage of a few low-cost capabilities and also the low labour cost of that country.
So, you need to decide what your strategy is so that based on that you need to move ahead.
Most businessmen try to find a certain agent in the overseas country and decide the product based on email or telephonic conversation. This approach may be OK if your need is short-term and quantity is very negligible.
However, if you are looking for a long-term supplier, then it will be better to visit the country and see the factory by yourself and check how they are manufacturing.
While searching for any supplier, you must ensure that you do enough research on the market before you select your product. Since you are looking for a long-time partner for your business, it is essential that you must evaluate your supplier well.
If you are searching in the Chinese market then search from the following websites:
Quite a few that you may come across may not be the actual manufacturer, but only an agent.
The most important step for selecting the right supply partner, who is ready to offer enough references so that you also can verify. You must verify that your prospective suppliers have got adequate capital, proper quality systems, and also sufficient production capacity.
Also, find out the priorities of the supplier like what they are focussed on? Whether they are focused on quality, price, or fast production?
Building and also maintaining a very strong business relationship with your supplier is very important in any overseas country and especially with China.
Before you start importing, you need to create an effective relationship. In countries like the US, this may not be so much necessary, however, in an overseas country, these relationships can be very useful in the long run.
Before you finalise your deal with any overseas country, you must ensure that there is complete clarity in the specifications. Your supplier and you must be very sure about what the end product is going to be. It’s recommended that you sign a manufacturing agreement with your China supplier.
In most Asian countries and especially in China, people are not serious about the importance of intellectual property like in Western countries.
Therefore, it is essential to discuss with your supplier on this issue and have legal documentation on your contracts. In China, even with a legal contract, it may be challenging whether your intellectual property will remain protected.
If you are dealing with any technologically driven product then it is essential that you must create a technical team who may visit the supplier’s factory and work with their engineers for some time.
It has been seen once engineers from both sides work and interact then they can always have better communication and the issues are resolved faster than your expectation.
Before you trust your supplier, one of the important tips of overseas sourcing is you must check what he is supplying you. Often you may be totally surprised that what he supplied is different from what you were looking for.
You must either have your own quality monitoring program, or you may get it conducted by any reliable third party in presence of your own company’s representative.
Also, it is extremely important to confirm that the product that is shipped will meet all of your specifications and also the performance criteria that were agreed between you.
Remember even a single bad shipment can seriously damage the credibility of your procurement department and wipe out all your projected savings.
There must be some of your representatives present in the overseas location from where you are importing who can keep a proper check on the product that is getting shipped.
You will also need a suitable tool to measure the actual quality of the product that is being shipped to you.
While receiving their quotes, you should remember that they are quoting only what you asked. In case there is something missing in your specification then there can be a significant difference in cost.
• Ensure that all your specifications perfectly match your needs
• While ordering samples, you must find an agent for supplier consolidation who can consolidate all your samples and ship to you all together to save cost.
• For the samples of Chinese custom products, they can be prototypes that may require certain improvements or a few more iterations.
One of the other tips of overseas sourcing here is you must ask your supplier whether they will refund the cost of any rejected sample while placing an order.
Also, any time either you or your supplier makes any changes on the product howsoever minor it may be, whether that will make any difference in price.
Quite often, it is possible that your supplier may not have exactly the same product that you are looking for. However, the company has the expertise to develop the product that you are looking for.
In such a case, it will be better to send your technical team to the country so that an R&D can be done jointly to develop the product to meet your requirements.
Often most of the importers assume that China will be the only destination from where one should import for a better price deal.
However, you must also explore a few other countries like India, Vietnam, and a few Mexican countries, where you may get your desired product of the right quality more than your expectation at the right price.
If your focus is mainly on China as your sourcing partner, then going on your own may not be very easy and smooth. The biggest hurdle will be the language barriers. Besides that, the business culture in China is quite different and difficult to understand.
Therefore, it will be a smart idea to hire a knowledgeable sourcing agent in China, who should be well conversant with speaking the English language and knows about the industrial practices of China.
Before you appoint any Chinese agent a few tips of overseas sourcing particularly from China will be useful to you.
You should preferably select a person who has a technical background and is well aware of the product that you want to import from China.
In addition to that, he must be aware of the government policies, customs, and various commercial issues that can often arise while exporting from China.
Preferably, your agent must have enough experience in this kind of job with a few other companies in western countries.
While hiring an agent in China, it is also important to verify his credentials. You need to do a considerable amount of research on the agent that you are considering. Take some time to track his credentials. Try to check the following:
• Location of agent: Prefer to hire an agent who is not located in China but is well aware Chinese industries. Verify his trade license before initiating any discussions.
• Length of experience: Know since when he has been doing the business in China. Ensure that he has an office in China and have a few qualified teams of persons with him.
• Reference: Ask for references with whom the agent has worked before. Try to verify from the references what their experience was while working with him.
• Handling of quality issues: One of the biggest concerns while dealing with Chinese companies is quality problems. Try to understand from your prospective agent how he handles various quality issues.
• English fluency: Ensure that your agent is good in both speaking as well as writing in the English language. Also, make sure that all his staffs are also proficient in speaking and writing in English.
Hiring any right agent is going to be a very crucial step for the success of your sourcing Chinese products. So you must ask the right questions so that it can help you to grow your business.
To make your sourcing process a success, you must share a full specification of the product that you intend to import from China. You must be very clear and specific so that nothing should be left to assumption.
Without a proper specification about the product may lead to serious confusion and it will be your waste of time and effort.
It will be best to send a sample along with a proper drawing so that there is no confusion in the understanding of exactly what you are looking for.
Often even after sending all the specifications and details, you may not get the right product that you are looking for. Therefore, insist on sending a sample.
Quite possibly the first sample may not be perfect right after your evaluation. So, you must communicate where it lacks. After a few iterations, you will finally get the right sample.
Even if you have got the right sample, you must still have a proper plan for quality control. You must try to get the quality report during the production stage and do not make any compromise on that.
In China, quality is often a very big issue, and unless you have very tight control over it then your whole effort may get wasted. Seek whatever help is needed from your agent and check how much he can help in this matter.
You must chalk out a detailed plan along with your agent how he can help you in ensuring future quality. Try to see how much your agent is competent in this regard.
Surely the Chinese products are quite low priced from almost anywhere in the world. That is because of their lower cost of labour and also the industrial policy of the country.
However, you should not always hunt for the cheapest product in China. Remember, if you throw peanuts then you will only get monkeys. Your agent may offer several quotes for your desired product, but you should be reasonable with the pricing.
Sourcing from China can surely offer you a lot of benefits however, if you are not very tactful then your whole effort may go waste. Your sourcing partner can be quite useful to you if you can manage the relationship well.