Elksourcing：Things to Consider during Global Sourcing

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Elksourcing：Things to Consider during Global Sourcing

Apr 20, 2021 , by 露露

Global sourcing products requires careful consideration, it’s a tough decision for any organization. You must determine whether it’s best to gain cost advantages at the expense of some control of your organization’s core activities, or if globally sourcing would be too costly to be practical. Below are key things you need to consider during global sourcing.

1. Monetary Risk 

Although the use of foreign suppliers can save costs due to factors such as lower costs of labor and proximity to raw materials, there are also risks that can impact costs including: 

Unanticipated and rising shipping costs. 

Cost of delays or loss of goods in transit. 

Rising costs of transactions, such as documentation fees, contract management fees and third-party supplier audit fees. 

Costs related to time zone differences, extra time for storage or transport delays, e.g. approval is given in one country, but the time difference or traditional days off mean the action cannot be enacted until the next business day. Many organizations use primary and secondary sourcing as a mitigation strategy. A primary source is used as long as it meets company requirements for supply, delivery, and quality while a secondary supplier is available to cover shortfalls. Often the secondary supplier in on-shore or near-shore in order to address supply issues quickly, and although typically more expensive, this can prevent greater monetary risk to the organization due to lost customers purchasing competitors’ products.

2. Competitive Advantage

Protection of intellectual property and quality are important aspects of competitive advantage. Organizations who believe their intellectual property is absolutely core to their competitive advantage should be very selective about the components they source from global suppliers. The more an organization has to divulge of its proprietary information, even in terms of specifications, the greater the risk to its competitive advantage. Organizations must also keep the purpose of global sourcing in mind, by ensuring their costing is realistic and includes all the costs of sourcing, such as planning, transition, and implementation costs. If a competitive advantage is to be gained by lowering costs, it is important to ensure there are no hidden costs that will eliminate any realized cost advantage. Organization must ensure they understand what their competitive advantage is and all the factors of global souring so they can best utilize, protect, and enhance their competitive advantage.

3. Culture

Global sourcing success requires the understanding of the cross-cultural differences between the sourcing organization and the potential supplier. If the key players in global sourcing initiatives are not aware of the impact of their behaviors on the interactions with potential suppliers, the resulting misunderstandings, miscommunication and hurt feelings will prevent any attempts at business agreements.

4. Ethics

Ethical business practices in other countries cannot be assumed as a standard practice. Although sourcing organizations are seeking the lowest prices, there can be negative backlash from customers if they find that, for example, farmers or mine workers are exploited or purchases are funding wars and insurgents. In developing countries, producers of certain raw commodities, such as coffee, bananas, cocoa, sugar, tea, and cotton, are being assisted by the Fair-Trade social movement, which seeks to ensure producers receive equitable compensation and serves to promote sustainable community development.

5. Environment and Compliance 

Other countries have different standards, laws, regulations, and business practices that can impact sourcing from other countries, either by adding costs or requirements that would be considered illegal in one’s own country. It is always important to remember to conduct business from the perspective of the end customer. Questionable practices that can be related to an organization’s product can have a negative effect on an organization’s brand and reputation. 

6. Quality 

The implications of a quality failure from an international source are much more severe than a quality failure from a domestic source. With lead times involving different time zones and much longer distances, it can take several months to rectify a quality problem. Quality issues also affect downstream supply chains.

7. Logistics 

Once quality supplies have been secured, the next consideration is managing their transportation. Even assuming transport costs have been factored into the feasibility research, there are still risks in transportation that are beyond the control of the exporter and importer because supplies are generally in transport for long distances and for long periods of time. 

8. IP Protection

Sourcing international suppliers for raw materials or components doesn’t pose a high risk for loss of intellectual property compared to outsourcing manufacturing. However, there is an intellectual property protection risk, if the components contain proprietary design or material elements or require proprietary equipment.

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Elksourcing：Type of Defects in QC Inspection

Apr 20, 2021 , by 露露

Most importers set quality tolerance level by use of an AQL table used in an acceptable quality level sampling method, such as Level II, AQL 0/1.5/4.0. Quality control experts categorize quality defects into three categories: Critical, Major, Minor.

Defect classification is a crucial step because it determines if the goods pass or fail the test. To help you make better decisions, we provide you with a complete guide on the types of defects. 

