Globalization has made it possible for businesses to reach every corner of the world. This factor has resulted in easy movement of raw materials between many countries and both the big and small businesses have experienced various benefits in this case.
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.
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 from China 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.
Why should you consider sourcing Chinese products directly?
Chinese sourcing is a kind of game-changer for any business to flourish successfully. Quality procurement with the help of cheaper prices is an excellent way of making sure that the business will experience wonderful profits. Benefits of sourcing goods from China include:
1. Low Cost
Chinese manufacturers normally make use of economies of scale when it comes to production. With the availability of bulk orders from many sources around the globe, it becomes easier for the manufacturing arrangements and hence will make the product cheaper. This, when combined with the availability of abundant cheap labour, can make it easier for Chinese manufacturers to produce low-cost products.
2. Huge capability
Chinese manufacturing companies have successfully developed a network of manufacturing systems with the whole world. They become the manufacturing facility that can offer huge capacity with high quality and precise options for customers around the globe.
3. Excellent quality
As the demand and technology both improved, along the years, more and more factories started focusing on the quality of their products, and as a result, Chinese products became more known for their quality in the last few years.
Most of Chinese companies are now focusing on the quality parameters. Hence, most of the start-up businesses prefer Chinese factories as the best sources for their importing business.
4. Short lead time
China is quite famous for many manufacturing sectors and every company will make sure that they fulfil the lead time as expected by their customers, without causing any delay. The availability of multiple options makes it easier for the manufacturers in China to get the job done before the deadline.
5. Easy availability of labour
The availability of abundant manpower has made the country not only utilize the opportunity to the fullest but also gain more by spending as minimal as possible in the form of labour costs in the country. Hence, the companies here can serve as the best options when it comes to choosing a sourcing company for your business. The availability of more manpower makes China utilize it as efficiently as possible and become the topmost country in almost every field, including businesses.
What are main challenges of sourcing Chinese products?
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 must have heard horror stories:
- Suppliers disappearing out of thin air.
- Long delivery delay.
- Untrue items.
- 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.
How to do Chinese sourcing without visiting China?
Before you can efficiently navigate the process of product sourcing in China, it is essential to consider the steps of purchasing products from China without going there.
1. Find 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 not difficult 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.
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.
2. Verify suppliers
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 supplier and ask for their business license. Although this may not be the case, it's usually a red flag when your supplier doesn't have a landline phone number and operates only with a mobile number.
3. Do sourcing in the right way
You will profit from cost-effective product sourcing in China when you study the suppliers and make orders online, so you can save on travel, lodging, and food costs, among other things related to find factories in China.
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.
4. 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.
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.
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.)
5. Communicate with suppliers effectively
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.
Procurement and global sourcing encompass multiple activities. In the beginning stages, the options such as documentation, licenses, quality checks, etc., and other such terms will become confusing to many companies. Hence, the best way of making a stronghold, in this case, is by taking the help of some experts.
Key business factors are cost and quality
The game of maintaining revenue and expenses on a perfectly balanced scale is the actual meaning of business. The cost for the raw material is a kind of major expense that every company should bear and every time they make a purchase, they are making big spending on it.
Some of the major factors that determine the expense of the raw materials include pricing regulations, a policy that is associated with the export and import, and so on. The best way for the companies to make some profits is with the help of the idea of procurement optimization.
The lower-cost procurement of the raw materials for any business can be obtained by looking beyond the world of the traditional suppliers. The businesses can obtain procurement in the required volumes only with the help of the top sourcing companies, and hence finding a reputed and even experienced sourcing establishment is necessary for them.
The growth story of any business is not solely based on optimizing costs. Even though they can procure cost-friendly products, nothing implies that the quality compromising will offer good results in the long run. The activity of sourcing is like a promise that can make you stay assured that you will get top-quality products for your company. Hence, you must find the right option in the world of sourcing companies.
Are there professional services for sourcing products in China?
Low-cost sourcing has become a trend around the globe and China is quite famous in this case. The idea of product sourcing is quite high in China, and this factor has made it easier for business organizations to expect wonderful results for their requirements.
An organization cannot work on managing everything on its own and these organizations will need the agents that can get them successful trade deals. Chinese business organizations can be your helping guide in this case.
Starting from the small factories, production monitoring, affordable price negotiations, etc., the sourcing companies will take care of everything on their end. The basic principle of hiring any sourcing solution is the accuracy in their work and many Chinese organizations can prove it to you in this case.
As the technology improved and many options were available for the interested customers, the demand of the customers started increasing, especially when it comes to thinking about their gain in any business transactions. With the help of assistance from professional sources, the customers have started demanding more than what the manufacturing sector can cater for their needs.
Conclusion
It is essential to keep these tips in mind when sourcing products 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.
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