Elksourcing:What Sourcing Agents Do to Help Your Importation Business?

Elksourcing:What Sourcing Agents Do to Help Your Importation Business?

Starting a business of importing from China is a tedious process. You have to create a sound business plan to run your business and ensure it will create profit in the long-term. More importantly, you should have a reliable and trustworthy supplier you can get quality products to sell to your target customers.

For first-time importers, the task of looking for a supplier is daunting, you should consider your budget and the number of products you need to order. With business transactions most likely done online, it can be hard to deal with someone without at least seeing your contact in person. Adding to that worry are horror stories where business owners get duped by scammers online.

In such cases, hiring a sourcing agent to help you deal with your supplier can help a lot, employing an agent can make transactions easier and with less hassle. Reliable sourcing will make your job easier as far as dealing with Chinese suppliers is concerned. 

This article will discuss what sourcing agents do and how important they can be on your business. Here are some things you need to know about a sourcing agent’s tasks:

1. They take care of importation process

In a nutshell, sourcing agents do the importation transactions with the supplier for you. They take the major responsibility of all the related legwork of product importation – from ordering up to the delivery. A reliable sourcing agent should also be knowledgeable with the importation process and prevent risks that can affect your operations.

2. They speak local language

If you are importing from China, it is only logical to hire someone who can speak their language. This can help in better communication and prevent miscommunication that can ruin your business.

3. They represent your business

Because sourcing agents will represent your business, it is important to hire someone reliable and trustworthy enough. A sourcing agent will also help you look for suppliers and conduct on-site factory visits when necessary.

4. They serve as quality controllers

A reliable agent should know the roundabouts of the importation process. At the same time, the agent is also responsible for conducting product quality inspections before it lands to your doorstep for selling. Sourcing agents will ensure you only get the best products from the best suppliers in town.

If you are a first-time importer, you will definitely need help with experienced personnel, and a reliable sourcing agent will help you with such tasks. Many successful businessmen believe hiring a sourcing agent for importing from China is a good business investment.

Elksourcing:Steps to Get Your Own Products Made in China

China is always the first place you need to consider, if you have an amazing idea for a product that you believe will do well on the market. However, it is not easy to make an idea to reality, if you do not follow the right practices, you may suffer in loss of money and time. In this article, we share you the right steps to get your own products made in China.

1) Getting Drawings and a Prototype

You need to get this idea made into engineer designs and a prototype. It is crucial you get both done; it can be difficult to manufacture a product without an engineer drawing that has tolerances, bill of materials, and technical requirements. You need a prototype, so you know your product is functional and looks good. You can do this in China, but it is not easy. Communicating with an engineer in China over different time zones can be difficult enough, but when there is a language barrier, the challenge is compounded as difficult ideas and concepts can be hard to translate. Progress is much slower because of this. It is recommended that you get your design and prototype completed in America. We can help you get started on this process if you need help finding an engineering company.

2) Finding a Supplier

Okay, so now you have a good prototype with clear and exact engineer drawings. The next thing you need to do is find a factory in China that can produce your products. You basically have two options, find one yourself, or get a sourcing company to find one for you.

You may think that getting one yourself may be the cheaper solution, because you don’t have to pay a commission. In actuality, it is often more expensive. If you choose to get one yourself, you must learn the culture, fly to China, and start building business relationships over time. You would need to look for factories that have the capability to manufacture your product and keep your level of quality. You would need to visit their actual location. Just googling Chinese factories doesn’t work because many “factories” have websites but are really just a front some scammer setup out of his apartment hoping to con westerners out of their money. They could also be a real factory but may steal your product and sell a knockoff version. After a lot of flying around China while paying for a translator, you will be out a large chunk of money, with no guarantee of success. 

Using sourcing agents can simplify things as you no longer have to deal with cultural differences, language barriers, time zones, the risk of getting burned by a fraudulent factory, and a whole lot of jet lag.

What makes a qualified sourcing company? Well, for one thing, the biggest isn’t always the best. Alibaba has had a number of issues over the past few years as published in many articles. A good sourcing company will have skilled people in China who either are Chinese or know the culture and language fluently. They have a longstanding history of protecting intellectual properties and know how to find qualified factories. They are responsive, pay attention to detail, and will ask a lot of questions about your situation to get a clear picture. They will help you through the import process and have a replacement policy for defective products. Sourcing agents should be upfront about fees and will work to fix any issues that occur.