1) Critical Defects

They are the most serious type of defects and do render a product unusable or even capable of causing harm to someone near it. Critical defects can put the business at huge risk or product recalls lawsuits and liability issues. Most importers usually have a zero-tolerance policy on orders that have critical defects. Any product will automatically fail inspection when a critical defect is found.

2) Major Defects

The major defects are those who are capable of affecting the appearance, performance, and function of an item. An item having a major defect will always depart from the product specification of the buyer. Customers can easily notice these defects, and probably they will return the item, raise a complaint, or even seek a refund.

A good number of importers have limits of major defects set lower than those of minor defects in the sample size that has been inspected. In most cases, they will accept a product with a few major defects, although they are most likely to reject the order or request the supplier to rework or hold onto it in case it fails inspection due to a high number of major defects.

3) Minor Defects

In most cases, the minor defects will be the insignificant and small issues that don’t affect the form or function of any item. Most customers will not notice a minor defect on a product, and some customers will not return the product just because of their minor defect.

The importers set a higher tolerance level when it comes to the application of that standard to a smaller defect in the AQL sampling that has been inspected. However, a product can still fail inspection when the number of minor defects is beyond the set limit by tolerance.

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Elksourcing：9 Steps to Import and Resell Products from China

Apr 20, 2021 , by 露露

Starting your importing from China can seem overwhelming at first, but it doesn’t have to be. Follow below methods, you can successfully import products from China and resell them for major profits online. 

1. Finding a Target Market

Before worrying about what kind of products you are going to sell, your website, or the factory you will order from in China, you need to focus on your niche.

This is the narrow target market that you are going to serve. Instead of going wide, be very specific about this.

For instance, instead of focusing on the muscle building market, focus on the paleo market. This allows you to compete without going up against major brands that have a better reputation and can outspend you until the end of time.

To identify your niche, ask yourself what kind of hobbies and interests you already have. It will be much easier to create your marketing once you understand your market.

Once you have identified a specific niche, you are ready for the next part of your importing journey.

2. Selecting a Product

Now that you know the kind of people you will be targeting, you need to decide what you will sell.

There are a variety of free and paid tools to see what kinds of terms are trending. This includes Google Trends, Google Keyword Planner, and more.

Make sure your product has at least 5,000 hits per month or you may risk going into too small of a market to turn a profit.

3. Finding a Supplier

Once you know your market and the product you want to sell, you need to find someone who will sell it at a wholesale price.

This is easier than it sounds. Most Chinese factories have a presence on a site called Alibaba. You can simply browse for those who create the product you’re looking to import and contact a few of them.

The negotiating process is the next step, and this requires more nuance than the previous steps. If you don’t approach it the right way, you could end up overpaying.

4. Arranging Your First Shipment

To make sure you get the best price for your product (and have room to make a profit from it) you need to contact multiple manufacturers. This is the first and most important part of your negotiating strategy.

The reason that contacting so many suppliers is essential is that you can play them off of each other. Because you have a choice, you will have leverage. You can always walk away from the deal if you don’t like their terms.

So, reach out to three to five of your favorite prospective suppliers and be sure to mention that you are talking to multiple vendors. Ask them for their best price and present your case as to why they should give you a great price.

Include reasoning such as a long-term partnership and high-volume orders in the near future once you take off with your product online.

5. Warehousing and Logistics

Don’t feel the need to house the products in your garage.

You can pay other companies to keep the inventory for you and even ship the units out to customers.

They will want a small cut, but it is well worth it for not having to spend your time dealing with all of the ingoing and outgoing packages.

6. Marketing

Now that you have the products in place and ready to be shipped, you can start your marketing efforts.

The first thing you need is a quality website. It should reflect the personality of the brand you’re going for. In a world where most e-commerce companies are buying their products from China and reselling them, you need to stand out with unique marketing.

Invest in quality photographs and videos if you can afford it. Also, keep in mind that your copywriting is one of the most crucial aspects of the marketing you do. You need to sell with your words.

7. Testing Sales

No importing business is ever finished once you have the site up and start making sales.

The reason is that you could be leaving money on the table. The testing phase is now in full force.

You can start testing different ads, landing pages, and even email funnels. Test every part of your marketing to see where you can create more profits.

The best part of this is that it is free (or very cheap) to use marketing software to collect this data and continually improve your margins.

8. Innovation

Congratulations, you now have your first successful online business by importing cheap products from China and marking them up for a major profit.

However, don’t stop here.

