China is a popular manufacturing hub for many businesses. Factors such as low labour costs, state-of-art technologies, and low taxes are what make it one of the industrial powerhouses in the world. If you too are looking to diversify your business by sourcing directly in China, then you would like to do your research on the direct sourcing scenarios in the country before taking the plunge.
Educating Yourself about the Chinese Market
When you are planning to source your products from China, you need to be well prepared. If you just dive in headfirst without any research or plan, you might get easily duped by fraud suppliers who might charge you high for poor-quality products.
The Chines market is complicated. Therefore, it would be apt that you hire Chinese sourcing agents to make things easier for you. Yes, you might need to shell out some money for their fees, but it would be worth every penny, rather than getting duped by fraudulent companies.
Now, you might wonder what Chinese sourcing agents do. Chinese sourcing agents:
- Help you find potential suppliers for your business
- They have the experience that can be bought to the table while negotiating with the suppliers
- They have many contacts that they can use to find the right suppliers for your business
- They can act as a bridge between you and the suppliers to answer any queries in Mandarin
When it comes to sourcing directly in China, there are lots of factors that come into play here. First and foremost, you need to have a plan in place. Some of the key points that you might need to take into consideration are:
Business Plan
You cannot venture into any market without having a business plan in place.
First, you need to do a thorough analysis of:
- What products would you be sourcing?
- How much are they worth in China?
- What would be the permit required?
- How much would the logistics cost?
- What would be the recovery selling value?
Based on the above questions, you would be able to come up with the right strategy and a better understanding of where to find the right suppliers. You can even take the help of your sourcing agents to help you come up with ballpark figures.
Check Your Import Rights
When you are sourcing from China, you need to see if you have import rights. If yes, then it can save you from a lot of hassles. You can directly have your products shipped from the Chinese manufacturing hubs to your customers, thereby saving you time and money.
Fix a Budget
Yes, this might be a tough feat, as you might not be able to figure out exactly how much expenses would be utilized while sourcing directly in China. Ensure to keep a buffer in case any emergency or additional expenses come in.
Drawing up the Contract
When you finalize the Chinese suppliers, ensure that you include all the terms and conditions in the contract.
Details that should be included are:
- Shipping Terms
- Mode of payments
- Additional costs
- Packaging costs
- Shipping costs
- Delivery time
Have the contract vetted through local lawyers before signing them. Ensure that you ask your suppliers for Proforma Invoices for future orders.
It is always good to maintain a good rapport with your suppliers to build trust. Once your products are ready and shipped to the delivered to you, ensure that you drop a mail to the supplier that you have received the same and would revert in case of any issues.
How Can Direct Sourcing Profit Your Business?
This is one of the most common questions that many companies ask before entering the sourcing market in China. So how exactly would direct sourcing help your business?
Choose from a Large Supplier Database
First and foremost, you get to choose from a wide range of suppliers, either through online resources such as Alibaba, Made-in-China.com, or Global Sources. Here you can type in your requirements and choose from a list of credible suppliers.
Some of the sourcing platforms even come with credit-check services that can tell you about the financial position of the suppliers. In addition to this, you can easily verify where the suppliers are in China and whether they have the proper licenses and registration documents.
You Are the Boss
You can directly meet with potential suppliers and discuss your requirements or ask for a factory visit. If you have hired sourcing agents, they can help you conduct factory audits or inspections to understand the working environments. Ultimately, you are the decision maker.
Make Direct Negotiations with Suppliers
The best part of direct sourcing is that you can negotiate with suppliers. If you want any modifications in the prototypes or would like bulk discounts, you can openly discuss them with the suppliers. Ensure that you are transparent about your requirements to avoid complexities.
Quality Inspections and Audit Reports
Though the Chinese supplier might be a reliable one that does not mean you ignore quality checks. If you are not in China to conduct the checks, your sourcing agents can do the checks on your behalf.
Credible sourcing agents will visit the factories, randomly check the products for defects or quality issues, and share reports about the progress. In addition to inspection checks and audits, sourcing agents can also help clear customs at the time of shipment.
So, you see there are a lot of benefits from sourcing directly in China. You just need to find the right suppliers, share your requirements, and place the orders. If you are satisfied with the supplier, you can develop a good business relationship with them and have wonderful collaborations together.
Going forward, when the suppliers learn to trust you, they might even relax their payment fees and give you good discounts on orders. It also helps you save time on traveling and making factory visits as you trust the supplier to offer good-quality products within the delivery time.
Conclusion
Direct sourcing can help take your business to newer heights and explore new possibilities. You can also improve the brand image of your company as customers will be happy with the product quality and the on-time delivery of the products.
