China has become an undisputed leader in the global manufacturing sector. Most of the countries around the world depend on them to source products at low costs. Made-in-China products were not appreciated or trusted by people, but things have changed significantly in the last decade. It is not a surprise that most of the top global brands depend on China to manufacture their products, parts, and accessories.
Small and mid-size companies are also following suit in procuring products and parts from China. The manufacturing and import policy laid down by the Chinese government has made it conducive to sourcing products, even for small traders from any country. This means that they will save a lot of money on procurement costs by importing from China. It gives them an edge over the local competition in their domestic market.
Challenges:
However, challenges come with the prospect of importing from China because of the manufacturing process in an overseas location. Only a few companies have the capacity to have their own officers and quality inspectors in China.
When engaging in imports from China, it is inevitable to come across the term "sourcing company". They offer end-to-end import solutions for their international clients. This blog post aims to present an objective analysis of sourcing companies and the solutions they offer. Importers must understand how a sourcing company can simplify their Chinese sourcing procedures and if it is feasible for them to hire one.
1. Cultural and language barrier
Firstly, there is a high chance of communication errors because of the language barrier. Also, people in China follow a culture that is different from that of the Western world. That makes it difficult for international importers to deal directly with manufacturers in China. Negotiations become difficult, and communication mistakes can occur while explaining the product specifications.
Even though most communication can be done online, many importers wish to visit China in person to finalize the deals. However, small companies cannot afford the additional expense of traveling and staying in China because it eats into their profit margins. The best workaround for this problem is to hire the services of a sourcing company based in China.
Solution:
A China sourcing company offers multiple services to international importers. The first one is breaking the language barrier. They have experts who are fluent in English as well as Chinese. That works well for most importers because English is a universal language for conducting business in Western countries. You can have a detailed discussion with your sourcing company so that their experts can understand your requirements precisely and convey the same to the suppliers or manufacturers.
There will not be any kind of communication mismatch with any third parties. You can discuss your budget and expectations and leave the negotiation to your sourcing company. Therefore, you will not have to spend money on plane tickets and hotels to visit China in person.
If you plan to develop a new product in China, the sourcing company can offer important resources like design planning, engineering drawings, and moulding. They also guide the clients through the prototyping and sampling phase. If the importer cannot visit China in person, then it makes sense to outsource the new product development process to a reliable sourcing company.
2. Cost estimation and budgeting
Many new importers make errors in estimating the costs accurately and are later surprised when they are faced with additional expenses they cannot avoid. It simply increases their overall procurement costs, which could either mean that they have to increase the retail price of their product or cut down their profit margins. Either way, it is not good for the business.
Solution:
When you work with a China sourcing company, you won’t have to worry about getting the shock of hidden costs. They have good experience working with international importers and are aware of each expense, like customs duty and taxes, involved in the procurement process. It will help you plan and finalize the budget. However, holding on to reserve funds for unforeseen expenses is still recommended.
3. Supplier verification and selection
Many importers have burnt their pockets by tying up with the wrong manufacturers and suppliers. Small and mid-size importers cannot take that risk as it could push them deep into debt and loss of reputation in the market. A lack of knowledge of how to do business in China, combined with insufficient research and information, could lead to disaster.
Once the design and specifications are completed, the next part of the procurement process is finding the right product supplier. Importers cannot afford to go wrong here, as it will snowball into bigger problems during manufacturing.
As an importer, you would want to avoid getting your business tangled with the wrong manufacturers. They could deceive you in many ways, like using cheaper raw materials, delaying delivery, or even scamming you outright. Don’t expect to not come across scammers in your import business. There are people out there waiting to make quick bucks at your expense.
Solution:
Experts from your China sourcing company will first understand your precise requirements and budget and then start scouting for suppliers. Firstly, they check if the factory has all the legal documents and licenses to do the job. Then, they shortlist the most eligible manufacturers that meet your criteria. They will also have established contacts with reliable factories with whom they have worked and successfully delivered projects in the past.
Your sourcing company will send their executives and inspectors to do the factory audits. There, they assess important aspects like production capacity, raw material supply, number of employees, machinery condition, technologies used, etc. Their experts will negotiate the costs on their client's behalf and finalize the minimum order quality to proceed with the production process. They also prepare proper contracts with the factories, where each aspect of manufacturing and quality requirements are clearly documented.
Note - Remember that the bigger the order, the better the chances of price negotiations.
