Because of the boom of the e-commerce industry in the last several years, the demands from consumers have also increased as well. This led to businesses looking for ways to get products and move them quickly so they can meet their client’s expectations as well. However, like most business practices, they want to do it without shelling out a lot of money in order to save for other purposes. This is why many businesses turn to China to get their goods.
Why do they turn to China? It’s because they are the world’s manufacturing hub which means they produce a lot more goods than any country in the world. They also offer it at a very low cost which is what businesses are looking for.
In this article, we will be discussing product sourcing in China, what it entails, and how it can help grow your business.
What is Product Sourcing?
You may have already heard about sourcing but what is it exactly?
Sourcing is the process of buying products at a competitive price. For this to happen, you need to find a supplier or manufacturer that has the capacity to produce these items. But sourcing does not stop at just finding a supplier; it also involves other responsibilities such as:
- Negotiating payment terms
- Product research
- Quality control
- Pre-shipment inspections
If done properly, sourcing can vastly improve your business and help you achieve your goals. It is a complex process but highly rewarding as long as you make wise decisions.
Why Should You Source Products in China?
It’s not a secret that many people equate China-made products to low quality and this is the reason why some are still hesitant to get products from them. However, there are several reasons why you should consider products from China.
Extensive selection of suppliers and manufacturers. China isn’t called the world’s manufacturing hub for nothing. They have all types of factories in different parts of the country that can provide any kind of products. Because of this, you will have different options and choose the one that will give you value for your money.
High-quality products. It can be argued that there are low-quality products in China, but the opposite is true as well. There are many selections of high-quality products from different suppliers and manufacturers thanks to the advancement of technology. You can also get these products at a very reasonable price that will benefit you and the supplier.
Low labor costs. Due to China’s large population and massive labor force, the cost of labor is greatly reduced. They are overflowing with skilled laborers which is why businesses opt to go to China to have their products manufactured.
Greater scalability. Even if you are a small or medium-sized business, you can still source your products in China since there are suppliers and manufacturers that offer low minimum order quantity (MOQ). Let’s say your small business is doing well and you are thinking of expanding your business, you may scale up the manufacturing to meet the demands. Most Chinese manufacturers have the resources and infrastructure to increase the order quantity if their client wishes to.
Steps When Sourcing Products in China
If you are interested in getting your products in China, you can follow these steps to help you throughout the process.
- Decide on your niche. Before looking for a supplier or manufacturer, first you have to determine what products you are going to sell. You have to find out whether the niche can help you break into the market or if it’s already too saturated that it can be difficult to make a profit because you’re going to compete with many sellers.
Do market research to see what the market is looking for right now or what they may find useful in the future. Narrow it down until you find the product that can give you profit consistently.
- Look for a supplier or manufacturer. Once you have a product in mind, you can now start looking for a supplier or manufacturer. It’s easier to narrow down the search because you only have to find those who specialize in your product. Make a list of these providers and contact them so that you can let them know that you are interested in their services. This will initiate the discussion between you and your potential partner.
When you are in talks with a supplier or manufacturer, ask them for their MOQ and price quotation and compare them with their others. This will give you an idea of who can provide you with your desired products at a price that is well within your budget.
It’s also important to take note of those who are quick to respond to your messages because you’ll know who’s interested. Communication is an integral part of the sourcing process so you should include those who are responsive to your inquiries.
- Verify the legitimacy of the suppliers or manufacturers. You probably have a shortlist of potential suppliers and manufacturers by this point. The next thing you have to do is to verify their legitimacy. It’s better to validate the credibility of the company early on rather than find out it’s a sham after you made a deal with them. It will only cause you more problems and make you lose more money.
Avoid getting into trouble later on by asking the supplier or manufacturer for their business license and other legal documents. You can ask them for client references just so you can further confirm that they are operating legally and they perform up to standards.
- Negotiate. To better evaluate your choices, you have to discuss with them your product demands and if they can deliver. Be as detailed as possible so that they can give you a more definite price for the job. Sometimes, the supplier or manufacturer may not be able to do a certain aspect but may suggest a different way. The discussion may go back and forth until both parties find common ground.
After that, they will probably offer you a deal that might sound like the best price already. However, you can still negotiate it to get a better deal. Negotiation is an opportunity you don’t want to miss out on so you better make the most out of it and get the best prices. When you have finished negotiating with all the potential options, compare their prices and you can choose which one you think will be more beneficial.
