Author: 露露

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Elksourcing：How to Manage Risks when Sourcing from China?

Apr 15, 2021 , by 露露

Sourcing from China is with full of opportunities, however, with every opportunity there is always an element of risk and China is no exception. Much of the risk can be managed and here we will outline some of the most common mistakes that people make when sourcing products, so that you can avoid making them.

(1) Not defining specs

This may sound obvious, but a clear definition of your product is absolutely critical. Whether the product is cardboard packaging, homewares or sports equipment, a comprehensive product specification is the first step in ensuring you end up with a supplier and product that you are happy with. The more detail you provide a supplier with, the more accurate the end product will be.

(2) Not doing enough due diligence

Many people don’t investigate potential suppliers in enough detail. This can be a costly mistake as trade fairs, emails and phone calls can only reveal so much about the real capabilities of a supplier.

The first step in conducting due diligence is to request information such as business licenses and customer references. Further to this, visiting the factory will provide a clearer insight into their working conditions and capabilities. Whilst on a factory visit, it’s also possible to arrange interviews with management to understand the financial health of their operation.

(3) Focusing purely on price

It’s easy to get caught up in the price game. After all, the lower the price, the higher your potential profits. Price can certainly be an initial filter when shortlisting suppliers but relying on this can be a very costly mistake in the long term. Low prices almost always come with other compromises, whether it be quality, reliability, communication or other things such as hazardous materials.

It’s important to be price conscious but letting this rule your decision-making can be the downfall of your product or business. Extremely low prices are often an indicator that a supplier should be avoided – if it seems too good to be true, it probably is.

(4) Not creating watertight contracts

Relying on verbal contracts and agreements is a very dangerous game. When sourcing products from China it’s important that you have everything in writing and create contracts with all parties. Standard contracts include the main items such as parties, terms and product definitions, but it’s important to have a legal professional assist you. This can make the difference between a contract that you think covers you and a contract that truly is watertight. Remember that different laws apply when doing business in a foreign country and navigating this on your own can be very difficult.

It’s becoming more commonly known that contracts themselves don’t always have as much standing in China as they do in the western world, but having the strongest possible contract is still the first line of defense.

(5) Not having a local contact

Doing business with other countries and other cultures can be fraught with danger and can at times be a logistical disaster waiting to happen. Having someone on the ground can help avoid costly mistakes. Such us a sourcing agent, this contact should speak Chinese and be able to assist with quality control inspections and any emergencies with logistics or manufacture. Many business owners believe they can handle the operation remotely but the value of having a specific contact on the ground cannot be underestimated.

How To Import From China

Elksourcing：How to Find a Good Factory in China?

Apr 15, 2021 , by 露露

China presents an excellent opportunity when it comes to sourcing products. In order to succeed, the most import thing is to find a good factory in China. However, this is uneasy. Below are some basic steps to follow:

Step 1: Know your product

If you don’t know the specifications (input materials, dimensions, components, packaging requirements), the compliance requirements to sell into your country, along with the quality demands of your market, then it is very hard to determine which manufacturer is right for you. Price should never be your only concern!

Step 2: Research

Trade websites are a great tool for finding factories. However, many professional manufacturers will not advertise through these portals and are instead found through Google, Baidu (the Chinese equivalent) or through industry specific trade shows. Keep up to date as to when and where specific trade shows are held, both in China and in your own country.

Step 3: RFQ 

Sending out a request for quote is important as it allows you to gather information about a factory and their capabilities, along with their price levels. It’s also an opportunity for yourself to demonstrate that you are a serious buyer that will bring the factory good business over the long term.

Step 4: Vetting suppliersbased on

Communication, location, size of the factory, specialization, export experience, legitimate operating entity, and the level of interest.

(1) Communication:

Can you communicate efficiently with the manufacturer? Are they prompt in replying to your calls and email? Are they ok discussing specifications in detail?

(2) Location:

Factory location will have a bearing on lead times. It will also impact prices through labor costs, access to raw materials, rent etc. Avoid companies that don’t provide the location of their production facility as they are probably a trading agent or middleman.

(3) Size:

Typically, you want to represent 5-30% of the factory’s business during that period. Anything less and you won’t be a priority for the factory, and you’ll have limited leverage with price negotiations. It’s also worthwhile investigating the operation size, production capacity, equipment, and staffing.

(4) What they specialize in:

China’s manufacturing sector is highly competitive. As such, Chinese factories are forced to specialize in production to maximize efficiency. I’d be wary of purchasing from a manufacturer who claims to manufacture a wide range of products. They are probably a trading company.

