A large percentage of businesses around the globe admit that importing products from low-cost markets like China translates to a lot of saving in their production costs. This allows them to improve their bottom line and remain competitive.

China is currently the leading manufacturing hub in the world. It began small, making most of the products available in most dollar stores in many countries. With time, China refined its expertise in the manufacturing sector, and today, a large number of the best brands around the world are manufactured in China.

Today, factories in china produce a variety of products including automobile parts, electronics, clothing, recreational and sports products.

If you are a small scale business looking to start sourcing products from China, it may not be obvious to you how the whole process works or how it can impact your firm’s bottom line. Here is a guide on how to source products from China and the impacts it has on your company’s finances.

Lowers Production Costs

For entrepreneurs or business owners, a product whose production you may be looking to have done elsewhere is either part of the company’s inventory and you are searching for the most cost effective way to sell or, your firm has just developed a new product that you would like to produce at an economical cost.

Sourcing from China lowers manufacturing costs because it involves large volumes - buying in large quantities lowers component cost. Although you could have your products manufacturers locally, having them manufactured in China brings with it a number of advantages. For one, labor as well as overhead costs reduce, which allows factories in China to produce your components at economical rates.

Additionally, factories in China have proven they can produce in large volumes. Factories as well as region in China have been set up to ease the manufacturing process, allowing things to move from point to point seamlessly. Raw materials reach factories on time, while products move from factories to ports within schedule. This has improve the efficiency of the supply chain, lowering manufacturing costs.

Lastly, it’s true that manufacturing costs have gone up in China over the last few years, meaning it’s a slightly more expensive to manufacture now in China, but rates are much higher elsewhere. So, it still makes sense to source products from China. Plus, China has the capacity to meet quality standards that customers expect. Unfortunately, the same cannot be said about other manufacturing zones such as Cambodia or Vietnam as they don’t have the expertise or experience to meet such standards.

Does it make economic sense to manufacture every product in a low cost region?

No, it doesn’t. Not every product should be manufactured in a region halfway across the globe. You should only source or manufacture in a low cost region those products that suite your business model.

As an entrepreneur, you need to be careful about what you source from China if you wish to get the most out of doing so.

The best way to start off is by assessing your entire inventory. The components that you outsource must be those that have a long shelf life and a large dollar value enough to make a difference in your bottom line. To capitalize on outsourcing, choose those components that are fast moving, particularly those that will not be obsolete within a short time.

Product volumes make sense if you want your sourcing to be successful. The reason is that nearly all factories in China operate under a minimum order quantity (MOQ) scheme. In other words, each factory has a minimum number of units that you can order. Otherwise, it would not make economic sense for the factories if businesses make lower orders.

However, the MOQ can change based on the complexity of the products you wish to source. Complex order have a lower MOQ. So, each business needs to choose the right product to source because not only do large volumes translate to lower rates, but because sourcing from a low cost region like China can take plenty of effort and time off your hands, and you want to be sure that the product meets your quality standards.

But, this should not be misunderstood to mean that you need to reconsider you decision to source from China because the whole process can seem complicated. Sourcing products from China is very profitable when you do it correctly.

Minimize Risks and Cut Costs by Engaging a Sourcing Agent

If you have no contacts in China, finding a manufacturer in the country can be a tough task. Actually, most businesses that are familiar with the whole process often advice others to view China as being made up of a number of regions.

This is an important point to remember because each region in China specializes in a particular product line. Electronics mainly come from Guangdong, textiles are manufactured in Jiangsu and Zhejiang, while metal products are manufactured in Guangdong, Zhejiang, Shandong and Jiangsu.

To capitalize on profits, you need to find a way to cut down on costs as much as possible, and using a sourcing agent will help you achieve that. This is where sourcing specialists come in.

Sourcing agents are specialists or firms that manage the sourcing process on behalf of businesses outside China. Their role includes identifying suppliers, requesting and assessing product estimates, negotiating product costs and reviewing product designs. Sourcing agents also perform functions like design review, sample production, overseeing production and quality standards, packaging and preparing consignments for delivery.

Here’s how they can help you cut costs when you source products from China.

As a business, managing costs associated with your supply chain helps you cut costs and maintain reasonable margins. Maintain good margins translates to profits for the business.

The best way to cut cost as you source goods from low cost regions is by working with a cost-conscious suppliers and sourcing agents. Here is how sourcing agents can help you source products from China at a cheaper rate.