3) Getting a Quote

When you find a sourcing company you like, you will need to provide them with your engineer drawings and other information such as: your shipping location, quantities to quote, packaging and labeling instructions, so they can tell you how much it will cost to produce and ship your product. Also, make sure you provide the company with any additional requirements you need your product to pass such as U.S. consumer certifications. It is a good idea to get exact quotes and not shop around for ballpark figures, so you have reliable numbers. It is important to note that cost, while important, should not be your main reason to pick one quote over another. Choosing a company that is responsive, reliable, and reputable will save you more money over the long run.

4) Purchase Order

Now you have a quote that includes sample, production, and shipping charges, along with estimated production times, you should be ready to place a purchase order. Some companies offer a third-party inspection service which may be a good investment if this is a first order or you are buying a large order. At this point, you should have been provided information about marking your product as “Made in China”, various import fees and paperwork you should expect, and you should either have your own customs broker, or have had one referred to you. Make sure the factory will make and send a sample to you before you move to production so that you will know the level of quality you will be receiving. You should also review their replacement policy.

5) Receiving Shipment

After you have signed a purchase order, you should receive a sample for approval. If there is something wrong with the sample, bring it up with your sourcing agent and have a corrected sample sent over. When you approve the sample, you should expect to pay a portion of the production order up front, and the balance when the order is ready to ship. You should expect to have to file some paperwork. Many companies will ship your products to the port you chose, and you may be responsible from shipping it from there to your door. Make sure you inspect your shipment, and the right quantities were received.

After following these steps, you should have an awesome product ready to hit the market that you can be proud of and can enjoy the success in business.

Elksourcing:Important Things for Sourcing Products from China

Sourcing Products from China tends to be cheaper than local, and often local manufacturers may not even exist for your products. Here are some of the most important things you need to know if you’re trying to source products from China.

1) Define Your Specifications 

There’s nothing more aggravating for the factory you’re working than either unspecified or constantly changing specifications.

Changing a material partway through the manufacturing process can be costly, time-consuming, and in the worst case may even necessitate moving to a different factory. Before you even begin to search manufacturers, you need to have a clearly-defined idea of what you’re working towards.

There are quite a few specifications you should have at least mostly nailed down before you open your web browser to go hunting. These include, but are not limited to:

Logo/ Materials/ Colors/ Dimensions/ Order QTY

Be specific and detailed. For example, if you were creating a handbag, you’d want dimensions for inside and outside, the strap, any buckles … don’t leave things out. The last thing you want to do is get far down the road with a manufacturer and then find out that they don’t have the capabilities for what you’re trying to make.

Something else to be aware of is that sticking close to standard sizing for your product can make it easier and cheaper to produce, as the factories may already have molds or patterns that work.

If the factory is doing a reasonable amount of business, it may have processed orders for other companies that want to produce similar goods. Take advantage of being second.

2) Use Sourcing Resources Wisely

Once your specifications are clear, you’re ready to start looking for a supplier.

This can be something of a daunting task.

Sites like Global Sources and Alibaba specialize in helping you find sourcing, but by and large they serve as bare bones brokers: you don’t necessarily know how well a company has been vetted, or even if they’re a manufacturer at all. Many trading companies represent themselves as manufacturers on sites like Alibaba.

There are other excellent tools out there that can help with both sourcing a manufacturer and dealing with logistics on shipping. Whichever option you go with, you’ll probably want to pare down to several options that you can send requests for quotes to.

3) Vet Your Supplier

So, you’ve reached the point where you’re reaching out exploratory feelers to your list of suppliers. But who actually are they? How much can you trust them? Is there a way to find out?

There are a few things you can check:

a. The easiest one by far: what’s the email address they’re using? Is it a company domain, or is it a Gmail or other free webmail address? Go to the domain. What does it say? 

b. Some platforms, such as Alibaba, have rating systems and reviews or testimonies for each listing. These can give you an idea of whether or not the factory does good work, but probably won’t tell you if they’re a middleman or not.

c. If you’re dealing with China, ask to see a business license. You might have to get a Chinese speaker to help decipher it for you, but it will tell you the scope of the business’s operations and what they’re allowed to do.

d. Check that country’s business index. Most of these are available online. It might take a little bit of web searching to do this, but you’ll probably be glad you did.

e. Ask for references. A reputable supplier that’s been around for a while will be happy to accommodate.