(5) What markets they sell into:

If your product must comply with strict national standards, it is wise to choose a factory that has experience manufacturing that product for sale into your market.

(6) Legitimate operating entity:

Check the ownership papers of the factory. Also, depending on the value of your order, auditing the factory can be worthwhile.

(7) Level of interest:

Sometimes good factories have no interest working with you. There’s no point pushing.

Step 5: Ask for samples

Request that the supplier sends samples of the product. For off-the-shelf products, the samples should closely match the specifications you supplied to the factory. If the factory can’t match your samples, then unless you are willing to spend time and money on re-tooling and product development, the factory is probably unsuitable.

*it is common to have samples redone and redeveloped in order to reach your desired outcome. Don’t write-off a factory too quickly if the first sample is not perfect.

Step 6: Visit the factory

This is by far the best way to determine if the factory is suitable. By visiting the factory, you can clearly check machinery and equipment, factory’s capacity, working quality of workers, sample room, warehouses, and quality control systems. It also allows you to negotiate pricing directly with the factory boss.

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Elksourcing：Key Strategies for China Sourcing

Apr 15, 2021 , by 露露

If China is front and center of your sourcing strategy, make sure you are associating with a sourcing partner that has a strong presence in Chinese marketplaces. It is wise to choose a consulting firm which has delivered Chinese sourcing solutions to other businesses. Depending on your core requirements, they can come up with flexible time and cost-effective sourcing strategies that give you the desired results.

The followings are some key strategies for China sourcing.

1. Building a supplier list– Sourcing agents are informed about your specific requirements and they identify the potential list of suppliers, who can deliver what you need, within your budgets and delivery timelines. Reputation is another factor that is kept in consideration when it comes to suppliers, as it signifies reliability and punctuality.

2. Aiming for profitability– Once the task of identifying the right supplier is completed, sourcing agents focus on sealing the deal. Focus must always be laid on protecting the investments of businesses, while finding a long-term, sustainable sourcing solution. Creating and building upon the relationships with profitable suppliers will ensure good outcomes from your global sourcing ambitions. The Chinese economy has witnessed significant growth in recent times, and so have the opportunities for product sourcing. Sourcing consultant services eliminate the usual communication, geographical, cultural and linguistic barriers that are faced by most businesses.

3. Maintaining integrity– It is quite important to ensure that the manufacturing processes are going in a way that adheres to your standards and expectations. Sourcing agents and project managers must monitor the entire supply chain process with precision. Factory visits are important, and as a client you can seek information from sourcing managers regarding the status of your processes. To meet deadlines is important, but so are the frequent, systematic quality checks. 

4. Dispersion of budgets– While contemplating sourcing strategies it is important to determine how your sourcing budget is to be allocated. Consulting with China sourcing service providers will help you get a clear idea about where your investment is going, and how it is being utilized across various steps of the supply chain. Sourcing agents must proactively monitor and plan out the dispersion of budgets, and find newer ways to raise cost-efficiency. Business owners might have to shell out a bit more than estimates, due to the various challenges that might arise during ongoing manufacturing processes. 

5. Long-term sustainability– Sourcing must not be approached as a quick fix, but rather as a long-term plan for generating sustainability. This involves continually finding ways to procure raw materials and labor resources at improved costs, and formulating strategies to maximize profitability. Only then can you stand to gain from sourcing products in China, or from any other emerging markets in Southeast Asian, African, Middle Eastern and Eastern European countries. Five years down the line, it is important to see a picture of profitability for your business, by implementing the right set of sourcing strategies.

China Sourcing Agent

Elksourcing：How Can Sourcing Agencies Help Your China Sourcing?

Apr 15, 2021 , by 露露

For a business to set up its own manufacturing facility or procurement office in China is actually impractical. Such decisions raise and increase the hassle of business owners. Instead, any business that wishes to explore China sourcing, should do it with a reliable sourcing agency. There are many reasons for consulting with agencies that have operated in China before. Let’s have a look.

A.   Reputed sourcing agencies have core local knowledge of Chinese marketplace. 

B.   They can identify and recommend the most profitable supplier options. 

C.  Business owners do not have to face linguistic, cultural, geographical and negotiation hassles.

D.  Agents in China seal the deal with suppliers. They proactively work to reduce costs, while profitability and efficiency.

Chinese product sourcing is something that can offer serious benefits to businesses across many industry sectors. The large domestic markets, promising labor, and logistics maintain its position on top of other marketplaces. Associating with experienced and verified China sourcing agencies can ensure benchmark profitably.