Sourcing agents link businesses with the cheapest product manufacturers

With the help of a sourcing agent, your business will have access to a range of affordable manufacturers based in China. Additionally, because the agents are domiciled in China, they understand the requirements for one to do business in the country efficiently and they know the local culture very well.

Furthermore, a sourcing agent will negotiate the best price for the goods you wish to source from China because they know agents and factories apart from those listed on Chinese e-commerce websites like Alibaba.

Minimize the need for you to go to China frequently

Based on the expert input of various sourcing specialist, during the sourcing process, the business needs to organize at least one visit to China in order to verify that the shortlisted suppliers are the people they claim to be; and they have the capacity to produce the volumes you are looking for. Based on the nature of your products, you could set up an office in China to ease your sourcing process.

While larger firms may have the resources to pull this off, smaller ones with a limited budget and a small team to work with have stretch themselves thin to handle such projects. But with sourcing agents, who already have teams and the right resources in China, you can cut down costs significantly.

For a small fixed fee, which you will include in the overall cost of production, the specialists will be your resource in China, your representative in the factories, taking care of your business interest on your behalf.

That way, you will be able to cut costs associated with running errands like identifying suitable suppliers, running background checks or commissioning samples before products are shipped to your location.

Sourcing agents know when and how to place orders

If you choose to source products from China, you can easily save a lot of money by working with an agent like Bliss Sourcing. They are conversant with business practices and the Chinese culture, so they will be able to help you kick start your sourcing project.

On the other hand, without the assistance of a sourcing agent, it will take you a long time to settle in and get good to your country. As an example, it would take a business a long time to find the right supplier.

Plus, Sourcing agents have immense local knowledge, which comes in handy when you want to start sourcing good right away. For instance, Bliss Sourcing understand that a customer should not place an order right before a major holiday. That way, they help you minimize losses.

No need for a translator

The biggest challenge that business face when they start sourcing from China is language barrier. Because the customer and supplier speak different languages, striking up a deal will take quite a long time.

In addition, getting the right price for your products amidst the language barrier is significantly low. But, with Bliss Sourcing or your preferred agent working on your behalf, you are guaranteed a great deal in record time.

Not only is Chinese their main language, they also understand the strategies they need to engage suppliers in the country. So, you are assured of a great deal, with little to no miscommunication. 

Sourcing products from China has become a favorite of most business, particularly those based in the United Kingdom that are running a limited budget are looking for opportunities to cut costs.

But, the greatest challenge, for most businesses, is the communication limitation, which makes negotiating with suppliers in China a little difficult.

If you are new to sourcing products from China, and are afraid you might be scammed, here are some of the things to consider before you get started.

Spend some time looking for reliable suppliers

No business entity wants to spend money and time wondering whether it choose the right supplier. There is no guarantee that the one you choose to do business with wont rip you off, even if you chose one with Accessed supplier, Golden Supplier or Trade assurance certification.

Bing, Yahoo or Google search engines are the default options for most people who are looking for suppliers to help them source products. Alternatively, you can visit sourcing platforms like Global Sources, Alibaba or Made in China. These avenues connect businesses and suppliers based in China.

Take note that while these avenues will come in handy when you wish to draw up a final shortlist, remember that most businesses listed by search engines might be resellers, not product manufacturers.

Although sourcing through these middlemen can work, especially for businesses buying retails products like clothes, toys or electronics, when you want products that have to meet certain technical standards, it is often advisable to work with a reputable manufacture.

Most sourcing platform such as Bliss Sourcing have a rating system for their suppliers, which can be helpful to businesses creating a shortlist of products suppliers in China. Look for suppliers with a gold rating, as this is often a sign of trustworthiness.

But, be careful, because some suppliers pay platforms an annual subscription fee for premium membership, which comes with the gold status. This helps to increase a supplier’s visibility. That is not a reliable mark of trustworthiness, so you need to be careful.

Verify your suppliers’ credentials

Once you have your shortlist of suppliers, the next step is to verify that they are who the claim to be. Although you may find some useful information online, you also need to find out whether they are a factory of just middlemen. Also find out if they have the capacity and expertise to meet and deliver your order.

There are plenty of ways to achieve this. Start by checking the company’s website. Ensure that the firm has a website to start with, and not just an About Us page. Google the firms in your list and find out whether they have scam reports against them or bad reviews.

