China has emerged as a leading manufacturing hub of the world. From electronic goods to plastic products- the country has it all. It should come as no surprise that more and more companies are now sourcing products from China. When it comes to variety, quality, and pricing, very few countries can compete with China.
Whether you are a business owner or a purchasing manager, one of your primary goals is to source high-quality products at the best price. Getting quality products at low prices enhances the cost-effectiveness and profit margins of your business.
If you are new at sourcing products from overseas, you must be wondering if sourcing from China is a viable option for you. You may be wondering if it is worth the risks. When done right, the benefits of sourcing from China far outweigh the risks. However, to achieve these benefits you should institute a well thought out strategy to ensure you get the best quality products with minimal risks.
Here are seven helpful tips for you for setting up your China sourcing strategy:
1) Use a sourcing agent
A sourcing agent performs the outsourcing activities on your behalf. Instead of hiring someone else, you may be tempted to do it yourself. You might think that all you need to do is visit China yourself and speak to a few suppliers. Sounds straightforward enough but have you considered the following hurdles? Do you speak the local language? Are you aware of local business practices? Do you know the licensing, certification, and other legal requirements?
A great China sourcing agent can take care of the entire sourcing process. From getting quotes from reliable manufacturers to shipping the products to your warehouse, the agent does it all.
Choose an experienced agent that not only has a domestic office but also a well-staffed office in China. They would know the local language and dialects and be well-versed with the business practices. With several years of experience, the agent would help you connect with reliable manufacturers or suppliers specializing in the product you need.
Take your time in choosing the right agent for your business. They can take away all your outsourcing worries letting you spend your precious time on other critical business activities.
2) Verify the credentials of your agent
As important as it is to hire the right agent for your business, it is equally important to verify their credentials. Don’t select the first name that pops up on your Internet search. Do take the time to research the agent and verify their credentials and track record; it is a vital step that should not be skipped.
Look for the following:
Where is the agent located? It is much easier to do business with a foreign agent than a Chinese one. Getting accurate information on Chinese businesses is quite difficult. We recommend choosing a foreign agent with a local presence in China. Verify their trade license before you even begin discussions.
How long has its Chinese office been in operation? Find out how long their Chinese office has been operational. Your agent must have an experienced staff employed in their local office in China. Partnering with the right agent with a proven track record can help your business grow leaps and bounds.
Can your agent provide genuine references from business owners who have used their services? Be sure to check these references out. Speak to the business owners, wherever possible, and ask them about their experience.
How does the agent handle quality concerns? The main attraction of sourcing from China is to get high-quality products at affordable rates. Choose one that prioritizes quality. They must make it very clear to the Chinese manufacturers that substandard quality products will not be accepted.
Does your agent speak good English? Good English language skills- both spoken and written, are non-negotiable. Ideally, you should choose one with an office staff in China that can both speak and write well in English as there may be situations when you may need to speak directly with their staff in China.
Hiring the right agent is a crucial step to successfully sourcing products from China. Ask the right questions to ensure that you partner with the right agent that can help grow your business.
3) Be very clear about what you want
For the sourcing process to be successful, you must provide your agent and the manufacturers a detailed specification of the materials or products that you want. Be very clear about what you want in the product or raw material. Do not assume anything is implied because doing business in China can be quite different than doing business in the West.
Failing to provide detailed specifications may lead to confusion and you could end up with something different than what you had ordered. You will end up wasting a lot of time and money getting the right products.
Provide detailed drawings if possible. If you are currently manufacturing your products, you may want to send them a sample piece. If changes are needed, make sure you provide detailed written specifications.
If you are ordering raw materials like aluminum or steel, specify the grade that you want. You may also want to specify what raw materials are to be used, to minimize the risks of getting the wrong products.
For colored goods, specify the color codes. Make sure you specify the exact raw materials you want your products to be manufactured with. Send photographs whenever possible.
4) Insist on a sample before placing the order
There is always a chance that the products you receive may not be to your specifications despite providing detailed instructions. To avoid such situations, insist on a sample before you place an order.
The first sample you receive may or may not be to your specifications. If the product does not match per specifications, note down the issues clearly and let your manufacturer know. Your feedback will help the manufacturer make changes to the product, and then they can proceed with production accordingly.
You must also give a fair idea of the number of goods that you will need. The manufacturer is more likely to pay close attention if you seem to be a valuable business source. If they feel that you may only place a small order, they may not be as responsive.