4) Communicate Clearly

This applies even in English, but it’s hyper-important when you’re dealing with companies based in non-English-speaking countries. Avoid long words or unnecessary jargon, especially things that might trip up machine translation. Not every office will have good English speakers, so they might be relying on software like Google Translate to pick up the slack.

Be concise and to the point, and use lists or extra line breaks where possible. It’s harder for the person on the other end to miss something important.

Don’t just rely on email, either. Email is the most common form of business communication for a reason, but having other avenues of contact can be helpful if email alone isn’t doing the trick.

5) Check a Sample

Everything may look great on paper but translating your specifications to an actual manufactured product (especially if there’s a language barrier) can be a challenge. You may have forgotten something in the specifications, or the manufacturing process might make it look different.

When you receive your prototype, put it through its paces. Use your senses. Does it look right? Feel right? Are the details correct? How does it hold up to wear and tear?

Iron everything out at this stage, while you don’t have a full production run going, and you’ll save yourself a lot of headaches down the line.

Elksourcing:How to Negotiate Better with Chinese Suppliers?

Negotiation skills are important when working with your Chinese suppliers — the people who actually manufacture your products. You need to learn some good ideas before you start to send an email or phone your Chinese suppliers.

1) Do Your Homework

You won’t be able to make much progress in your negotiations if you haven’t done a fair share of research in advance. You should understand the basics of working with Chinese suppliers, while also conducting in-depth research on individual businesses to create a preliminary list of partners who seem like they would be a good fit.

Researching basics like available product types, minimum order QTY and shipping terms can help you get a better idea of which suppliers have the potential to meet your needs.

Not only will this help you make a good impression with suppliers once you pick up the phone and call; it will also help you avoid wasting time with providers that wouldn’t be a good fit.

2) Communicate What You Want

Knowing exactly what you’re looking for is another essential aspect of negotiation with Chinese suppliers.

Before you even begin negotiating with potential manufacturing partners, you should have already figured out key product specifications like dimensions, materials, colors, packages and how big of an order you wish to place.

Be thorough. Suppliers want to see that you know what you’re talking about. If you haven’t already determined your product specifications, you won’t be able to get accurate quotes from potential suppliers.

An inability to provide complete specs could also make a supplier less eager to work with you in the first place, as your perceived inexperience will make it appear unlikely that you have potential to become a long-term client.

3) Shop Around

If you want to gain a competitive advantage, you should never simply accept the first quote you receive. Always get the service quoted by at least three suppliers. I let the supplier know that I am getting quotes and will go with the best one available. This creates some competitive pricing.

Suppliers want your business. More often than not, shopping around and getting multiple quotes will allow you to leverage additional discounts or benefits from your preferred supplier.

4) Show You Are a Long-term Player

You’re not the only one who stands to lose or gain money based on who you pick as a supplier. Generally speaking, overseas suppliers prefer working with long-term clients, rather than someone who is simply placing a “one-and-done” order.

When trying to negotiate discounts and other benefits, emphasize how you are looking for a lasting supplier relationship. Ask about additional perks that the supplier provides to their long-term customers.

In the long run, it’s better for the supplier when you agree to a long-term partnership. This makes them more likely to offer special discounts in an effort to win your business, ultimately creating a win-win for everyone involved. 

5) Know the Language

When negotiating with overseas suppliers, it’s important to remember that you won’t always be dealing with someone who speaks English as a first language. Regardless of whether you’re communicating via email or in a face-to-face conversation, this means you need to keep your language simple. Learning a few words and phrases in Chinese won’t hurt, either!

Your suppliers probably understand basic English terms related to product specifications, but this doesn’t mean you should dive into industry-specific jargon.

6) Build a Relationship

One of the most talked-about aspects of doing business in China is guanxi. It is about building a network of mutually beneficial relationships which can be used for personal and business purposes. Chinese culture takes things a step further. Business professionals often get to know each other outside of formal meetings to deepen their relationships.

In an ideal world, this means you would visit suppliers in person and participate in these informal gatherings to cultivate stronger relationships. While this may not be possible for an emerging startup that is still tight on cash, you can still take small steps to build stronger bonds with your suppliers, such as sending gifts or offering to write a testimonial.

