China Sourcing — The Ultimate Guide of 2022
China sourcing is popular with many professionals in the field of procurement. Do you know why? Because it is the country that sells more manufactured goods than any other country! China is often called the world’s factory due to its strong and huge manufacturing sectors.
For this article, we will discuss what China Sourcing is. We will check how sourcing in China can be best for businesses. Also, we will share some tips when sourcing goods or services in China. Furthermore, we will present some of the best sourcing entities in China.
Once you finish reading this article, you will have a deeper understanding of how to source products in China. You will know how to analyze which supplier is good to be a business partner. Additionally, this type of sourcing will allow you to save more to develop your company’s future.
What is China Sourcing?
Many of us know what sourcing means. It is the act of searching for a supplier that can deliver the best goods or services for a company.
It involves finding quality goods and services for the best possible price. Therefore, if we connect it with China, we will get the main idea of China sourcing.
China sourcing is the act of searching for a supplier in China to acquire goods or services. It is not surprising that many professionals source in China due to its low costs.
Sourcing in China is the best decision if the organization wants to reduce costs when it comes to acquiring materials.
China offers low-cost materials which are why it is very popular in the trade industry. However, language barriers and some business practices can be challenging for foreign buyers.
When this happens, foreign buyers would seek help from a sourcing agent or agency in China. This makes their life easy because they do not need to personally negotiate anymore with the Chinese suppliers or manufacturers.
Hi there! My name is Marijn Overvest, I'm the founder of Procurement Tactics.
Want to take your negotiation results to the next level?
Should you use a Sourcing Agent?
When you start to buy in China, the first thing that will come into your mind is, “can I manage this myself?”
Of course, it is valid to be scared of sourcing in China as you do not have any idea how to start. But do not worry, we are here for you!
The table below are the advantages and disadvantages that can help you decide if you want to employ a sourcing agent:
Reasons why you Should Consider Sourcing in China
1. High-quality of products
There is a myth about Chinese products being fragile enough that it does not last for a long time. This is the reason why many people think that Chinese products are not of good quality.
However, this is far from the truth. Many professionals have already found different suppliers in China that offer high-quality products. The suppliers will deliver the expected quality of materials to the organization at a reasonable price.
2. Wide supplier options
China is known for its wide array of factories and industries working in numerous different cities. It is one of the largest countries that have many manufacturers.
Due to this, you can choose from different suppliers that will give you the best value for your money. The same is true that you can select from different manufacturers if you are going to get your product manufactured.
3. Labor costs are low
Labor costs are one of the factors that determine the selling price of a product. As China has the biggest population in the world, it is common to find labor at a low cost.
When you source in China, you can find skilled laborers at low prices. Even if you are away, you do not have to worry about the money you have spent. The sourcing agent or agency that you employed will take care of everything for you.
Tips When Sourcing in China
1. Look for the right suppliers
In every sourcing process, you must first find the right supplier. You need to look for the right suppliers who understand all your needs and requirements.
There is no good or bad supplier, it all comes down to your decision of which supplier is suitable for you.
2. Verify the Supplier
The last thing that an organization would like to incur is fraud when finding suppliers. To verify suppliers, the organization must ask for its credentials to check their reliability.
In addition, the organization must take note of the supplier’s experience in the manufacturing of products. The organization must look if the supplier can offer the proper range of products.
The organization can also ask the previous clients of the supplier to verify if it has done well with its responsibility.
3. Ask for Samples
Before the organization places its order, it must first ask for a sample of products. The samples that you will check will enable you to decide if you will order or not. The samples will tell you if it suits the quality and requirement that you expect.
4. Communicate always with your supplier
When sourcing in China, The organization must consider that there are language and cultural barriers to overcome. Even if the supplier can provide English-speaking customer services, many issues can be traced down due to communication errors.
Of course, communication errors are unintentional. However, the organization must take note of this to avoid delays and costly mistakes.
5. Quality control inspections
Even if you already have an agreement with the supplier, you must not be complacent. You will always need to conduct quality inspections to ensure that it meets your expectations.
Mistakes to Avoid When Sourcing in China
1. Failure to develop a good sourcing strategy
A good sourcing strategy is important when sourcing from China. Being able to know all the transactions will lessen the risk of delays and overspending.
Therefore, it is important to build defined goals and requirements for every transaction.
2. Not ordering product samples
We often hear that action speaks louder than words. The same is true that the organization should not believe that everything that they will deliver is perfect.
This allows the manufacturers to familiarize themselves with the requirements of the organization.
3. Focus only on pricing
Price should not always be the factor when sourcing in China. The emphasis on costs can take away the focus on building the products of the organization.
Of course, low-balling suppliers are not good if you intend to have a good relationship with the buyer. You must take into consideration that the low price should not affect the quality of the materials.
At the end of the day, the organization must remember that if the price is too good to be true, then it is.
4. Not hiring a sourcing agent
It is okay not to hire sourcing agents if you are familiar with how to source your materials in China. However, if you do not know where to start, then it is a must to hire one.
You should not try sourcing in China just because you think you can. You should know that it takes a level of experience and skills to successfully transact in China.
Frequently Asked Questions
1. What is China Sourcing?
China sourcing refers to the act of searching for a supplier in China to acquire goods or services.
2. Why do professionals source in China?
People source in China due to the low costs of materials and labor. Additionally, professionals source in china due to multiple suppliers available.
3. What entities can help me source in China?
The entities that can help you in sourcing in China are the sourcing agencies and agents.
"Very useful course, many actionable strategies"
Want to close better deals? Prepare faster and achieve deal results you have been dreaming of? This course is a perfect fit for ambitious procurement & sourcing professionals. Enroll now and equip yourself with the full range of skills needed to master the deal.