1. Long-term sustainability

The objective that many businesses and their sourcing partners strive towards is long term sustainability. China product sourcing opportunities offer a multitude of opportunities, due to low costs and large volumes. The key to benchmark sustainability is associating with the right suppliers.

2. Profitability 

What a western business will spend in its manufacturing processes in its native marketplace, will probably be a lot higher than what it spends by sourcing in China. China sourcing is a way of improving production and delivery timelines. 

3. Quality 

A sourcing agency can be utilized to help businesses find quality suppliers in China. Chinese suppliers have strong reputations, that been built on delivering quality assurance to the west. Apart from volume and sticking to estimated timelines, sourced products and materials will comply one’s quality standards. 

4. Labor force 

China is the most populated country in the world. It also happens to have the largest skilled and unskilled labor forces in the world. Although the Chinese economy is growing at a steady rate, cheap and quality labor is still abundant.  

5. Volume 

Not many marketplaces have the capability of handling manufacturing volumes like China. If you need voluminous results and need them fast, China is the place to be. This is the reason why so mid to large sized businesses have incorporated China sourcing into their production workflow. It is very hard to achieve the kind of volume China can provide, within very limited timescales. 

6. Efficiency 

Infrastructure that is capable of handling heavy duty manufacturing processes is commonplace in China now. As a result, China sourcing agent professionals and their agencies confidently recommend China. Whether energy assured compliance with international standards, or efficiency in manufacturing and distribution.

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Elksourcing：Key Objectives of Global Procurement

Apr 14, 2021 , by 露露

Procurement solutions should not be viewed as fixes, as they can continue to offer benefits for. While it is practical to be realistic about initial profits and cost savings, nurturing a sourcing mechanism can prove advantageous in the long run. Let us look at some of the key objectives of procurement. 

1). Long-term cost savings 

You will invest less and gain significant results. This can continue for years and decades, and your organization will make cost savings a way of life. One must realize that there are barely any constants in sourcing and procurement. For instance, a marketplace that seems promising for cost might be outdone by another competitor in 2-3 years. A reputed agency can help you find the most profitable marketplaces at any time.

2). Surpassing regulatory barriers 

Emerging businesses in the developed world face with expenses but that is not all. There are a lot of regulatory and political factors that can change the situation of first world markets. These tend to have a grave impact on manufacturing processes, and many organizations are pushed into a corner. 

Procurement companies can point your investments into profitable marketplaces, whose governments and suppliers are keen on foreign investment. There are developing world locations which provide assurances of low costs, intellectual property protection, and business climates i.e. without significant local and political barriers. At the same time, they follow ethical sourcing, manufacturing and distribution mechanisms. 

3). Restructuring operations  

Many business owners fail to realize that sourcing and procurement can be incorporated right from the start. In today’s world, many businesses consider these as part of their workflows. Emerging organizations are being encouraged with improved possibilities in new marketplaces. As examples of procurement outsourcing success, we can look at multinational businesses who consider it as the primary requirement for all manufacturing mechanisms. Even smaller businesses can incorporate advanced procurement-powered business models, to boost savings and grow their market potential. 

4). Beating the competition 

This is an objective common to every business owner at any given time. Previously, startups and struggling businesses would strive to gain a foothold among the pioneers of their industry. This was mainly due to high production and distribution expenses, which translated into lesser abilities demands. 

Procurement has breathed life into many struggling small to businesses across the world. It is possible to multiply production volumes and speed up distribution while saving integral costs. Such possibilities enable businesses to scale up their outputs and increase profitably. As a result, your organization can surpass direct competitors, and focus on ways of further enhancing your services and operations. 

5). The Integral Role Played by Procurement Agencies 

A.   Supplier selection – Promises do not amount to anything if they are ultimately not met by those making them. Such is the scenario with suppliers in the developing world, whose credentials might be questionable at times. A reputed procurement agency can find legitimate and credible suppliers, who are more than able to meet the expectations of investors. 

B.   Inventory and supply chain – Sourcing agencies take steps to ensure efficient and ethical sourcing of the prerequisites. These include quality raw materials and efficient resources. Procurement officers and agents work closely with suppliers to ensure maintenance of production timelines and quality. Taking critical decisions at various stages is best left to experienced partners. 

C.  Combating risks – There is always a possibility of risks when you are investing in developing marketplaces. But steps can be taken to create ready workarounds to any possible local, regulatory, supply and distribution related risks. In some cases, procurement agencies might consider switching suppliers or processes to different marketplaces. 

