Why Most Companies Prefer to Source Plastic Products from China?

2021-08-06

插图1.jpgNowadays, all major international business communities consider plastic products made in China vital for their profitability. Almost all international brands have started utilizing this opportunity, and this has become a trend to drive success to their business.

Due to the rise in prices of various domestic products, the requirement for affordable sourcing has gone up and also has become a necessity for survival in this competitive market. Therefore, many companies these days find it quite beneficial to source plastic products made in China, as the labor cost there is pretty low.

The Truth about Business Growth 

Any business will need time and sustained efforts to build reputation and credibility among its target customers. For any business to start earning consistent revenues, it may take anywhere from 5 to 15 years. Being successful and strive in the market, one needs to be smart and evolving.  

There are so many uncertainties an entrepreneur has to face. It requires a lot of patience and fortitude, as well as a rock-solid foundation. You need to know why you began your business and stay focused so that you finally can reach your goal. 

Trends in Sourcing and Procurement

In any kind of business, well-developed sourcing and procurement are very important. Without a proper procurement system in place, any business may face challenges to find and select the best suppliers, identify the cost-saving opportunities, and also consolidating spend. 

Therefore, it has become a necessity to look for plastic products made in China. To sustain any business these days the following things are very important: 

Global sourcing 

Every business now needs to opt for global sourcing for their basic components and parts, so that they can get the desired items at a much cheaper rate. That is the main reason why most global companies in the world have started sourcing various plastic products from China. 

Sourcing partners  

While sourcing any products from China, many doubt the quality of products. The second problem is the language barrier, which often discourages most European companies to look for plastic products from China. 

Therefore, it is essential to have a local sourcing partner who can take care of both these issues while buying plastic products from China. Many Hong Kong-based companies are playing a vital role in linking the buyer and seller efficiently. 

Green logistics 

Due to global warming, these days most companies prefer green logistics during the procurement of any products from any other country. Chinese companies have also geared up to follow these norms and you can find most made in China plastic products are coming in green packaging materials. 

Global quality standards 

Businesses and organizations need to comply with certain quality standards for their products, services while exporting them to another country. There were issues related to the quality of Chinese products in the past. However, slowly things are now improving at a rapid pace. 

Global Sourcing - The Strategy 

Due to an increasingly integrated globalization, many entrepreneurs have started outsourcing different products and services from different countries. Therefore, both importing as well as exporting have now become a norm. Because of all these developments, the global sourcing practice has become convenient and more relaxing. 

Global sourcing literally, means sourcing various products or services beyond geopolitical boundaries. For example, entrepreneurs in any developed country may source certain labor-intensive products from any developing country where both raw materials skilled labor is available at a relatively lower cost. 

For example, if a businessman in a developed country needs to procure plastic parts, then he will prefer to source made in China plastic products at a much lower cost rather than from any domestic company. This will help to save money on sourcing and procuring supplies from China. 

Major steps in global sourcing

The following are some of the steps that any company needs to follow when sourcing from another country.

Identification of product category for sourcing

Strategic sourcing is always a fact-based and very systematic approach that every business uses to optimize and manage its supply chain. This approach will focus on the improvement of the value proposition. 

It will not entirely take into account the cost, but also ensure that the right material is available to the business when needed, and also in the required quantity at the best possible cost.

This process will involve making decisions that will be based on various facts obtained through market research and analysis. The process will gear towards getting quality products or services at the best value.

Finalizing product specifications and quality parameters 

Having identified products such as plastic products from China, now it will be the responsibility of the businesses to finalize the specification of the plastic products that may include necessary drawing, material specification, dimensions, and so on.

In addition to that, the quality parameters also must be specified for the plastic products. Quality parameters may include physical, thermal, and various other properties of the raw materials used for the plastic products made in China.

Identification of sourcing partner organization (manufacturer/supplier) in China

The next step is to look for companies in China that can provide you with plastic parts that are as per your requirements. You must try to read the review of the supplier and also obtain feedback about the company from any other importers from your country. 

Review of general quality standards of plastic products available in the country

You must now make a comparative study of the similar products available in your own country with the plastic products made in China to know whether Chinese supplies can match the quality standards that are available in your own country. 

Due diligence and license/registration verification of sourcing partner

After satisfying yourself with all the technical aspects of your plastic product needs, you need to verify all commercial and administrative requirements necessary to import them from China. 

These include the licensing details about the Chinese companies that you have short-listed. You can get these details by contacting Chinese government agencies close to the location of the companies in China. 

Factory visit

Having verified all the above, it will always be advisable to visit China and see the factory all by yourself. This will give an overview of the company that you have selected, and also develop a personal rapport with the management of the company.

Preparation of draft contract agreement and sample production

If you are satisfied with all the above then you can sign a contract agreement and ask them to produce a sample of the plastic product as per your specification and quality parameters. 

Product sample verification

You can ask them to send a few samples needed for your trial. If you are happy with the end product using Chinese plastic products, then you can place your order. 

Final contract agreement 

After you are fully satisfied with the performance of the Chinese plastic, you must negotiate the price based on the quantity that you want to procure per month or year. You must agree to all the terms and conditions specified by the supplier and vice versa. Any doubts with terms and conditions must be clarified before signing the agreement. 

插图2.jpgAdvantages of a Sourcing Strategy from China

These days procuring any manufacturing supplies such as plastic products, China has been advantageous for many. A large number of companies find it beneficial by sourcing plastic products from China due to the following few reasons:

Low labor cost

Labor cost is the most important factor that will determine the overall production cost of any product in the manufacturing sector.

