Globalization has redefined the way we do business. There is a seamless movement of raw materials and products between countries. Businesses - small and big equally benefit immensely from these transactions. It provides an open market for procuring multiple raw materials/products at competitive prices. On the other hand, this is a golden opportunity for companies to sell their finished goods in various countries. In a way, this is very crucial for business growth.
Global sourcing and procurement encompass multiple activities. Licenses, documentation, and quality checks can be confusing for companies in the initial stages. It is always advisable that companies consult experts before jumping into this. This helps them in taking the right steps and reap maximum benefits from the activity.
Currently, China is a major sourcing destination for companies all over the world. But, is it easy if you have a sourcing office in China? Do you need the help of sourcing companies in China for this? Check out this blog for tips on selecting the best sourcing company in China.
Business growth is primarily a game of balancing your expenses and revenue. For the manufacturing industry, raw material cost is a major recurring expense throughout their operation. Unlike other administrative expenses, raw material costs are dependent on multiple external factors. It can depend on availability, pricing regulations, export-import policy, etc. At this point, optimizing procurement costs becomes crucial for companies to maximize their profits. They need to look beyond traditional suppliers for procurement at lower costs. The cost of procurement is also dependent on volumes. These factors make sourcing from other countries a complex process requiring the support of a sourcing specialist.
Optimizing costs is only one side of the business growth story. Cost reduction by compromising on quality can prove disastrous for companies in the long run. The sourcing activity also includes a quality assurance process. If you are successful in procuring quality raw materials at lower prices, it can work wonders for your business. Let us understand the prospects of China as the most suitable country for your sourcing requirements.
China has a well-developed manufacturing and business ecosystem. It also has huge reserves of primary raw materials for making various products. This makes China the manufacturing hub of the world. From safety pins to high-end machines, they manufacture a wide range of products and components. Moreover, critical raw materials for electronics such as rare earth elements are found in China.
Around 35% of global manufacturing output is by China. In the electronics and machinery supply chain, it accounts for nearly 25 % of the global export. This is a clear indication that the country is a manufacturing hub and undoubtedly a major global sourcing destination. What makes it the ultimate manufacturing hub of the world?
Industrial Cluster Model: In China, they follow a pattern of industrial clusters across the length and breadth of the country. This brings in cost efficiency for suppliers, assemblers, and manufacturers across the entire supply chain. It also has dedicated areas for a particular industry such as electronics, apparel, engineering, etc.
Cheap Labor: China is the most populous country in the world. This also makes it a country with surplus manpower for carrying out various works. The surplus manpower is the reason for the cheap cost of labor in the country.
Excellent Infrastructure Support: Chinese industrial units get proper infrastructure facilities and various incentives. The government also provides tax incentives for companies involved in manufacturing activities. They also have access to excellent transport connectivity and electricity supply.
Procurement is a major game-changer for any business. Be it a final product for trading or raw materials for production, quality procurement at low prices is a clear step towards profitability. Across the globe, many companies are increasingly sourcing products from China due to numerous benefits. The major advantages of sourcing from China are:
Chinese manufacturers rely on economies of scale for production. They get bulk orders from multiple countries and this scale makes manufacturing cheap. Additionally, there is cheap labor availability and tax incentives. This brings down the overall cost drastically.
China has developed the manufacturing ecosystem very well. Initially, the industry was dependent on small-scale manual operations. With the advent of automation technologies, there are now manufacturing facilities that offer high precision and quality. They are capable of producing almost all categories of products as per the demand.
In the early years of manufacturing, quality was a big concern regarding products from China. But now, the scenario is completely changing. Chinese companies are increasingly focusing on key quality parameters. The rise in the number of OEM (Original Equipment Manufacturer) manufacturers for leading brands is a clear indication of this trend.
Having a wide choice of suppliers is always good for any buyer. China has numerous manufacturing companies working on the same product line. This helps in better price negotiations and gives a competitive advantage.
