5 THINGS TO KNOW ABOUT CHINA SOURCING
In order to ensure effectiveness in the global market, most countries have begun the implementation of high global sourcing strategies. China, being the largest economy in the world is one of the major destinations for people worldwide, despite the increasing cost of manufacturing in recent years. In order to achieve a successful China market sourcing, here are some tips.
1. Quality control management: in China market, there are varieties of goods with different qualities ranging from low to very high standards. So to ensure quality products and timely delivery from China suppliers, the buyer forms his own quality control system. Also, other things that can be done to ensure quality control are:
- Inspection of factory audit with view of how quality control is being done in the factory.
- Checking of the factory’s licenses (especially ISO), certifications, human resources policies and their production capacities.
When buyers form their own control system, a noted risk encountered by these buyers is the increasing friendliness between the quality control personnel and the suppliers. A choice attached to this is to involve a recognized inspection company to take on one’s support in the company
2. Product specification: the stating of exact specification of China products willing to be bought by buyers should be ensured, so that;
- No confusion concerning price and quality between buyers and sellers would occur.
- Discouragement of “cutting of corners” by the China suppliers due to blurry specifications in the China market would be encouraged.
- There would be increase in the efficiency of the import process.Sign of incompetence resulting from suppliers committing to sales without thought for product specification or questions about goods should be observed by buyers.
3. Payment methods/terms: when importing China products, it is necessary to note the payment conditions in order to ensure the safety of buyer’s funds. The steps taken by buyers in processing payment includes:
- Negotiation for payment (most important)
- Choice for payment option
Influencing the negotiations with the China suppliers, is the value of the order which depends on the level at which the supplier operates.
- The purchase history which creates an avenue for re-negotiation and compliance with the client, making the purchase history an important factor.
- The competition in the company one tends to order from.
For various reasons such as defraud, logistic (bureaucratic problems in claiming funds), China sellers do not always agree with the buyers preferred payment. The payment options include;
- International wire transfer (most accepted)
- Letter of credit (most secured)
- Online escrow
- Sourcing companies or agents
- Pay pal
4. China sourcing is not always at low cost.
There is this mentality that China products are always cheap compared to other countries product, but this might not always be the case. In China, there are many factories that constitute to low cost of labor and raw materials. Due to the location, cost of manufacturing can be high because rent is high in some location thus, increasing the cost of price of product depicting that China sourcing is not always at low cost.
5.Avoid 100% upfront
Using a good OEM agreement is a way to avoiding 100% upfront. An example of such can be delay in the delivery of goods or services, change in future prices, etc. can occur leading to total loss