Outsourcing in China – The Right Strategy to Implement

China’s superior production capabilities, affordable pricing, and diligent diversity make it a major product-sourcing hub. However, sourcing requires a lot of hard work and research.

Hence, for start-up’s, it might be demoralizing and a daunting task. Business owners should be well-equipped with insight and tactics to streamline their journey of outsourcing in China, increasing efficiency, lowering expenses, and ensuring success.

Every importer has a different strategy while commencing international trade. All importers should follow the necessary initial sourcing strategy. This will make it easier to ensure safety and security when sourcing from China.

Identify your Product and Requirements 

A key component of a sourcing strategy is choosing a product. Before outsourcing in China, it is crucial to outline the necessities.

Look for a promising product with can be modified based on market demands. Decide the necessary elements and requirements while also learning about the market and product.

Define the features, modifications, and goods. Consider the budget, lead time, and product volume. Trade-offs between price and quality are important.

Clear requirements help in selecting the right supplier and in building appropriate contracts.

Find Supplier

Create a list of potential suppliers in the beginning. Narrow down your list further by removing and adding features and requirements for your product.

However, price should not be included in your criteria list. Your mission is to locate the many high-quality suppliers in China.

You can look for suppliers online through B2B platforms, trade fairs/events, or with the help of a sourcing agent.

Clear Sourcing Objectives

Communication plays a major role in defining a relationship. As a business, one should set clear objectives for the supplier. Ensure that your supplier understands your requirements.

When outsourcing in China, Western companies often face problems like cultural differences and language barriers.

Seeking the help of a third party can reduce this problem. Hiring a sourcing agent can relieve the misunderstanding due to miscommunication.

Place Order for Samples 

It’s time to evaluate the quality of the suppliers you’ve selected by ordering samples from each. Compare each product sample while taking pricing into account.

Request numerous samples from each supplier instead of just one, so that they don’t send only the best one to you. You can recover the sample cost later while negotiating the final order.

Negotiation and Written Documentation

You may begin making negotiations with suppliers by setting your priorities and working together to fulfil them.

However, do remember that choosing a low price typically results in a compromise in quality.

Instead, focus your initial negotiation on the conditions of payment, the nature of the defect coverage, the labelling, packing, and the preparation.

Avoid putting pressure to prevent suppliers from compromising on quality. Ensure that every product documentation is written in English as well as Chinese, approved and signed by all parties.

For major investments in Chinese manufacturing, consulting a lawyer with knowledge of the industry provides additional protection against risks.

Make Payment and Stay in Loop

Pay after verifying all the information. Find the appropriate payment method the supplier prefers. Always ask for a progress report.

If you don’t want to do it daily, then keep it weekly, or every 15 days. Immediately fix any problems to avoid shipment delays. If possible, appoint a sourcing agent for inspection from time to time.

A sourcing agent not only helps in finding a reliable supplier, but also keep the business owner updated with the manufacturing process.

Particularly in countries like China, sourcing agents are crucial to streamline international procurement procedures.

They serve as a mediator between buyers and suppliers, helping in successful sourcing, quality control, and communication.

Their role consists of –

  • Competently negotiating terms, costs, and contracts on the buyer’s behalf.
  • Monitoring the quality of products through audits and inspections.
  • Managing shipping, customs, and delivery logistics.
  • Bridging linguistic and cultural barriers, for successful communication.
  • Identifying and reducing potential sourcing risk.

Thus, working with a dependable sourcing agent can help businesses to find a reliable and trustworthy supplier for outsourcing in China.

Post Author: Cali Archer