Sourcing from China
It is important to take into account many factors when you are sourcing products from China. Here are five suggestions to help you get started.
1. Spend time looking for the right supplier
For many who are looking to source products in China, the first option is Google, Bing or Yahoo. You can also visit online sourcing platforms such Alibaba, Global Sources or Made in China that connect buyers and suppliers in China.
Although these tools can help you to create a shortlist of potential suppliers, it’s important to keep in mind that not all businesses found on search engines or sourcing platforms are manufacturers. It may be fine to source your products through middlemen if you are looking to buy toys, clothes, and other electronic products. But if you have specific requirements like die casts or metal stamping or plastic injection molding, you should identify the manufacturer and source directly from them. This also helps to reduce costs.
Global Sources and Alibaba offer the ability to rate suppliers online, which may help in shortlisting. Alibaba, for example, rates its suppliers with “gold” ratings. This is a sign of trustworthiness and reliability. But it is important that you remember that gold supplier status can be obtained by any supplier who pays an annual fee to Alibaba for premium membership. This allows the vendor to increase their visibility on the site. It is therefore not an indicator of reliability that can be trusted.
2. How to source products from China – Verify suppliers
Once you have shortlisted suppliers, it is time to verify their credentials. Although some information is readily available online, it is important to verify:
It is important to determine if they are actually the factory and not a middleman.
It is important to determine if they are able to produce the goods they claim they can.
You have many options. You could ask for the factory’s audited accounts and check its invoice for Value Added Tax. Also, you can request product samples. You can also ask the factory for its Chinese name, location and local government office. This office will also have the factory’s registration records which you can use for verification of the details they have provided.
3. Keep in mind that quality is directly proportional cost
Why is it that buyers around the world choose to source their products from China? One reason is the low manufacturing cost, which even includes the shipping costs and duties, ends up being less expensive for the purchaser than sourcing elsewhere in the West. When negotiating with potential suppliers it is helpful to keep in mind that manufacturers usually have a price ceiling – the lowest cost for the product to be manufactured.
These are two important points. You will know the price of the product if your research has included information about raw materials, market prices, and other factors. You should avoid choosing suppliers who are willing to offer you a lower price. A second reason is that suppliers may offer lower prices to purchasers who have large orders. These are the ideal buyers from the standpoint of the supplier. High quality materials are important for consumer product packaging. A high-quality packaging will not attract premium products like cosmetics.
Both cases are similar, but remember that suppliers can’t go below minimum price thresholds without affecting other suppliers. It could result in a lower quality raw material, or worsening the wages or working conditions of workers. It may also result in the supplier omitting steps in quality control. This could not only affect your product, but also your reputation. It could also have legal consequences.
4. Communication should be clear
One must remember that Asia is a country with a different culture and language when sourcing. Many problems between suppliers, buyers, and larger suppliers can be traced back in part to miscommunications. Oft, “understanding the meaning of what was said” can be confusing with “understanding the intent.” All of this is unintentional, but purchasers can prevent costly mistakes and delays by remembering this.
This communication gap is why all your requirements, including product specifications, packaging type and quality, and whether or not instruction manuals are required, should be clearly stated and detailed in writing. You should not let the supplier make assumptions. If they don’t understand something, encourage them to ask.
5. Quality control inspections
Although a manufacturing agreement is a good way of establishing a relationship with the supplier, quality control inspections are essential to ensure your product meets your requirements. This helps avoid costly mistakes down the road. Research has shown that production problems that are caught later will always result in higher costs than those that were caught earlier.
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