Western companies have looked to China for cost efficient sourcing even with the significant differences from Chinese factories in the business manufacturing approach. There are both pros and cons to leveraging China for sourcing products for your business, and if you’re thinking about it you might want to take a look:

 


Lower costs 

  • While shipping is a large cost from sourcing products out of China, generally speaking, it is much cheaper to manufacture in China.
  • Lower costs and prices for consumers almost always will result in better sales.
  • Almost everything is negotiable.

Higher output 

  • Chinese factories are usually always able to produce huge orders.
  • Estimated production times are usually always accurate.

Expansion Capabilities

  • Sourcing products from China can allow you to get to market sooner than if you had to build your own factory, and get your own equipment and employees.
  • It can also bring your market closer to Asian and European countries if you want to expand globally.

Duplication capabilities 

  • Whether it be a hot piece of clothing or a trending toy for kids, the Chinese are known for their talent and abilities to duplicate something which allows you to sell something that is hot and trending at a lower price.

 

Finding a good factory

  • There are many to choose from and it can be overwhelming deciding on one from the internet.
  • It’s going to take time, effort and a lot of research.

Communication barriers

  • You might need to learn a bit of Chinese to properly communicate.
  • They can interpret things differently than how we communicate here, so being careful with your words.
  • Use things like photos to further illustrate your points.

Shipping 

  • Expense and time. The shipping costs in China compared to the shipping costs here are very different.
  • Shipping by sea takes at least 30 days, so depending on what you are selling this may be a big deal—especially in that 29-day period when you don’t have your goods and are potentially losing sales.
  • Shipping by air from China is more expensive but you can get your products a lot quicker—sometimes the cost of air shipping is less than the lost sales you’d have if you waited the 30 day sea shipping time. Make sure to do the math!

Quality of Work

  • China has a bad reputation for cheaply producing products, however, it depends on your product of course.

How can you avoid mistakes?

Easy.

Do your product research.

  • Sometimes certain products are not worth sourcing from China because of the hassle and, again depending on your product, you could get a better deal here in the US.
  • Products that require faster shipping times, personalization, customized packaging, etc. may not be practical to source from China.

Research your potential suppliers.

  • There is a lot of information out there with other peoples experiences with specific manufacturers and suppliers in China.
  • Prepare questions to ask potential suppliers and manufacturers and also identify what you want out of them as well.
  • Some manufacturers will offer to make anything for you—but this may mean poor quality. So again, do your research!

Here are some examples to ask questions about:

  • Minimum order quantity
  • Price for samples
  • Price for production
  • Time to manufacture
  • Payment terms

Make sure cutting costs isn’t the main motive for your business sourcing products and be sure to weigh out all the underlying factors at hand.

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