These behaviors lay the foundation for more positive interactions, which will give you much greater leverage in future negotiations.

Elksourcing:Notes for Sourcing Bespoke Products from China

Not like sourcing stock products, sourcing bespoke products is more complicated and you may meet face more challenges. Having custom parts manufactured involves locating and building a relationship with a factory, unless you use a sourcing company, which is highly recommended. 

The followings are some notes I have learned from my 20-year experience of sourcing from China.

1) Develop Your Product

The first step to getting your product sourced is to, not surprisingly, develop your product. This involves going from conceptual ideas and artwork to having engineer drawings designed and then prototyped. Sometimes this can take one or few tries before your product has taken shape in the way you envision. It is not likely that an engineer can get your design perfectly designed in the first iteration of files and prototypes, so don’t be shocked if the first prototype is a little rough.

If this is a new groundbreaking product, you should be taking prototypes to family members, friends, and strangers to do market research. Try and get their feedback and input on how to improve it. Find out what they like about it, then try and improve and emphasize those aspects of it. Correct any flaws that are spotted, and you are well on your way to success.

2) Protect Your Product

You should try and take every precaution to protect the intellectual property of your product. Try and get a patent if possible. Even if you can’t get a utility patent, you should be able to distinguish the aesthetics of your product so you can get a design patent. A patent lawyer can help decide which patent route to take.

You can also get a Non-Disclosure Agreement with companies you choose to involve in your product. NDA prevent parties from giving away or selling your information, and they can be written to last as long as you want. If you are signing another company’s NDA, be sure to thoroughly review and understand it.

3) Sourcing the Products

After all the preliminary work you have done to get this far, you should now be ready to start sourcing your products from China. Sourcing companies will help you save many months of time, significant money, and travel as they will have pre-established relationships with factories in China.

Business relationships in China are much different than in western cultures. In China, contracts are dependent on the strength of the relationship. Some businesses will turn down lucrative deals if they have been offended or the relationship hasn’t been built strong enough. Or what can happen is they will prioritize orders with companies that they do have those long-lasting relationships with.

You should communicate to your supplier upfront what standards and certifications you need your product to meet. They won’t know if your product needs to be certified or what those certifications may entail, so you will have to contact an expert in the field of your product. For example, if you are manufacturing a repellant, you’ll need to contact an FDA consultant to advise you. You can learn more about product compliance here. This will affect which manufacturers the sourcing agents can contact.

The first step to getting your products sourced is to get a quote. Quotes from sourcing companies should include shipping terms, payment terms, sample costs, cost per unit, and production time.

You should start with a sample for your order. Samples will allow you to invest a small amount while getting evidence that the factory can produce your product as you want it made.

Approval of the sample will mean that the production order is ready to start. A rough estimate for production orders is about 1~2 months. The size and complexity of the product can impact how long the part takes to be produced.

4) QC Inspection

A third-party inspection company is available to come in and inspect your shipment when it is complete. The QC inspectors will review the shipment and draw up a complete report with pictures in regard to the standards you have them inspect. This is a good practice for larger first-time orders.

Repeat orders on parts should be much quicker. The factories will be familiar with how to manufacture your product and you won’t have to go through the sample process again. However, you still need to pay much attention to quality control, in peak seasons, factory may be too busy to focus on all details. After Chinese New Year holiday, 30~50% workers may not come back, so factory has to recruit many new labors, but the new workers are not familiar and skillful, so, the quality level usually is lower than average.

5) Plan Ahead

You will need to have a customs broker lined up. Once the order is finished, shipping documents such as the ISF (Importer Security Filing) and bill of lading will need to be processed. Customs brokers are specially certified to process these documents and clear shipments at the port of entry.

If you need parts quickly, try and plan to build as much time as possible for the production and shipping process. Unexpected events such as dock worker strikes, diseases, natural disasters and other unforeseen circumstances can occur, so be sure to account for the unexpected.

Per my experience, it is better to leave 2 weeks as cushion time, as many delays could happen, especially in peak seasons and close to major holidays, such as time before Christmas and time before Chinese New Year.

Elksourcing:Building Good Relationship with Your Chinese Supplier

China is factory of the world, so, when we speak global sourcing, China is on the top of list. Once you find a Chinese supplier and decide to work with it, it’s essential to build and maintain a strong and healthy relationship. We believe below aspects are critical for building good relationship between you and your Chinese supplier.