Ask for a product sample. When you have finally chosen a company to produce your items, you shouldn’t go on full production yet. A good sourcing practice is to ask for a product sample first. This allows you to better evaluate the supplier and see whether they understood your specifications and other demands. It gives you the chance to clarify what you want and also gives the other party to fix the production. Only when you are satisfied with the sample result then you can proceed with full-scale production.
Do a quality inspection. Even if the supplier or manufacturer is reputable, don’t skip quality control. This is important to ensure that the products meet your expectations. If there are mistakes on the product, they can fix them or have them replaced before shipment.
Throughout the sourcing process, communication is the key to a great working relationship. If one of the parties fails to communicate on time, it can cause delays and greater problems. To not incur costly mistakes, you should always keep in touch with the supplier and be specific in your discussion. This is a sign of respect for each other as both of you show that you want to succeed with the project.
How to Find a Reliable Supplier or Manufacturer
It’s fairly easy to find a supplier or manufacturer nowadays mainly because you can just search in search engines such as Google and Bing. From there, you can find many options and it’s your responsibility to filter out the reliable ones and those that are not. Another way is through popular sourcing websites such as Alibaba and AliExpress. All suppliers and manufacturers that put their listings in there undergo a thorough verification by inspection companies so you can be assured that they are legitimate businesses.
Have some spare money? You can go to China to look for manufacturers at trade shows. It will allow you to see and experience how manufacturing works in China. You can also find a potential manufacturer or supplier personally and ask questions directly. Unfortunately, not all businesses have the capability to start sourcing on their own. Small businesses especially don’t have the time or money, unlike big companies. If you own a small business but want to source products in China, don’t worry because there is a solution.
A sourcing agent is the best option for businesses that can’t fully focus on product sourcing alone. What is a sourcing agent? They are responsible for looking for suppliers and manufacturers on behalf of the client. Usually, they are already based in China which is convenient and saves time. Some also offer additional services that can benefit your business.
Why Do You Need a Sourcing Agent?
You might think hiring a sourcing agent means additional costs and you won’t get your money’s worth. However, the advantages greatly outweigh the disadvantages. How does an agent benefit your business? Here are some of the reasons:
They have an extensive list of suppliers and manufacturers. Sourcing agents especially those who are already experienced have formed relationships with local Chinese suppliers and manufacturers. Because of this, they can easily access their list and present you with a company that is aligned with your niche.
Saves you time and money. Because they have an office in China, it saves you time and money looking for a supplier or manufacturer. You can work on other aspects of your business and they will handle most of the workload on the other side of the world.
Erases the language barrier. One of the most common problems when working with Chinese manufacturers is the language. Unless you are fluent in Chinese, it’s going to be a problem communicating with them. Sourcing agents are already fluent and can communicate your demands more clearly to them. Negotiating wouldn’t be a problem and your concerns will be effectively passed on to the manufacturer.
Cost-effective solution. Contrary to popular belief, a sourcing agent is a cost-effective solution in the long run. Because they oversee the production and even do quality control for the products, you get more of your money’s worth eventually. It will give you more time to focus on improving the other aspects of your business. They will also handle the price negotiation which means they can get you the best price in the market.
The most significant disadvantage of a sourcing agent is that you will have lesser control over the sourcing process. The only way to be assured that everything works fine is to get a dependable and trustworthy sourcing agent. Just like looking for a supplier, you will have to be careful and mindful when choosing an agent.
China is the greatest manufacturing hub in the world and sourcing products from the country can be complex if you have no idea where to start. It involves many processes that require diligence and wise decision-making. It’s a steep learning curve but when done right, it will provide you with great results that will help your business.
Since you will be dealing with a foreign manufacturer, sourcing can come with a lot of risks and it’s difficult to be on top of things most of the time. You may also face communication issues due to the language barrier which is a great hindrance to the progress of production. To lessen the risks and maximize the sourcing process, you should get the services of an experienced sourcing agent. They can make the whole process go smoothly and ensure that you get the right manufacturer or supplier that will meet your requirements.
Get a sourcing agent with the best skills and experience. Lansil Global will help you find the most suitable, legitimate supplier for your desired products at a price that won’t hurt your pocket. We put our client’s interests first and help them grow their business. Contact us today and let us know how we can help you. Follow us on our Facebook page to get the latest updates and happenings.