When you are ready to source from China, you may be confused or have no idea what to do with the process. After all, China is a huge country with different suppliers producing different products.
I hope that this guide will provide you with some help and guidance in your sourcing process so that you can be more confident in sourcing from China and getting quality products and services.
Why Should You Source from China?
China is the world’s largest producer and exporter of goods, making it a popular destination for suppliers.
Here are some reasons why you should source from China.
Lower Cost of Production
Sourcing from China allows you to take advantage of its low-cost production and labor. The average hourly wages for production workers in China are much lower than wages in the U.S. or Europe. This helps to keep production costs low, which means you can save money on your sourcing.
High Quality
China is known for its high-quality products and rigorous manufacturing processes. Many products are made in highly automated factories that adhere to strict quality standards.
Additionally, there are plenty of quality-control measures in place during production to ensure that you get the best quality product every time.
Wide Variety of Options
China has a huge range of products to choose from, so you can be sure to find the perfect item for your business needs. Whether you need a high-tech gadget or an everyday essential, you’ll be able to source it from China.
Fast Turnaround Times
Sourcing from China can help you get the products you need quickly. With competitive transportation networks, air and sea shipments often reach their destinations in just a few days.
This can help you get your product to market faster, helping you to stay ahead of the competition.
Competitive Prices
China is competitively priced, so you can get a good deal on your sourcing without sacrificing quality.
Additionally, the range of suppliers available makes it easy to compare prices and find the best deals.
What Do I Need to Consider Before Sourcing from China?
Find Legitimate Suppliers
Before sourcing from China, it is important to thoroughly research the supplier and ensure they have a good reputation.
Look for customer reviews, check their website, and make sure they are able to provide the products you need in the quantities you require.
Know the Regulations
Be aware of the regulations and laws related to importing goods into your country. This includes customs duties, taxes, and any other fees that may be applicable.
It is also important to familiarize yourself with any product-specific regulations or certifications that are required for the goods you are importing.
Quality Control
It is essential to have a system in place for the quality control process when importing from China.
This may involve inspecting the goods before they are shipped, setting up a third-party inspection service, or having a representative from your company visit the supplier to ensure the quality of the products.
Payment Terms
Negotiate favorable payment terms with your supplier, such as using a letter of credit or using an escrow service to protect your payment until the goods are received and inspected.
This will help to reduce the risk of fraud and ensure that you receive the products you paid for.
What Are the Advantages of Sourcing from China?
1. Low Labor Costs
China has a large labor force that is willing to work for a much lower wage than in most countries. This allows companies to lower production costs, thus reducing the price of the final product.
2. Huge Manufacturing Capacity
Chinese factories have a tremendous capacity for production, which can enable companies to fulfill their large production orders quickly and efficiently.
3. High-Quality Products
Chinese factories are generally capable of producing high-quality products at a much lower cost than in other countries. This can help companies to reduce their losses on faulty products.
4. Low Tariffs
By sourcing from China, companies can often avoid or pay low tariffs or taxes when importing products and parts. This provides an additional cost saving that can help improve a company’s bottom line.
5. Proximity to Other Markets
China is geographically close to many of the key markets in the world, minimizing shipping costs and delivery time. This can help companies save money and offer faster delivery times for their customers.
A step-by-step guide to Sourcing in China
1. Spend Time Looking for a Supplier
If this is your first time sourcing in China, your first option might just be to do a quick google search.
Tip: It is better to choose a manufacturer when you supply products with technical requirements as you can source directly from them.
2. Hire a Sourcing Agent in China
If you are sourcing in China for the first time and are willing to spend some money, hiring a sourcing agent in China might be a convenient option for you, especially if you are looking to acquire products with technical specifications.
Again, this is a convenient option if you want to stay wherever you are and not travel to China to conduct factory and quality inspections.
Your sourcing agent will take care of all of that.
Other benefits include having an experienced agent who can speak the language and negotiate with suppliers on your behalf.
Companies such as Globallyfulfill have a strong reputation for sourcing products for businesses, saving them time and money, and making the entire process extremely smooth.
Lastly, when you use a sourcing agent, you are far less likely to get scammed or be a victim of fraud.
3. Conduct Supplier Verification Checks
After making a list of suppliers based on their experience, you will need to verify this information.
Things to verify include whether the suppliers are a factory or just a middleman and whether they have had the previous technical expertise and the ability to produce what you are looking for.
You can verify this information by examining the suppliers’ VAT invoices, audited accounts, or the factory’s registration records.
You can call the supplier and ask for their registration number and business license number.
While this is not always the case, it is often a red flag if your supplier does not have a landline number and only operates using a mobile number.
Suppose your supplier fails to provide a business license or a company registration number.
In that case, you should avoid doing business with them.
All registration numbers can be verified by the local administrative government or the local Bureau of Industry Commerce.
Lastly, it would be best to ask for references from the supplier’s previous clients to verify their history and reliability.
4. Find a Balance Between Price & Quality
The biggest benefit of sourcing in China is that your cost is significantly reduced due to low manufacturing and labor costs.
When negotiating the price with your supplier, you should remember that all suppliers have a general minimum cost to manufacture the product.
Here is where you need to research the costs of the product and the market price to get a good idea of what a reasonable price is.
With this information, you can tell that when you are offered a price below the market price, the quality of the product may not be the best.
Going below the minimum market price or the product’s cost price should be a red flag as the supplier is compensating for something missing that you might not have realized as yet.
To protect yourself from dealing with such consequences, you should avoid working with suppliers that offer you a price that is way too low.
5. Buy Directly From Suppliers
Eliminating the middleman and buying directly from the supplier gives you more control of the entire manufacturing process.
Additionally, you also avoid paying extra fees or commissions to the agent or middleman.
If you have the time and experience to carry out your own search, effectively communicate with suppliers, and oversee the manufacturing process, this is something you should consider as it can significantly lower your costs.
Moreover, communicating and buying directly from suppliers avoids the risk of miscommunications and delays in sending money to China as you no longer have to rely on them.
6. Conduct Quality Control Inspections
Conducting regular quality inspections is crucial to ensuring that your product is made correctly and that its quality is not compromised.
Having a regular check on the manufacturing process ensures that things are not left to the last minute and that any issues that turn up are dealt with immediately as it’s easier to fix problems during the manufacturing process than after the final product has been made.
In conclusion, sourcing from China makes it easy to save money, get quality products, and have fast turnaround times. There are many benefits to sourcing from China, so it’s worth considering as an option for your business.
Source from China FAQ
1. Why Are Products Sourced from China Less Expensive?
Many Chinese factories have access to cheap labor and do not have to focus on finding skilled labor. In addition, they use the most efficient industrial chain to distribute their products worldwide.
These two factors cut the price of products. As a result, sourcing from China has become more cost-effective.
2. Is Sourcing from China a Profitable Business?
Of course, yes! But it depends on your product type and how you source it. You can source good quality products from China and get the best prices.
Some popular product categories include electronics, clothing, and baby products.
3. What Quantity Do I need to Source from China?
It depends on the factory and the product. Again, as a general rule, about 1000 pieces is the normal minimum order quantity (MOQ).
However, this is not always the case and you can ask the sourcing agent to negotiate through their existing relationship with the factory.
4. What Payment Methods Do Chinese Suppliers Prefer?
Chinese suppliers prefer 100% prepayment by bank transfer and are very happy if you do not need to use a contract or PO.
