Why Procurement Outsourcing in China Is Important for Your Business?

2022-08-26

插图1.jpgOver the past many years, several small and medium-sized companies, as well as a few of the top brands, have recognised how crucial it can be to source products from China.

China surpassed all other countries in trading in 2013. In 2021, China sold $3.34 trillion worth of goods. Global e-Commerce enterprises are the best source of raw materials and products that are ready to market.

If done right, procurement outsourcing in China can boost your profit margin, guarantee a stable supply and cut labour costs all year long.

Unfortunately, there are still a lot of myths and falsehoods spreading. A few claim that Chinese products are not of excellent quality. But the truth is that sourcing from China can be your best choice.

Let us look at a few advantages of procurement outsourcing in China to help you change your perspective.

1. The growing Chinese economy

The Chinese economy is expanding quickly, and therefore sourcing the goods from here is a wise move for any business owner. Majority of multinational corporations develop a selling-buying relationship and define the necessary competencies to succeed in the market.

2. Low-cost country sourcing advantages

E-commerce and the internet have sped up the rate at which products are copied and trends emerge and disappear, elevating the importance of speed-to-market.

When it comes to accelerating your supply chain, the integrated supply networks of China represent a significant benefit.

With respect to a wide range of low-tech, mid-tech, and even high-tech products.

Its production ecosystems offer a concentration of input suppliers, assembly plants, experienced workers, and service providers that is difficult to match.

China adds 76% of the value of the items it exports on average, which is close to the EU's 87% and demonstrates how little it depends on foreign materials. This explains why China has continued to produce the majority of things that require multiple components, including electrical goods.

3. Expansive supplier base

Since China has a vast network of suppliers, Western companies may benefit from it, which is why so many prosperous enterprises of today prefer procurement outsourcing in China for the products like electronics, textiles, toys, etc.

插图2.jpg4. Reducing the risks

When you buy products from China, you choose a carefully strategic sourcing process that enables you to minimise any potential risks.

When you buy products from China, you are going to be actively involved in every stage. In turn, this will assist you in receiving early warnings of fraud risks, erroneous profits, and late deliveries so that you can take action and effectively reduce them.

5. Cost-value

Finding good value at a fair price continues to be a sourcing goal even as other factors become more important. The influence of the rising labour cost, property cost, and compliance expenses in China are now somewhat countered by the rising productivity and quality advances of the country.

A major factor in improving productivity of China is rapid automation of the country. Compared to Chinese facilities, US automakers used three times as many industrial robots in 2011, but a Boston Consulting Group analysis states that China caught up in just five years.

6. Better scaling capabilities

China has a strong, well-established infrastructure. The majority of Chinese manufacturers also have extensive experience and knowledge of the global supply chain. These two elements enable them to increase production as needed.

For instance, in only a few days or weeks at most, you may boost the number of products you source from a few thousand to over a million. The length of time it takes to scale up the will, of course, varies depending on the nature of your product and the accessibility of raw materials, among other factors.

Additionally, the majority of manufacturer regulations do not mandate that customers spend a lot on Minimum Order Quantity (MOQ). Due to the significantly lower costs associated with MOQ, start-ups and small businesses can begin buying products in small quantity.

7. Freedom to select desirable factory

You are restricted in your ability to review the working terms and conditions when choosing local providers. Just let your supplier know about the exact product. You will receive the required things if they can live up to your expectations else, bad luck.

However, when purchasing Chinese goods, you have the option of visiting the factory in person to examine the working conditions. Additionally, you can choose from a choice of factories and talk about your needs.

As a result, when you purchase goods directly from China, you have the opportunity to choose the right goods and the proper factories to produce them. However, when your company expands, you may scale up. There is no better option than using Chinese manufacturing if you are a young business trying to build your brand.

8. Sustainability

The increased demand from customers for products created ethically and the ability of the internet to instantly make or ruin a brand's reputation are forcing sourcing teams to prioritise social and environmental responsibilities.

Finding inspection companies and suppliers with experience in satisfying international compliance standards is very simple because to China's developed export sector.

9. Direct sourcing

Buyers often deal with several parties, or middlemen, while procurement outsourcing in China that causes delays and raises sourcing costs. However, you can interact directly with the producer when purchasing goods from China.

The OEM market in China is fiercely competitive. As a result, in order to avoid the higher costs of using multiple middlemen, the majority of producers prefer to work directly with the purchasers. Sometimes you just need to work with one product sourcing agent, which makes it simpler to get started.

Through online marketplaces, by physically visiting different merchants' markets in China, or with the assistance of an expert sourcing agent, you can quickly establish contact with a reliable supplier or their representative agents at international trade fairs. Make certain to work with a reputable and knowledgeable manufacturer.

10. Reactivity

Responding faster to consumer choices is crucial to unlocking profitability.

For example, you should make your purchasing and production more demand-driven to reduce inventory issues and increase your return on investment.

The practise of "nearby-shoring," which would involve locating production quite near to end users, is also the other way of increasing agility. This has typically meant leaving China and migrating closer to Europe or the US.

However, now the global consumption focus is moving eastward. Asia will account for 40% of global garment sales by 2025, predicts McKinsey. As a result, more businesses will view China as a near-shoring destination as opposed to an off-shoring place.

When manufacturing is outsourced to China, a sourcing agent is crucial. Anyone looking for a stress-free and easy approach needs the assistance of a sourcing agent.

Procurement agent can assist you with your procurement procedure and profit margin for the following reasons:

1. Better connection with suppliers

Sourcing agents may assist you in identifying the manufacturers who can provide the best value and highest quality for you based on their past customers, industry expertise, and professional connections.

One size does not fit all, and their network of contacts will put you in a better position to establish a business connection with a manufacturer.

2. Customization

Few merchants collaborate with Chinese producers. Customize products in China frequently annoy retailers. Language barriers and distance hurt. Purchasers' agents can be quite useful here.

They speak both English and Chinese languages fluently and have expertise in working with regional vendors. With the help of this technology, sellers can buy their desired goods with little risk.

3. China-based team

Most sourcing agents, if not all of them, have teams based in China where they source manufacturing. Language limitations are a challenge that many businesses must overcome.

Since the team is located abroad, there is no communication barrier, which lowers the possibility of miscommunication, saves time, and increases efficiency.

4. Save your time and cost

The decrease in the risk associated with importing from China is another factor that makes sourcing agents important to organisations. By monitoring manufacturing and conserving time, they can reduce the danger. This is going to you save money too.

插图3.jpg5. Quality control/reducing any risk of bad quality

Your eyes and hands in China could be a sourcing agent. In order to maintain the desired level of quality throughout manufacturing, the sourcing agent will efficiently handle quality control and deliver the report and lowering the possibility of purchasing subpar goods.

6. The price is competitive

A sourcing agent will always be able to secure reasonable pricing because of their numerous strong contacts with various factories, saving you money and boosting your profit margin.

7. Offer shipping coordination service

Your products can be shipped efficiently and successfully to the UK or USA with the help of shipping coordination services. A sourcing representative can guarantee effective shipment for you.

Conclusion

No doubt through procurement outsourcing in China you are able to get plenty of benefits and that is the reason why most of the companies in the West prefer to tie up with a Chinese manufacturer. A trustworthy sourcing agent can be icing on the cake.

Recent Blogs
Want to speak with our key account manager?
We speak your language.

Our Features