Sourcing from a country like China may not be as easy as it may appear to be. China is a far eastern country with a totally different language and business culture.
However, the country offers a very good opportunity to reduce your production cost. This is a good amount of managing capabilities.
If you fail to do that then you may end up losing your money as well as your business reputation. While sourcing from any foreign countries, the following are a few steps need to be followed:
- Identifying those parts, you are outsourcing
- Searching for suppliers
- Checking their credentials
- Negotiating with them
- Placing your order
- Monitoring quality control.
This all requires your time and effort. Not only that, once your China sourcing management process is set up and you receive your first consignment, you may relax and reap the rewards of your hard work, but only for a brief period of time. For the subsequent shipment, you must still remain vigilant.
Those who successfully do China sourcing management may focus on a few essentials. To combat the organizational inertia that can hinder the implementation of a purchasing program in China, adjustments are made at the home office.
They pay attention to the small things and keep a careful eye on their suppliers. They also set a clear objective for sourcing and take all necessary steps to attain it, much like one Western company that established and achieved a $100 million first-year target.
A few mistakes to avoid
To do better China sourcing management, you must avoid the following few mistakes.
- Not having a well-defined sourcing strategy
The significance of having a well-defined sourcing strategy while sourcing from China cannot be overstated.
This strategy is going to be your guideline, which will lead the way on how to look for the best business partner in a country like China.
Failing to create a proper plan or strategy, you cannot achieve the desired objectives like:
- Right pricing
- Good quality
- Timely delivery.
- Lack of supplier visibility
Understanding the policies, procedures, and history of the Chinese supplier is essential because it enables you to assess potential risks and look closely for potential causes of disruption in these sourcing arrangements.
Some indicators hint at the supplier’s unreliability. Knowing these indicators will enable you to spot them and prevent working with the incorrect supplier.
- Too much focus only on pricing
Even while it is true that every business is in it to make money, when it comes to sourcing from China, putting a lot of emphasis on price is not a wise move.
Do your research before entering into any negotiations. Find out the most recent price for the product by researching the market, but keep in mind that a lower price does not always equate to a better profit margin.
- Not asking for samples
The hazards of fraud, fake goods, and poor product quality exist whether you buy from an online marketplace or a Chinese source.
A useful strategy to minimize these risks and guarantee product quality is to get product samples from a Chinese source. It is especially crucial to assess a real sample if you plan to place a bulk order.
- Trying to self-manage everything
Purchasing from China entails potential legal, financial, and commercial concerns because it is essentially an international transaction.
Self-managing each and every detail is not only impossible, but impracticable too. Rather this will not help you to identify the right Chinese partnership and achieve the desired quality and price.
When you are doing business in China, strong relationship always pay, which can help you to do –
- Better business collaboration
- Reduce operational costs
- Shorten lead times.
To do better China sourcing management, businesses could also hire a sourcing agent and implement a few sophisticated procurement techniques.