1. Capability

The supplier has to be able to do what you need them to do. Can they make your product out of the material you need? But the next step is also crucial. Can they grow with you? 

Do they have multiple manufacturing capabilities? 

Can they scale up? Do they want to?

2. Communication 

Responsiveness is an important attribute in any relationship. You want to be able to get in touch with your supplier when you need them, and you want them to communicate with you as well. If your supplier is overseas, this is even more important. Make sure to have a native speaker who can translate for you on your calls. 

How frequently will they report to you?

Will they call or email?

Who will be your point of contact?

Will you receive written reports? How regularly?  

3. Transparency

Open, honest communication is what customers are looking for. Customers want to see where their products are being made. They want a supplier that welcomes them to the factory floor.

When can I visit the facility?

How much notice do you need?

Can I get a list of references and other customers?

Who are some of your suppliers?

4. Quality

Obviously, products are useless if they don’t perform to standard. Customers are looking for suppliers who can meet the basic industry performance standards, and in many cases, outperform those standards. They are looking for a supplier who makes a part right the first time, and every time after that.

What is your quality plan?

What testing capabilities do you have at your facility?

Your company’s success will be built on a good sourcing strategy and creating a sound sourcing process. By measuring the performance of your suppliers, and aligning their capabilities with your needs, both your businesses will be set up to excel and flourish. And that’s the best kind of partnership. China sourcing agent – Elksourcing have capabilities to fulfill your need.

Elksourcing:Common Mistakes Made by New Importers

China has become one of the largest manufacturing hubs in the world. However, if you are a new importer, there are certain details that you need to pay close attention to as these may make or break your import from China. The followings are common mistakes made by new importers.

1. Not understanding Chinese business culture

You can’t do business without proper communication. This applies to any businessman from any country trying to strike a business deal. China is such a vast country that it’s home to very different cultures. If you’re looking to establish a long-term relationship with Chinese businessman, going beyond the basic introductory phrases will be handy.

Also keep in mind the Chinese way of doing business. What may appear polite to you may come off as rude to the Chinese, and vice versa, and you definitely wouldn’t want to lose a deal just because of an easily avoidable misinterpretation.

2. Not investigating applicable regulations

Knowing the trade regulations of the product you’re importing is part of any import and export process. But when importing from China, it’s best to take extra precaution. It’s not uncommon for Chinese suppliers to produce goods that fail to comply with international standards. In fact, it’s reported that in certain industries, as few as 5% of Chinese suppliers actually meet the guidelines implemented by the European Union.

Depending on where you’re importing to, we recommend that you properly investigate not only the import laws of the importing country but also the regulation that applies to the products. That way, you know exactly what to look for when choosing a supplier in China to ensure that the products you’re importing comply with the right standards. This helps to prevent problems at customs clearance and delays. A good resource for information on product guidelines is the chambers of commerce and customs offices of your country.

3. Choosing wrong Incoterm

Incoterms are a clear set of conditions by which both importer and exporter are obliged to abide in any international transaction. This prevents misinterpretation and confusion over costs, risks, management, and responsibilities. When importing from China, it’s highly advisable to pay close attention to the pros and cons of the Incoterm you choose.

Three common Incoterms used for imports from China are FOB, CIF, and EXW. However, each of these has advantages and disadvantages that could play a massive role in the overall cost of your import. The CIF Incoterm may seem like the better option due to its low costs and relatively fewer responsibilities. But this could backfire later on as with limited control, chances are you will have to accept everything your supplier decides, which could end up in significantly higher costs. In general, we recommend choosing FOB as this gives you greater control over the entire import process and costs.

4. Choosing unreliable suppliers

As an importer, you’re responsible for the products that you import. This means that you’re answerable to customs should anything go wrong with your import and are liable should your products cause injuries to any consumer. That said, it’s extremely important to choose reliable suppliers from China.

Before signing an agreement with a supplier, make sure you’ve done proper research into its production process. This means knowing where it obtains its materials from and even speaking to other importers who are either importing the same products or have dealt with said supplier. You may also want to take a trip down to the production ground personally for additional assurance. Consider bringing a specialist who understands the production process of the product you’re importing with you and can thus advise you on potential problems that may come up.

