Benefits and Obstacles of Sourcing in China
The economic and industrial sector of China has undergone rapid transformations owing to the favorable trade laws initiated by the Chinese Government. This is one of the reasons why marketers are choosing China when it comes to sourcing operations.
Sourcing in China has the following benefits:
1). Low production cost
This is one of the major benefits of China sourcing. If an organization works with a manufacturing factory in China, the company can reap the benefits of lower production costs. Reduced production cost doesn’t mean reduced volume output. A large number of Western marketers are wooed by this fact.
In Western countries, the costs of production are higher when compared to the Eastern nations. Now, if a Western marketer decides to manufacture his product in the home country, the production costs are very likely to be higher. This is because Western nations are far more advanced than the Eastern countries in every sphere of operation. China has a growing industrial economy and is giving a tough competition to the Western countries. Marketers are looking to take advantage of it.
2). High output within a short period
It will not be wrong to say that the Chinese workers are more skillful than most of the workers of other countries. The Chinese factories are not limited in capacity and time, unlike some U.S. domestic factories. The Chinese workforce is aware of the latest trends in technology. They also know how to implement it in their operations.
Agencies that offer sourcing services make marketers familiar with the economic and political climate of China. The cost of labor is cheap in China. This is also a great advantage for organizations. Companies have the option to hire more people if there is an increase in consumer demand. In this case, marketers have to incur less money than domestic facilities.
3). Market expansion opportunities
This is another reason why marketers are opting for China sourcing activities. The economic and political climate of China is favorable for marketers to conduct business operations. The Chinese Government has initiated various reforms that are promoting the sourcing scenario of this country.
If an organization decides to manufacture its products in China, it will also get a chance to penetrate the local market. With the help of sourcing agencies, companies can reap the benefits of an established supply chain. China boasts of having a large number of factories under its name. With over 1.4 billion potential consumers, organizations can hope for better returns.
However, there are obstacles to sourcing in China:
1). Getting access to the right factories
As this giant has numerous factories, organizations face the difficulty of finding the right factory that fits their needs. Many Chinese factories do not deliver products as per the requirements of firms. Moreover, there are quality issues that take a toll on an organization’s brand name. Companies hire sourcing agents of China to minimize this problem at large. These procurement agencies have an idea about the Chinese factories and suppliers that can come in handy to organizations.
This is another obstacle the Western marketers face while conducting their procurement operations in this country. There is no doubt about the fact that the Chinese language is very different from English. Most of the time, communication blunders lead to a fall in productivity standards. Companies should try to avoid such blunders by any means.
Hiring a Chinese sourcing agent can make things easy for organizations. A good sourcing agent can give the company updates regarding the production process.
Though the infrastructure of China is up to the mark, there are problems relating to the shipping of goods. When it comes to shipping, the suppliers pack the products and put on cargo ships. These ships sail around the globe and reach the marketers after a long period. This also increases the shipping costs of companies at large.
Organizations have to consider both sides before engaging themselves in China sourcing operations. Marketers need to formulate a sourcing strategy that meets their objectives. Go with China sourcing operations if you want to enhance the productivity of your company.