Recent developments in the fields of procurement technology, processes are becoming faster and so are results. Associating with a leading sourcing and procurement service provider can be the best way forward for growing developed country organizations.

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Elksourcing：Brief of China Sourcing Prospects and Facts

Apr 14, 2021 , by 露露

1.   China is the second largest economy in the world and has a huge open marketplace that welcomes foreign investment. The economy of China has grown by over 300% in the past decade. 

2.   Per capita income in China is still considerably low, when compared to those in many leading western countries. It also has the world’s largest population. Hence, there is a growing abundance of skilled and unskilled labors that can aid one’s sourcing ambitions. 

3.   China is a haven for thousands of readymade goods, machineries, parts and components, which are available at attractive rates. As a result, western businesses and their sourcing agents stand to gain. 

4.   Rather than raw materials, manufactured goods are the major exports of China. The country is one of the leading producers of manufactured goods in the world. 

5.   Many leading global Fortune 500 companies have invested in Chinese marketplace. The dedicated workforce, vast infrastructural improvement and quality manufacturers make it a favorable destination. 

6.   Chinese policies and regulations favor foreign investment and the government also offers lucrative incentives for investors. 

Many businesses are experiencing the benefits of Chinese product sourcing and procurement. It can be the best way forward for your business. Consulting with leading sourcing companies can give you a better idea about the possibilities. Suppliers in China can help you generate better growth and sustainability.

China Sourcing Agent

Elksourcing：How to Qualify a Sourcing Agent from China?

Apr 14, 2021 , by 露露

China has got certain benefits in terms of overseas sourcing, however, in order to do it properly, a professional sourcing agent is needed. Do you know how to qualify a sourcing agent? You may ask below 10 questions.

1)What sort of services can a sourcing agent offer?

Obtaining products from China is often underestimated. It requires good amount of hard work, knowledge and expertise in this domain. Ask your agent to demonstrate what can he or she do to manage your project ‘end-to-end’ and this will save a lot of time in inspecting companies, customs, freight forwarders and collaborating agents.

2) What can the sourcing agent source?

You may come across some agents who have a wide network in a market and they can help you to purchase different products. With large database and purchasing system, such agents can penetrate various markets and get you a product at an affordable costing. A good sourcing agent will have a systematic approach to manage your project.

3) How can you be sure of the price?

To know ‘fair market value’, you should go for open market tendering, instead of just creating just a few established contacts. This will let you know the average cost prevailing in a marketplace and will give you a peace of mind that you are not being overcharged.

4) Will the agent give you full details of suppliers?

Most of the sourcing agents will prevent you from knowing their suppliers, they try to withhold their details so that you rely on them. But, when you are selecting a sourcing agent, ensure that they are transparent and provide you with every detail. This can be quite beneficial for you. In case, if you and your agent relationship ceases, you will not be out of products, as you can directly contact the suppliers.

5) Does the sourcing agent have good knowledges about factories?

A professional and reliable sourcing agent will get quotes from many suppliers so that you can decide who can suit your needs. If the sourcing agent is professional, he or she will suggest you a trustworthy supplier who can meet your requirement.

6) Is the owner of the sourcing agency firm Chinese?

Many agencies can be non-Chinese, who have made a few contacts, done a few business trips and are trying to fit in the Chinese marketplace. Whenever you pick a consultant, make sure that the owner is Chinese so that he or she can give you a clear picture of the market that can help you to be successful.

7) Are you going to have a single point of contract?

In case of single point of contract, this will save a lot of money and time from being passed from one person to another.

8) How is their ability in English?

Email is the only channel used to conduct business. Hence, agents with good English written ability and communicating ability is important to avoid any sort of inadequate communication.

9) Do they have any sort of experience in West and East?

Sourcing agents with bi-cultural experience and knowledge will help them to do create a better approach while doing business. A bicultural agent is someone who understands Western and Chinese culture. Choosing such an agent will give you smooth access in different markets and he or she can negotiate with the supplier.

10) How can you ensure the quality?

Throughout the sourcing process, there must be a quality control unit. Your agent must work closely with factory and managers so that he or she can satisfy your demands.

On reading these points, you can understand which questions are needed to ask before you think of selecting a reliable sourcing agent from China.

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Elksourcing：Quality Control When Source Products from China

Apr 14, 2021 , by 露露

China is called “the world factory” for its business ecosystem, huge labor pool and low production costs. As a result of focusing on production-oriented upstream and downstream in production facilities, materials, design, and freight transportation within a specific area, a close economic and technological cooperation circle has been established to reduce production costs and increase production efficiency. 