The main characteristic of any great entrepreneurs is the ability to take their results and duplicate them. So, use what you have learned and repeat the steps on a different product.

This can be something you came up with, or simply a similar product that you also want to import. The point is to create systems so that you are free to focus on the higher-level creativity.

9. Paying your Chinese Suppliers 

There are a variety of regulations when it comes to sending money in and out of China, so you need to carefully set yourself up for success now that you’ll need to regularly pay your Chinese suppliers.

One of the best options is to actually open a multi-currency account in Hong Kong. 

Because there is so much trade between Chinese suppliers and Western businesses, many Chinese companies a) choose to deal in USD and b) have their business accounts in Hong Kong. Due to highly regulated cashflow restrictions in China, having a Hong Kong business account makes a lot of sense for Chinese suppliers who work with international brands. 

The same goes for you. If you have a USD account in Hong Kong, that means that when it comes time pay your suppliers, you simply have to initiate a local transfer from your USD account to theirs, which is fast and convenient. 

What’s more, incorporating a company and opening a business account in Hong Kong can be far simpler than doing so in China.

Conclusion

When it comes to running a great online business, it is never easy. However, it doesn’t have to be impossible. If you approach things the right way, you can enjoy a highly profitable business without taking as much risk as you think.

But be sure to go through all the steps above. Otherwise, you risk running out of money, time, and patience.

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Elksourcing：Things to Consider When You Import from China to EU

Apr 20, 2021 , by 露露

When you consider importing goods from China to Europe Union, getting started is the most complicated part of the process. It is crucial that you follow all customs requirements and do not make any assumptions when it comes to importing goods. A small mistake can be a costly one when it comes to importing goods from anywhere in the world. When you are first starting out, make sure you know the rules and regulations inside and out.

While just about anyone can develop a business plan and start importing goods from China, it is still hard to get started if you don’t know what to do first. Here are 10 things you need to consider to help you get started and move ahead with your business plan as you import goods from China.

1. Know your product

When you make the decision to start importing goods from China, you need to know your product inside and out. Once you decide to import a product, it will be difficult to go back and change your mind. Get it right the first time by choosing carefully and only purchasing items in an industry you are familiar with.

2. Research Distributors

Exporting goods is a big industry in China, and just like here in EU there are companies that are good to do business with as well as less favorable businesses. For the best experience, find a reputable dealer that you can trust. A good distributor will also make the entire importing process easier.

3. Make the Right Connections

In order to ship goods out of China you are going to need a shipping agent that is skilled and familiar with the shipping process.

4. Attain the Correct Documentation

This is a big part of the customs process when shipping goods from one nation to another, and China to EU is no exception. By attaining the help of a skilled shipping agent, you can ensure all documentation is completed correctly.

5. Know the Rules and Regulations

China is not the only country with shipping regulations. EU has its own laws when it comes to customs and importing goods. Make sure that you are following all protocols for both nations; otherwise your goods will not be delivered as planned.

6. Learn the Costs

You are going to pay customs duty, shipping costs and fees to those helping with the importation process. If you are caught off guard and are unable to pay a fee the importation process will come to a halt.

7. Start Small

Importing goods is expensive, and you are going to have to pay fees on top of the purchasing and shipping costs. While you might think that you will be able to sell a large quantity of product, it is better to start with a small order and test the water before jumping in.

8. Find a Reseller

Have your business plan in set before the product arrives in EU. If you plan on using a reseller, sign a contract with that seller beforehand. If you are going to sell the product yourself, attain all proper tax documentation for your business endeavor.

9. Contact the Service Port of Entry

Find out any additional regulations that pertain to your specific location. Know who your local contact will be, and if the service port has any stipulations regarding pick up and transportation.

10. Arrange Transportation

If your product is especially large, then you are going to need transportation to move it from point A to point B. Know where you are going to bring your product, when you will be delivering it and how it will be getting there.

Once you have all of these steps in order you are ready to make your order and get going with your business endeavor. Remember that organization is key. The more prepared you are before the process starts, the more likely your experience importing goods from China will be successful.

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Elksourcing：Valuable Tips for Importing from China

Apr 20, 2021 , by 露露

If you are importing from China, pls keep in mind some important aspects and good knowledge. In this article, we have listed some valuable tips we learn from our experience.