A China sourcing company not only helps the importers find suitable suppliers as per their specific needs. They also follow up with the production work before, during, and after the manufacturing phase. That brings us to the next big challenge that China importers face.
4. Quality of manufacturing
Importers can buy products directly from suppliers, but there is no guarantee of good results all the time. Let’s say you got lucky to find a good supplier directly, and the products did well in your domestic market. You will have already negotiated and finalized the prices, so you feel that everything is good. You start to become lax with quality monitoring to save money because you are confident that your Chinse supplier will take care of that. That could lead to a serious setback.
Your supplier may try to cut corners to increase the profit margin at the cost of quality. You will unknowingly sell those products to your customers or distributors. Before you know what went wrong, you will be hit with quality issues that keep mounting all the time. Such instances will ruin the name of your brand and push away even your loyal customers towards the competitors. You cannot simply let that happen to your business.
Solution:
As a part of the pre-production quality check, they help in the sampling phase, where a few pieces of sample products are sent to the client. The client will get to see and feel the physical products, making it easy for them to assess whether they meet their expectations. Any changes can be accommodated in the sampling phase without spending much money. Mass manufacturing will start only after the client finalizes the product sample.
Businesses cannot afford to relax the quality monitoring process, trust the suppliers, and expect them to live up to that. It is a recipe for disaster. Here is where a China sourcing company can be of great help. They send their inspectors to the work sites in person to monitor the manufacturing process. QC checks and analysis are critical steps in risk mitigation and process improvements.
Firstly, they will develop a product and process QC plan where the quality checkpoints are determined. It is designed to work in tandem with the real-time manufacturing process. It will be documented appropriately according to different phases and layers of manufacturing and shipping. Clear instructions for job roles and responsibilities of individuals and teams are assigned so that there is no confusion. Everyone is accountable for the duties that they are assigned to do.
Once the manufacturing process starts, they send their inspectors to monitor the process personally at the factory. They will have clear-cut instructions and checklists for all the points where they have to ensure compliance. If needed, they also do video calls with their international clients to show the process in action or for clarification. It may look insignificant, but this step gives a lot of confidence to their importer clients. They will have peace of mind knowing that the work is being done in a professional manner.
The inspectors also monitor QC during the packaging, storage, and pre-shipping phases. Here, they do random checks on products to ensure that each product meets the quality standards as specified. They ensure everything is in place until the products are loaded for transportation.
These are all the critical manufacturing steps that importers must pay attention to. It will lead to a fade in quality and bigger setbacks thereafter. Moreover, these inspectors also monitor the production speed to check if it is on par with the agreed delivery deadlines. It is an essential part of the quality check because shipment delays can cause significant losses and cancellation of deals.
If your business does not have QC monitoring or inspection specialists in China, then the business sense demands using third-party inspectors. You will be spending money on their services, but it is well worth it.
5. Continuous improvements
No matter how much you streamline the processes, there is always a room for improvements. The customers may love your products today, but you cannot guarantee the same after a few months or a year. Customer choices and preferences keep changing, and your products must be able to meet their new needs. It would be better if you have the foresight to identify their future needs and improve your products accordingly. This is especially true for importers who turn to China for repeat orders. If your product can’t meet your customer's needs today, your competitor’s product will.
Solution:
Your China sourcing company will have experts monitoring the market trends and innovations that can help update or upgrade your products. Their analysts will also identify the areas where the process lags and offer solutions to streamline them. These companies work with multiple clients and factories, so they get firsthand information about the new things in the market related to your products. They suggest the things that will help your products offer the best solutions to the end customers.
In addition to the challenges mentioned above and import solutions offered by a China sourcing company, they also help in other procurement matters like product designing, finding fast prototype services, warehousing, and product consolidation. They can also help their clients get legal aid if needed.
Conclusion
A China sourcing company offers end-to-end solutions from discussing product specifications and designing, sampling, manufacturing, packaging, warehousing, shipping, and everything in between. It is like having your own office and employees in China without having to invest heavily on infrastructure and resource. These sourcing companies may either work on a commission basis or a flat rate, and you will need to decide on the best option that is feasible to meet your import need.
Many small and mid-sized businesses are using third party services for product procurement from China. The benefits can be enormous if you work with a trustworthy sourcing company in China. Whether you are a startup company or a large corporation, the association of such companies in China can be highly beneficial.
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