China has a long list of producers, thereby leaving you spoilt for choice. You have the flexibility to choose a producer whom you think is best and as per your preference. However, one of the biggest issues is quality control, considering you stay tens of thousand miles away from the production line. In this article, I’d like to share some of my thoughts per my 20-year experience.

1. Understand the value of your products

When you plan to source products from China, you must have a full understanding of the products. With the product value in mind, you are allowed to figure out the quotes from suppliers which may help you settle on the market. You have to figure out the raw material, basic process, functions, and even the design.

The most important thing you have to understand is about product quality. You have to know the price range of the product at a certain level of quality. Normally, you will find a different price on the market for similar products because of different quality standards. As such, you have to understand the value of the product. The full understanding of your products will definitely help you to specify the quality standards in detail in the contract when you cooperate with manufacturers.

2. Cooperate with a quality supplier

Remember to cooperate with quality suppliers when you start souring from China. First and foremost, you have to reach them to check their qualities. You can find these suppliers on different platforms such as B2B websites, Google, trade shows, and social media sites such as Facebook, Twitter, and LinkedIn. Find them and get their contact info and background info to know much more about the supplier. Secondly, you are allowed to entrust a third-party inspection company to inspect the manufacturer. Remember to ask for the inspection report if you entrust someone or a company you are familiar with. This helps you narrow down your choices.

3. Quality Control over imported products

When it comes to quality control over the imported products, there is a wide variety of stuff to do on the list. It covers all possible links ranging from the beginning of the production line and the ending of pre-shipping management. We’ve divided it into three different periods for the product.

(1) Pre-production Inspection

The first comes to the pre-production inspection. At this period, you have to check the raw material and components. Generally, manufacturers are inclined to source the cheapest material and components, and they are not aware of the raw material restrictions of your country. To make sure the quality of the raw material and components, you are allowed to draw a few samples randomly for the lab testing. Besides, you have to check the prototype of the product to ensure a successful design. In addition, you have to communicate frequently before it enters the mass production period. All this is to make sure that your quality specifications, materials, components, and process are completely understood by the manufacturer.

(2) In-process Inspection

Then it should be the in-process inspection. This means the inspection during the mass production. You have to make it in case of possible unsellable products produced. During this period, you have to check the quality of a few products that were already manufactured and avoid possible issues on the rest production. You should never check it too early or late given its turnover of the product manufacturing. Try to find out the non-conformity products based on the buyer’s requirement. Besides, you have to pay attention to the visual defects of the products. This is of great importance before it enters the market. What’s more, you have to monitor the process for the product such as the forging process, and the assembling requirement. You can supervise the manufacturing process. If possible, you have to keep frequent communication with the supplier to follow up on the manufacturing process and give specific details about the product. Frequent communication delivers a better understanding of the products specification. Get the manufacturing update from the suppliers, and find possible revisions, and correct it during the production period. You can get the potential problems fixed before it’s too late.

(3) Pre-shipment inspection

Literally, pre-shipment inspection means the product inspection prior to the shipping. Normally, you will get the finished product quality control from the manufacturer. But that’s not enough. Pre-shipment inspection is normally carried out once 100% of the order is produced, and almost 80% packed. Some may even wait until all orders get packed. This is to identify possible faults and errors in the batch orders before you ship the items. This is how you make it easier for suppliers to rectify an issue. For this part, you may not be able to check the product one by one. The best solution is to carry out the sampling test onsite. Sampling plans are available for you to determine the acceptable number of defects. Pick randomly and figure out an accurate overview of the quality of the batch order. Get the test report and evaluate if it is up to your quality standards.

4. Who will carry out quality control?

It’s important for you to entrust quality control to a reliable partner to ensure quality product sourcing. As such, you can make it by yourself, hire inspectors, or entrust a professional quality inspection agency. Make sure they fully understand the requirement of your products.

(1) Travel to China to Inspect Products Personally

You may not know the best way to conduct product inspection. Remember to take the details of the process into account and get the necessary training. You have to figure out the inspection quantity. As we know, it is impossible for you to inspect all the products one by one. You have to know the sampling inspection process, the on-site testing procedure, and the equipment for inspection. Besides, traveling to China takes your time, money at the expense of the opportunity which may neglect other business activities at home.

(2) Hire a third-party inspection company

A third-party inspection company will be the best option for those who don’t have a big budget to fly to China or hire your own inspection staff. The third-party inspection company will offer you their professional service with their expertise.