1) Investigate the specific rules and regulations

When you import a particular product, you’ll need to research the regulations with which you’ll have to comply. The number of rules will depend on the type of product you’re importing. This is always a requisite for any import, but in the case of China, you’ll need to be especially clear on the matter. That’s due to a large number of Chinese suppliers not manufacturing products that comply with such regulations. In some industries, only about five percent of Chinese export suppliers meet the usual standards and regulations of the European Union.

Among those products that are especially sensitive and subject to greater regulation here – and that are also among the principal imports from Asia – are: toys and other products for children; food and food containers; vehicles, motors, and their components; electrical and electronic products and components; lighting; textiles and footwear; furniture; chemicals; cosmetic and hygiene products; construction materials; and all types of packaging in general.

2) Choose reputable Chinese suppliers

This point is crucial for various reasons. First, you must know that the importer is entirely and solely responsible for the products that he imports. Any compliance irregularities with regulations and certifications can lead to serious legal problems for the importer if it results in him being sued because the product causes injury to a consumer.

Second, if your supplier issues a false certification, your products may be held up at customs. Do note that this actually happens often in China. It will, at the very least, bring you logistical headaches and extra costs (in terms of storage and delays), and port authorities could end up keeping the goods and absolutely prohibiting their entry into the country.

In this sense, it’s important not to trust just any supplier who tells you that they comply with regulations; it’s advisable to go and get to know the factory and the products in person. It also helps to be accompanied by a specialist who understands the technical problems that can arise in relation to the product and which specifications apply in order to comply with regulations.

3) Sign a firm sales contract 

Once you’ve thoroughly researched all the certifications that your products need and you’ve found a trustworthy supplier who complies with them, it’s equally important to draw up a sales agreement in which everything is absolutely spelled out. That’s especially so for the specifications of the product and the conditions of return and compensation if the received product doesn’t comply with the agreement. This will save you many problems in the long run and is the point on which most importers fall short: when importing from China, you cannot pay enough attention to details.  

In terms of the specification of the product, you must draw up a document that details every feature. You must do this in a way that leaves no room for subjective interpretation and that can be accepted internationally and in different cultural contexts. So, if you’re talking about colors, specify the Pantone number; if you’re talking about materials, specify the density, hardness, composition, and texture and surface finish.

4) Choose right Incoterms 

Incoterms are international commercial terms that govern responsibilities related to international transport established between purchaser and supplier. There are numerous Incoterms and purchasing under one or another can change the total amount of the purchase substantially. Because of this, it’s highly recommended that you resolve this before you place your final signature on the sales contract. If you’re unsure of which Incoterm to choose, do read our post on how to choose a competitive and safe Incoterm.

When importing from China, suppliers want to carry out shipments under Incoterm EXW (Ex Works), because it is the most advantageous for them. It places the maximum obligation on the buyer, and the minimum on the seller, who is responsible for nothing more than having the goods ready. 

For buyers, it is highly recommended to choose Incoterm FOB (Free On Board), as this is the best way to control the freight handling and shipping cost.

5) Keep buffer time in mind

When you’re importing from China, time is a decisive factor to keep in mind for a successful campaign. I usually recommend that you plan a transport from China a minimum of two months in advance.

The approximate transit time from China to Europe or America via sea is between 25 and 35 days. This can vary according to the port of origin and the connection to the goods’ collection point. But you also have to keep in mind there could be unexpected delays, so it is better to leave two weeks buffer time.

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Elksourcing：4 Common Misconceptions about Packing List

Apr 20, 2021 , by 露露

Many shippers are aware of the importance of Bill of Lading; however, the importance of packing list must not be overlooked.

Whether you are filling out a packing list to export commercial merchandise or to move overseas, there are important aspects of this document you need to be aware of. A simple misunderstanding of this document may result in unnecessary delays and their corresponding fees.

Here are 4 common misconceptions regarding packing list.

1. Information on a packing list should be kept to minimal

Wrong. The packing list should include details such as dimensions and weight not only of all the individual boxes and packages but the entire shipment as well. Full contact information for the shipper/exporter and consignee must also be listed on the packing list. You may give our article on how to fill out a packing list for a more detailed look at what should information you need to include.

When creating a packing list for an overseas move, each package should be described with the general commodity. For example, ‘kitchenware’ is an acceptable description of dishes, bowls, cutting boards, cutlery etc. You do not have to break it down to the quantity of each item; an overall description per box will work. If you have packed items from different categories, you will need multiple descriptions, such as ‘books and linen’.

For commercial shipments, you should also specify the Incoterm under which the shipment will be sent. Make sure that it is consistent across all your documents.

