Companies from all over the world have taken the opportunity of sourcing in China and outsourced part of their production to China.
In theory the profits expected are huge but on the ground, it is not as easy. Many companies encounter difficulties in dealing with Chinese suppliers.
Sourcing is an English term that refers to practices aimed at finding, evaluating and contracting with suppliers of goods and services. See our section Sourcing & Procurement
The main tasks are:
- Increased competition of existing suppliers with lower prices
- Identifying new suppliers for the international market
- Discovering innovations offered by new suppliers
Here are a few tips to source out of China:
Use a local representative
Quality control is a key factor of success for your sourcing activities in China. Having a local person who anticipates problems in China is crucial. Exporting or Importing from China is not an easy task !
Chinese manufacturers have a different view towards quality. A product with a defect will be acceptable by your supplier, instead a quality controller will protect your interests. As you know it is always rather difficult to solve problems when you are far away.
Many companies think they can deal with Chinese factories only by e-mail. They will soon realize it is far from evident.
The main difficulties are: cultural differences, linguistic misunderstandings and different time zones.
A local representation will help you to avoid spending on constant traveling to China and negotiating the best possible prices.
Be careful – many Chinese agents receive multiple shadow commissions.
Your advantage is to have an office in China that you can trust with local employees that can defend your interests and offer you peace of mind.
How about using a sourcing company?
It is convenient and easy for you, as they will take care of everything. You can find many sourcing companies in China, but few are serious.
Often the problem you expect the least, will cause you the biggest damage and require time and effort to solve it.
Never underestimate the power of networks and relationships in China, a local agent will be required to develop them.
You will have to pay attention to the dark side of Chinese suppliers. A common mistake is to believe that once you found the right supplier your job is done. This may be okay for a while, but the provider will not hesitate to do more if you engage a true relationship with him. A provider who has not seen his client for a while will not fully satisfy its customer orders in terms of quality or timing.
Supply chain management
Nowadays, the Internet has made it easier to find a supplier. Alibaba, Made in China or other websites can help you on that task. Nevertheless, even though those websites offer various suppliers and some claim to have been audited by inspections companies like SGS, there are many variables that can change from the moment the original auditing was executed and the time you make your order.
Sourcing in China is to identify not just one supplier, but also alternative ones. In China it is always important to have different sources of supply if you want to avoid the risk of seeing your supplier disappear or if he stops your business relation.
In addition, you must visit the Supply Chain manager. If a supply chain manager feels your presence he will do a better job.
The issue of management in China
Do not underestimate the time needed to deal with problems in China.
At all stages of production, you can encounter problems, especially at the beginning.
An expert in sourcing will know what kind of flaws can quickly turn into huge problems if a quick and efficient decision is not made.
It is important to always keep an eye on your production, and have it monitored.
In Europe, no news means good news. In China it means big problems might be occurring.
You may have to constantly be behind your partner and ask for a scheduled meeting if you want to follow the state of your production. In Chinese factories the priority is often given to the largest customer, to new clients or friends. If it is not your case, you should ask to check your production to reach your deadlines and get the best possible product time delivery.
Incidentals
In China it is important to ask in advance who will pay for unpredictable costs.
Often suppliers will ask you to pay for shipments, samples, fumigation fees, brokerage and the list goes on and on.
Some of these fees are mandatory, but often they are just trying to cheat you.
If your Chinese supplier knows that you have no representative in China, he will usually try to make you spend more money for over costs.
It might sound shocking, but for many Chinese, western people are likely to be naïve and easy to fool. You will have to show that you know your business and that you are not gullible.
Do you have any questions? Do not hesitate to contact us