Lead time stands for the total time taken from the process initiation till its completion. In the manufacturing sector, lead time is very crucial for companies to fulfill their customer commitments on time. When you source from China, there are plenty of manufacturing companies and ready availability of critical raw materials. This supports a considerable reduction in lead time.
Sourcing products from China provides a lot of benefits for companies. But as it involves inter-country trade, you need to go through certain formalities. The steps involved in sourcing are:
Finalize the required product/raw material with full specification and quality parameters
Preliminary research on the internet for suitable suppliers for your products
Obtain price quotes for your product based on quantity requirements
Review quotes based on price and offerings
Placing of orders along with price negotiations
Procurement of samples
Factory visits and background checks
Final order and shipping
At a glance, the entire process may look very straightforward. It is quite a tedious process to operationalize. There can be multiple barriers, including language and cultural differences. Additionally, there are numerous documentation and license requirements for completing the sourcing activity. In most cases, a factory visit is inevitable to ensure that you are dealing with the right company. Complex procedures pertaining to legal and shipping aspects are also very much part of the sourcing activity.
In this context, it is always better to go for a sourcing company in China for your procurement activities. This will help you streamline the entire process within a short time span.
Sourcing products directly from Chinese manufacturers is certainly a cost-effective option for your business. But it demands a lot of your time and attention for successful deal closure. There is a range of activities that goes into procurement. Apart from the technical aspects, effective communication is essential for dealing with suppliers. In China, you require proficiency in the Chinese language (Mandarin/Cantonese) for communicating with various companies. A sourcing office in China can come in very handy while dealing with these communication hurdles. This helps in translating your requirements into a perfect final product.
A sourcing company in China handles multiple activities on behalf of your firm from start to end. The sourcing company can help you in:
Identifying the right manufacturing partner across China
Due diligence of the manufacturing capabilities
Verification of licenses and certifications
Communication on design requirements and finalization
Preparation of contract
Factory visits and sourcing of samples
Completion of legal compliance
Logistics and final delivery
In short, the support of a sourcing company in China provides a hassle-free procurement experience for you.
The major benefits of working with a China sourcing office are:
Clarity in communication
Better price negotiations
Accurate due diligence
Real-time factory visits and inspections
Faster logistics and delivery.
Companies do acknowledge the benefits of partnering with a sourcing office in China. But selecting an appropriate sourcing company can be very challenging. Sourcing is an activity where you invest a lot of money upfront. The sourcing partner should be capable of delivering the desired results at a low cost. During sourcing, at every point, timely approval is a key factor. Any delay in production, shipping, or clearance can cost you extra money. Similarly, lack of supervision in the quality aspect can result in product rejections. This might end up in legal battles that take up a lot of your precious time and money. So, the sourcing partner should have all the necessary expertise to deal with these issues.
Check out these factors while selecting your China sourcing partner company.
Local Presence: Local presence of the company is inevitable when we talk about sourcing. The internet can serve only as a secondary source for verifying claims made by a company. The actual work needs to be done on the ground. A sourcing company with a local office and staff has many advantages while dealing with manufacturing companies. This can facilitate on-site visits for factory inspection. These visits are also helpful while communicating product requirements and quality parameters. The local presence of the company can speed up the paperwork and ensure faster clearance for logistics.
Level of Quality Assurance: A shipment that is only worth rejection is the last thing any company would want. For any business, quality products are a must for customer retention and business expansion. You should make sure that the sourcing partner has all the necessary capabilities for conducting quality assurance audits. This includes trained staff capable of carrying out QC inspection at every step of production. You can cross-check with the company regarding their manpower. It is a good idea to assess the capability of their staff by interacting with them on relevant topics.
Language Competency and Cultural Familiarity: The Chinese business ecosystem is entirely different from the U.S and Europe. The cultural values are also different. A good sourcing company should be well familiar with these nuances. Having a good representation of Chinese-speaking candidates in their staff is a good indicator of their language capabilities. This helps in obtaining the best results while dealing with the manufacturer.