5. Not planning in advance

Time is an important factor to consider for any import you’re doing from China. Any one of the above-mentioned errors alone can cause massive delays and disruption to your logistics chain, let alone were two or more to occur. With these in mind, always begin planning your import from China with extra time to spare.

We recommend that you start organizing your import at least three months in advance. Depending on the port in China from which you’re importing and the destination point, transit times may vary rather significantly. Also keep in mind time needed for inland transportation.

Ideally, you should have your shipment booked at least two weeks before the vessel sails. This gives you extra time for your agent at origin to get all the required documents done in time, prepare the shipment, and allow for a time buffer should something go wrong. To obtain the best transit times and minimize hiccups, always speak to your freight forwarder for the best ocean freight options.

Elksourcing:Factors to Consider While Sourcing Products Globally

Organizations need to consider pros and cons before engaging themselves in global sourcing activities. Conducting sourcing activities in a different destination is undoubtedly a tough task for marketers. Organizations can gain from their sourcing operations, but it is not free from challenges. The following factors should be considered while sourcing products globally:

1) Landed Cost

Most people focus on the lowest unit cost. However, the unit cost is just one piece of the total cost equation. Besides landed costs, marketers also need to focus on transportation, insurance, duties, brokerage services, etc. If you run an organization, you also need to consider costs relating to unforeseen circumstances. Instances may arise when customs officers decide to assess the freight. For this purpose, you also need to include the examination and local coordination charges. Another factor you can’t afford to neglect is the transparency in the supply chain. Delays in the supply chain would lead to expedited freight charges to meet the target delivery date.

2) Product Quality

In this age of cut-throat market competition, every organization is trying to manufacture quality products that would address the fluctuating preferences of consumers. Modern-day businesses are customer-centric in their approach. There is no doubt about this aspect. Quality plays a crucial role in any sourcing business.

If your customers are unhappy with the product quality, your organization will get a bad reputation. No marketer would want this to happen as it will loosen their gripping’s on the market. Quality issues are bound to arise when you address a vendor through cultures, time zones, and geography. Poor quality stirs customer dissatisfaction and affects everything downstream. In such cases, you may have to sell a defective item at discounted rates without expecting a profit.

3) Logistics 

This is another factor you need to consider when engaging in sourcing activities in a different destination. All the great products and quality would be useless if you cannot bring the goods to the market. For this reason, most organizations prefer to conduct sourcing operations in destinations with good infrastructure and excellent transportation options. It reduces the lead times to a great extent. The finished goods reach the marketers within a short period. This is particularly helpful in times of increasing consumer demands.

However, while considering the logistics capability of a country, you also need to take account of the seasonal fluctuations and weather conditions. Take suggestions from strategic sourcing companies to implement your procurement plan effectively. Professional sourcing agencies will also make you acquainted with the economic and political scenario of the sourcing destination. It is recommended to have alternate sourcing plans in case the primary plan does not go right. This back-up plan will also be of great help if organizations cannot avail of the transportation lane.

4) Location

Organizations choose sourcing destinations that are near to them. This indeed has an added advantage for marketers. One cannot deny the several benefits associated with the location proximity of a country when it comes to procuring goods and services. Mostly, you do not have to deal with different cultures if you select a nearby sourcing destination. You will also get various similarities in the sourcing destination with your native country. Added to this, working in different time zones will not be a headache for you.

5) Regulations

Organizations prefer to conduct sourcing operations in a destination with fewer trade regulations. This is a major factor why Western marketer are going with countries like China. The governments of these countries have undertaken various reforms that are accelerating the trading scenario of these countries. No doubt, it is proving to be a great boon for marketers. Before making any sourcing decisions, you need to probe into all trade incentives or restrictions relating to the sourcing destination. If you are not aware of the trade regulations, seek guidance from professional sourcing companies. The procurement experts will educate you regarding the legal requirements of international trade.

Making a global sourcing decision is not an easy task for organizations of all sizes. You should take into account the above-mentioned factors before coming to a final decision. Considering all sides before initiating your organization’s sourcing operations can open the floodgates of success. The strategic sourcing companies have a great role to play in this regard. With their advice, making calculative decisions will not be difficult for you. Prioritize the above-mentioned aspects before putting your hands in sourcing operations.