Your sourcing agent can also help in such situations. They can help you find reliable manufacturers who pay attention to detail. They will work to ensure that the manufacturer understands your specifications exactly. The sourcing agent’s responsibility is to provide you with a sample product and fine-tune it exactly as per your design and specifications.
When you receive a sample product from the manufacturer, take the time to test it out. The products must work correctly and meet the requirements of your customers. You may want to show the sample to the pertinent employees in your organization so that you can get some feedback from them as well.
5) Take control of quality
The safest way to source products from China is to take control of quality. If it’s your first time, you may want to visit the factory personally to check the products’ quality. When that’s not possible, hiring an independent quality inspector is also a good idea. Your agent should help you find a reliable quality inspector.
It is crucial that the quality inspector gives you an independent report on the quality of the products. Always be careful of who you hire. Don’t hire someone without verifying their credentials thoroughly.
Hiring a quality inspector may be a good idea; however, you can’t continuously keep doing it for every order. What you need is to establish a well-structured quality control plan.
You must have a quality management plan managed by you and your agent. You may also need to make periodic visits to China’s factories to ensure that your quality control plan is running as expected. Run sample inspections and never miss verifying your supplier’s quality documents. If something seems off, you may want to hire a quality control inspector again.
6) Understand the quality controls
It is primarily your agent’s responsibility to monitor the quality of the products. However, understanding the quality controls yourself can also be a big advantage.
Understanding the following can be helpful as a client:
Vetting process: Understand how your agent vets new suppliers. Find out if the agent checks the supplier’s experience, track record, licenses, and certifications. You must know if your agent puts sufficient efforts to connect you with trustworthy manufacturers.
Factory visits: Before recommending a manufacturer to you, your agent must visit the factories to see how the products are made. Your agent must have a good idea of the capacity of the factories, lead times, and other customers of these manufacturers.
Quality certificates: Your agent must check for authentic quality certificates from the manufacturers they work with. Not all manufacturers in China have these certificates. Don’t fall victim to such manufacturers. Typically certificates are in the local language. The benefit of your agent is apparent as they know the language and will inspect these certificates before they recommend a manufacturer.
Certificate of Authorization: The Certificate of Authorization is an important document that your agent should be able to provide for you. This certificate is evidence that the agent is authorized to supply goods overseas from the manufacturer. With this certificate, you ensure that you are procuring goods only from a certified manufacturer.
7) Be reasonable about the pricing
Affordability is one of the major charms of sourcing from China. Indeed, the low rates that you can get in China can’t be found domestically. However, you must remember that you will get what you pay for.
Cheap labor and technological advancements help Chinese manufacturers provide affordable goods. But when it comes to the cheapest goods, it is best to avoid them. Manufacturers may cut corners to give you cheap products. The quality of such products may be far from desirable.
Also, the Chinese manufacturing market is booming. New manufacturers and factories are cropping up every day. The new entrants may agree to manufacture your goods at dirt-cheap rates, but they will somehow compromise on the quality. The established factories will provide goods with much better quality; this quality comes at a higher price tag. When putting together a China sourcing strategy, you must keep pricing in mind. However, that should not be the only deciding factor.
Your agent will provide you several quotes from different manufacturers. Don’t focus only on the lowest price. Instead, opt for established factories that prioritize quality and have a proven track record of serving other companies like yours.
If you want your business to grow and the number of loyal customers to increase, you have to deliver high-quality products. You must partner only with those suppliers that provide competitive products without compromising on quality. Yes, they may cost a few dollars more, but it is well worth it.
Sourcing products from China can increase the cost-effectiveness of your business by a great deal. You can get great quality products manufactured exactly to your specifications at very affordable rates. More and more businesses are now interested in sourcing from China to gain a competitive edge and increase their profit margins.
Advantageous as it may be, sourcing from China also requires a great deal of care. Done right, it may do wonders for your business. However, if things go wrong, it can prove very costly for your business.
You must take all preventive measures to ensure that you minimize the risks of sourcing from China. Working with a trustworthy and established sourcing agent is an important step. The right agent can help you get acquainted with the ways Chinese businesses operate. You will also gain valuable insight into the different licenses and certifications you need to check before ordering products from China. Make sure that you do your due diligence before hiring one for your business. Finding and utilizing the right agent will quickly prove that the benefits of sourcing from China far outweigh the risks.