Registration and Licenses: China follows a strict law enforcement system. This means that the sourcing agent should possess all registrations required for operating a business. Any failure to comply with this can land your procurement deal also in trouble. Apart from the regular trading license, they should also possess registration for shipping, export, etc., as per the nature of the activity. You can take the help of a qualified lawyer to check these registrations and their validity.
Capabilities in Logistics: Without proper logistics, sourcing activity is never complete. Make sure that the sourcing company has all the capabilities to arrange proper logistics. The mode of logistics has an impact on the final cost also. Customs clearance is also a major aspect of logistics. Any delays in these clearances will cost you a lot of money. Make sure that the sourcing office in China has expertise in dealing with these aspects.
Domain Expertise and Industry Connect: From toys to electronics, Chinese manufacturers produce almost all products. But you have to make sure that the sourcing company is capable of identifying the best manufacturers for your product. For this, they themselves need to have proper domain expertise. Make sure that the sourcing company has well-trained staff with expertise in manufacturing and quality control in the respective domain. The company should have excellent connections with relevant industries to provide good results. You can check their website and client list to assess their domain expertise.
Capacity to Carryout Documentation: Every step of the sourcing process requires a lot of paperwork. From advance payment to the final contract, all these documents require proper drafting and scrutiny. Most of these documents should be prepared in both English and Chinese languages. This requires expertise as the terms and conditions are crucial for timely delivery and quality. In case of any legal tussles, these contracts act as the key document. It is very important to ensure that the company in China has expertise in drafting these contracts.
Client Feedbacks and Online Reviews: The internet is a valuable source for assessing a companies’ credentials. Customer testimonials on the company website and reviews on public platforms are useful in forming a rough idea about a company. But this can’t be relied upon as the ultimate source. With the advent of digital marketing, we can’t rule out the possibility of fake reviews and paid testimonials. In this context, speaking directly to some customers is a good strategy that you can adopt.
If you pay attention to these aspects, you will be successful in selecting a good china sourcing company for your business.
Maple sourcing is an expert sourcing company based out of Shenzhen, China. It provides sourcing services for companies across the world. Founded in 2012, it has a team of experts capable of meeting all your sourcing requirements. The team is well-versed in both English and Chinese, making your communications easy. It deals with multiple product categories such as consumer electronics, sports equipment, health products, metal hardware, etc. Maple sourcing provides end to end solutions in sourcing such as:
Process and Order Management
The benefits of choosing Maple sourcing as your China sourcing office are:
Quality assurance with 100% refund on defective products
Excellent customer care support
Expertise in multiple industry domains
Bilingual staff for smooth two-way communication
Transparent operations with experience in multiple countries
Dedicated QC inspectors for quality inspection
Tie-ups with quality manufacturers
Assured low prices
Possess all necessary registrations and licenses
If you are looking for a trustworthy sourcing company in China, then Maple sourcing is undoubtedly the best option. You can consider them for a long-term partnership for fulfilling all sourcing requirements. It has a vast portfolio of satisfied clients across multiple product lines.
The decision to source products from China is a true game-changer for your business growth. It provides your company with exposure to a wide variety of products across different industries. It can bring cost optimization and increase your overall profitability. But, it takes a lot of effort and time to engage in a direct sourcing activity. This can be a daunting task for your company. At this juncture, the services of a sourcing company in China can be very helpful.
The sourcing company can act on your behalf to carry out the entire sourcing process from beginning to end. In a way, selecting the right sourcing agent is crucial for your business. You need to invest enough time before finalizing a sourcing agent for your business. Make use of online and offline resources to verify the credentials of such companies. Once you complete a preliminary background check, it is always advisable to visit some of these companies in person. Remember, a trustworthy sourcing company in China can take your business to new heights.