In just a few years, China has become the most popular place for product sourcing. There are a lot of companies and entrepreneurs buying everything from clothes to toys from China.
Global sourcing and business expert Rahul Sarkar posted the graph that shows the US imports data in absolute dollar value, sourced from China and India. It illustrates that China continues to lead as the most sought-after destination for purchasing goods.
Is it too late to join the game? The evidence suggests that it is not - numerous companies have started to take the benefits of global sourcing in recent times and are a sign of the continued possibility. But you need to be ready for the unique issues of sourcing goods from China, particularly if you do not plan to visit the country.
The problem is that the road to sourcing success from China is littered with questionable suppliers, broken dreams, and relationships that are not mutually beneficial. Many wonders if it's possible to locate the best suppliers without visiting mainland China. You've heard horror stories:
· Long delivery delay
· Untrue items
· Suppliers disappearing out of thin air
· Low-quality shipments
It's normal to think twice. However, you must realize that there is no one best method for procurement in China. Your success will be determined by the level of your knowledge about the sellers you are dealing with, your specific product, your negotiation skills, the ability to build relationships, and a host of other aspects.
Before you can efficiently navigate the product sourcing in China process, it is essential to consider the advantages of purchasing products from China without going there.
1. Evaluate suppliers
If you use platforms such as Alibaba and Made-in-China to search for suitable suppliers, you'll be provided with an inventory. It's simple to evaluate suppliers based on reviews, rating price, shipping time, and other comparable factors when you can view their profiles and products all in one spot.
2. Cheaper Sourcing
You'll profit from cost-effective product sourcing in China when you study the suppliers and make orders on the internet. You'll save on travel, lodging, and food costs, among other things related to find factories in China. Your time and money can be used to find the most innovative product within your field.
a. Initial engagement
WeChat and other tools for messaging make it easier to communicate with suppliers quickly or in live time. Merchants can get suppliers involved earlier before arranging a formal meeting in China. Communication tools allow users to talk about specific features of your product on the spot.
b. Access to Samples
Since you're not visiting the factory or warehouse of the supplier and you're not in the warehouse, you're in a situation to ask for samples of an item you are interested in. The best option is to seek examples of 3 to 5 suppliers you're thinking of. Merchants who receive samples may keep track of delivery timing, damages, import charges, and other factors. To get a picture of how the shipment might occur in the future.
3. Find a balance between Price and Quality
The main benefit of China direct sourcing is that the cost is reduced significantly due to the low cost of manufacturing and labor.
This is significantly less expensive than in other nations, making buying goods in China appealing. In negotiating the price in conjunction with the supplier, every supplier has a minimum price for producing the product. This is where you must study the cost of the product and its cost to have an idea of what an acceptable price would be.
With this knowledge, you will be able to tell when you receive an amount lower than what the market is charging, and your product's quality might not be of the highest quality.
Being lower than the minimum market price or the price of the product's cost should raise an indicator that the seller is compensating for an item that isn't there and you may not be aware of. To avoid dealing with these consequences, you should avoid engaging with suppliers who offer you a price far too low.
4. Effectively communicate with your Suppliers
The most significant challenge businesses face when purchasing goods from China is the inability to communicate because of cultural and language barriers. Thus, many issues with suppliers stems from miscommunication and confusion.
It could be worthwhile to hire an interpreter since miscommunication could create massive delays in production and delivery times, negatively affecting your business's profitability and margins.
Technical details like product specifications and packaging guidelines shouldn't be written down orally and must be written in two languages.
Also, you should talk about the progress of your work to ensure that any issues are resolved quickly and that you have a smooth flow of communications.
5. Conduct supplier verification checks
After creating a list of companies based on their previous experience, you must confirm the information.
It is essential to determine if the company is a genuine factory or an intermediary and if they have the prior technical knowledge and capability to make what you're searching for. You can confirm the accuracy of this information by checking VAT invoices of suppliers and audited accounts, and the registration documents. Contact the provider and ask for their registration number and business license number.
Although this may not be the case, it's usually a red flag when your service provider doesn't have a landline phone number and operates only with a mobile number.
Suppose your supplier cannot give a business license or a registration number for a company. In this situation, you should stay clear about doing business with them. All registration numbers are confirmed by the local administration or the Local Bureau of Industry Commerce. It is ideal for getting references from previous customers to verify their reliability and track record.
While shopping in China, keeping these suggestions in mind is crucial, especially when it's your first experience. If you are a newbie, you don't want to be tricked or cheated because it could negatively affect your business.
Options when it comes to purchasing from China
Let's look at each in greater detail to see the one that best fits your needs.
1. Purchase Direct
This is the way that 80% of importers attempt to achieve. They are trying to manage the entire process and not pay commissions to intermediaries or agents.
If you're organized enough to manage your suppliers (see above), and you can satisfy your suppliers' minimum order quantity (MOQs), this could be the best choice for you.
2. Make use of a commissioned sourcing agent
Many people from China try to earn money by offering this service. If they're from the right field and have the right skills, you could benefit from their connections and save time. They could also serve as your local representative.
3. Purchase from a trading firm
This is an excellent alternative if you cannot meet the MOQs, such as an entrepreneur or startup placing an order early. A trading business may put production in a smaller facility that can accept smaller orders. Apart from this scenario, we wouldn't recommend collaborating with intermediaries.
4. Find a Sourcing Company
There are lots of Chinese sourcing companies who can source product for foreign buyers. The entire process is transparent (supplier names, a followed process, etc.) It's an investment in your business before the start of production; however, it's a good choice when you anticipate big orders shortly.
Suggestion to buy directly
1. Set the proper expectations
There are a lot of hidden expenses. Don't just focus on the FOB price offered by your supplier. You must determine the landing cost (i.e., the cost that is fully burdened for your merchandise after shipping and duties.)
2. Take the time to locate the best suppliers
This is the most crucial success element. The correct supplier has already produced products for export markets like yours concerning requirements for quality. The best supplier is not too small or too large. They're well-organized for their size. The top managers are looking forward to working for you.
It is essential to keep these tips in mind when product sourcing in China, especially if it is your first time. As a beginner, you do not want to be scammed or taken advantage of, as it can severely impact your business.
Taking your time throughout the process and not rushing things is the best option as you can carefully consider all factors and make an informed decision regarding who and where to get your supply.