As you know, China is the most populous country in the world, and thus it is much easier to find both skilled as well as unskilled labor locally in abundance. The availability of such a high number of skilled laborers has enabled Chinese sourcing companies to reduce their manufacturing costs.

Besides, many government policies of China also allow Chinese manufacturers to maintain the work standards without increasing labor costs. Most of their workers have many years of experience in their respective fields. 

Hence, as a buyer, you need not invest your time and money to train, especially if you want to source plastic products.

Expansive Supplier Base 

The basic reason why most companies prefer to import plastic products from China is that they have an expansive supplier base. Today, China boasts of having the maximum diverse buyers all over the world. 

If you want to source plastic products from China, then you have a long list of options to choose from. These companies can offer you services like raw material, packaging, transport, and quality control

Reasonable Product Quality

A few years back, it was a common misconception that all Chinese products are of substandard quality, and they do not last long. Often Chinese products were termed as use-and-throw-quality products. Now, things have changed for good. You will find several small/medium suppliers offering top-quality plastic products.

Most reputed Chinese manufacturers allow their products to be tested by quality control at various stages of manufacturing. This ensures that the end products if durable and of great value. 

Better Scaling Capabilities

The basic infrastructure in China is robust and well established. Most Chinese manufacturers have got years of experience and have in-depth knowledge about global supply chain management. 

Therefore, you can increase your quantity of plastic product requirements from a few hundred to a million within a few days. Of course, the scaling up time will depend on what type of plastic product and the availability of the raw materials used.

Direct Sourcing

While outsourcing, most buyers prefer to deal with a middleman. However, when you are sourcing plastic products from China, it is not necessary to involve any middleman and you can deal directly with the manufacturer.

Few Reasons to select China as an outsourcing country

The following are a few good reasons why you must choose China as your outsourcing partner.

The Growing Chinese Economy 

China has now set itself as the world’s second-largest economy. Recently it has also shown its credential as one of the largest existing manufacturers in the world. 

Most international companies have also recognized the Chinese capabilities to establish a selling-buying relationship.

Infrastructure advantage

China’s infrastructure has opened the door for socio-economic development in their country. Their economic growth has facilitated better roads, power, and water investments that have helped roughly 700 million people to come above the poverty line within the last twenty years. 

Their extraordinary economic achievements were possible due to many factors like:

a. Export-friendly investment and trade policy

b. Political stability

c. Sound macro-economic management

Adherence to global quality standards

Although the quality was one of the major issues, over the period Chinese Government has made many changes in the business environment. Thus, as a result, Chinese products quality is accepted worldwide. 

Challenges in Sourcing from China

Dealing with unknown territories

China is a Far East Asian country having its distinct culture, which is not very well understood by people of western countries. So, if you are looking for how to get plastic products made in China then you must approach very cautiously. 

Barriers in language and communication

China has its language like any other country. Only a handful of people in China can interact in English. This also poses another big challenge to communicate on a one-to-one basis. Communication through an interpreter can always create some confusion, particularly during business dealings.   

Government’s role

Any joint ventures with China are difficult to establish as they have substantial involvement of the Government. Legal matters often lack consistency and that can be changed anytime by the Chinese government. 

Recently, however, the Chinese government is trying to upgrade legal protections so that the business environment becomes more attractive to foreigners.

Corruption

The policy and various other forms of the Communist Party of China’s policies have often clashed with market liberalization. Kickbacks, bribery, theft, and also misspending of the public funds have affected a minimum of 3% of GDP each year.

插图3.jpgSolutions for Tackling Sourcing Barriers in China

Background research

It will always be in the best interest of the sourcing company to do a background search for any of the short-listed companies. 

In-person visit

It will always be worthwhile to visit China at least once and check out the manufacturing process and other facilities available in the country when you are looking for plastic products suppliers.

Sourcing company/partner

If you want to know how to get plastic products made in China, then you need to carry out thorough research to find a suitable company producing these products.

Improving the clarity in communication

Either try to learn their language or hire a trustworthy Chinese interpreter from your own country so that you can improve the clarity of communication.

China - The Perfect Sourcing Destination

The vast size of this country can be quite intimidating for many companies who are concerned about any possible pitfalls. Many are simply unsure about how and from where to start. 

Yet you need to understand that scale breeds opportunity and surely China has got it. China has already is not the second-largest economy in the world. It also has one of the largest manufacturers on the planet. In the last few years, Chinese growth in the plastic product sector has accelerated to a great extent.

As the economy of China is moving at an ever-faster rate towards truly global trade, more and more western companies are acknowledging all the benefits of sourcing plastic products from China

Benefits of a Having a Sourcing Agent

When you deal with the Chinese for the first time, you may need support from a sourcing agent who will help you to locate a suitable source of plastic products supplier in China.

Particularly, if you are dealing with a Chinese company for the first time, it will be very useful to keep someone in between you and Chinese suppliers, who will coordinate all the needful things to smoothen out your business.

Partner with the right Sourcing Company

If you are planning to source products from China, look for a professional sourcing company that is based in China itself. The company must offer product sourcing as well as quality inspection services. 

For any business start-up company, sourcing plastic products from China can always be an overwhelming endeavor, because of various factors like distance, language barrier, cultural differences, legal difficulty, and other risks. 

Therefore, by hiring a verified sourcing representative, you can source plastic products or any other custom products from China profitably without any hassles. Experienced sourcing companies offer complete transparency to ensure that you get the best services from the Chinese at best possible costs. 

Sourcing agencies guarantee the manufacturing of top-quality products and timely delivery of goods. They will have their QC inspectors to ensure that your orders are manufactured as per your custom requirements. They'll also ensure that the products are flawless. This will help on lowering the complaints and refund claims from your end-customers.

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