Ask questions whenever something seems unsettling about a supplier. For instance, you can request for product samples to be sent to your location or ask for pictures of the suppliers holding the product you wish to order.

Maintain consistent communication with the supplier, but if things begin to feel erratic, that would be an indication that is not the right company to work with.

If you do not have the time to travel to China or your budget is a bit limiting, find a sourcing agency like Bliss Sourcing to carry out pre-shipment inspections together with other important functions like assessing production, testing products, to ensure the components are produce in accordance with your requirements.

Bear in mind that Cost and quality go hand in hand

People often wonder why most businesses look to China for most of their products. The primary reason is that it is cheap to produce in China, even with shipping costs and duty included, which makes it economical to source products from China than anywhere else.

As you negotiate with your chosen manufacturer, remember that each factory works with a “Price floor”, which basically means the minimum amount it will cost to make the products you need.

If you did your research really well on your desired product, cost of raw materials as well as the product’s market you will have an inkling of what the price floor will be. Do not work with a supplier who promises you a price way below the average floor price. Additionally, buyers who want large orders, from the view point of a manufacturer, will want to lower the supplier’s price event further.

Please note that if your manufacturers goes below the standard threshold, the effect will trickle down your supply chain. The manufacturer may choose low quality materials, lower the worker’s wages or subject them to poor working conditions.

The supplier might also choose to bypass some steps in the quality control process. In the end, this will negatively impact not just the end product, but also the reputation of your business. Disgruntled customers might even take you to court.

Be concise in your communication

If you choose to source from the Asian market, you need to bear in mind language will always be an issue. Although some large product suppliers have English speaking customer support representatives, most s the issue that arise between buyers and supplier often stem from poor communication. Understanding what was implied is never the same as having understood exactly what was communicated.

Often, these issues are not deliberate, but if you know this beforehand, you will be able to protect your business from expensive mistakes. Such issues are the reason why requirements like product specifications, packaging, and quality requirements have to be in writing in a thorough and clear manner.  Basically, do not give the supplier the leeway to make assumptions, but encourage question so that you can iron out anything that is not clear.

Negotiate before you strike a deal

If there is something the Chinese do very well, it’s haggling. In the past, it was somewhat challenging for other countries to source from China, but nowadays, they understand the art of haggling and they enjoy bargaining for the best deals.  

Be sure to negotiate with your supplier and iron out issues like minimum orders as well as terms of payment. Have a an agent based in China like Bliss Sourcing handle negotiations on your behalf because prices may go up as soon as the supplier hears an overseas voice.  

Ask for Samples to be sent to you before you purchase

Do not make a large order before you assess quality of workmanship. Some suppliers may charge a small fee to have the sample shipped to you. You are entitled to a sample, even when you choose not to visit the site where the products will be made. Request from at least four supplier and be sure to note cost, shipping and delivery time.

Quality control inspection is important

Although establishing an agreement with your supplier is probably the best way to kick off a business relationship, it is important to conduct regular quality control inspections to ensure your products are always up to specification. This deters costly mistakes that might haunt you in later on.  

Engage a sourcing agent

Alternatively, you can reach out to professional and reputable sourcing firms like Bliss Sourcing. They will handling product sourcing for you, saving your business plenty of money and time with regards to inspecting samples and having your products mass produced. The benefits of working with a sourcing agency include:

· They will handle negotiations with suppliers in China on your behalf

· It’s very unlikely that you will be scammed

· If you have not been able to find a reliable supplier, have a sourcing agent locate one for you

Establish a business relationship with your supplier

Ordering products via web platforms should not restrict you from creating a business relationship with the supplier.

In this day and age, it is very easy to build a professional connection with people around the world via web applications like Skype and Facebook, which allow real time communication. So, it is possible for you to conduct business with people from other parts of the world without you traveling to their location.

If you are inexperience in sourcing products from China, the tips we have listed should point you in the right direction. However, should you want to engage a sourcing agent, Bliss Sourcing has a team based in China to guide your business through getting products quotes, assessing manufacturers and communicating with suppliers on your behalf.

We understand the sourcing business, we are constantly in touch with the best manufacturers in China, our reputation guarantees us the best rates on the market and we ensure that you products reach your destination within schedule.

Language barrier and cultural differences shouldn’t be the reason why you can’t source your products from one of the most cost friendly country in Asia. Give your margins a boost, build a name for your business by giving your customers quality products at a price that will put a smile on their faces. Get in touch with us today, and let us handle you sourcing needs.