2. Packing list is same as commercial invoice

The packing list and commercial invoice are similar in terms of the information that’s listed on both forms. But there’s a difference in terms of functionality. You’re required to indicate the commercial invoice number on the packing list and information on both documents must correspond. But the commercial invoice cannot substitute the packing list and vice versa.

As mentioned, the packing list details the quantity, type, weight, and dimensions of the cargo being shipped and is a required document in the event of disputes and claims. The commercial invoice, however, is a legal document between the supplier and the customer that not only describes’ the goods being sold but also the amount the customer has to pay to obtain the goods.

Another way to look at it is: The packing list is usually sent to the receiver of the goods, while the commercial invoice is sent to the party responsible for the payment of the goods.

3. Estimated weight can be shown on packing list

Wrong. The packing list should include details such as dimensions and weight not only of all the You should never put an estimated approximate weight on packing list as this could result in an unnecessary inspection and delays. When a shipment arrives at the port – be its origin or destination – it is usually weighed and measured. Any discrepancies between the actual weight and what’s written on the packing list may arouse suspicion and customs authorities may deem it necessary to hold your container while they conduct an inspection. The shipment cannot be moved until the contents and information of the cargo are determined to be correct.

4. Packing list for an export is same as the packing list for an international move

No, the packing list for commercial exports generally requires more details. These include the monetary details of all items being shipped. This allows customs authorities to assess the value of the overall cargo and ensure that the correct number of items are accounted for.

When creating the packing list for an international move, keep in mind that the packing list will not only be used for customs clearance, it can also be a very useful resource for you to keep track of all your items including how and in which boxes they are packaged. Some of our clients have found that making a very organized and detailed packing list actually made it easier for them to ensure that they have loaded everything at destination and upon arrival, that they have received everything.

China Sourcing Agent

Elksourcing：What Makes a Sourcing Agent Good?

Apr 20, 2021 , by 露露

China is the most prominent source for products, however, it’s a complicated market for new importers, so more and more businessmen realize the importance of using a sourcing agent. However, it is difficult to find a trusted sourcing agent in China if you do not know below key parameters of a good sourcing agent. 

1) Specialize in your niche

If you want to import many different types of daily consumer products, it is better to choose a sourcing agent that has already sourced similar consumer goods for other buyers. 

If you specialize in importing certain industrial products, then find a sourcing agent that focuses on that specific industry.

Because these sourcing agents have accumulated lots of experience and built relationships with many good suppliers in this industry, they can help you in the long run.

2) Know what you will get

You have to inquire more about the sourcing agents to know how resourceful they can be. This would mean knowing their networks, partners and their portfolio.

A good sourcing agent should provide service including certification requirements and product specification confirmation; Research of price, ordering a sample and choosing suppliers who qualify; Affordable rates; Supplier selection; Quality control; Logistic coordination, etc.

3) Close to industry cluster

In China, each city has its own specialized industrial clusters, which are groups of similar and related firms in a defined geographic area. 

Therefore, locating close to the industry cluster is convenient to contact with factories and reduce intermediate costs, like shipping costs, quality control fees and so on.

4) Understand the market

A good sourcing agent should have sufficient knowledge of global market, which means they can deliver top quality services.

Moreover, the agent must have knowledge about the quality standard, certification needs and other aspects acceptable in the Western countries.

Hence, it is better if the sourcing agent has offices both in your country and in China to facilitate the supply chain process.

5) With rich experience

Sourcing experience is a vital factor that you should take into consideration. The sourcing agent should be experienced to ensure that you get the best services.

Experience guarantees the agent knows the technicalities experienced in the sourcing process. Thus, the number of years spent in the business turns into proof of track record.

For example, an individual who works as an agent for 10 years can be much more resourceful and more reliable than a sourcing company that only established only several months. This means he has continuously provided his clients with a good quality business.

Other than being knowledgeable in choosing suppliers he should also be extremely skilled in the areas of quality control, logistics and business risk management.

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Elksourcing：Reasons of Source Products from China

Apr 20, 2021 , by 露露

As a wholesale distributor, retailer or a business owner, it is important to manage supply chain costs efficiently in order to maintain a reasonable margin and optimize profitability. Sourcing for the right suppliers and products is a crucial element from your business plan to help you achieve your goal quickly.

So, where should your business look for suppliers and products? Many businesses are turning to China, the world’s leading manufacturer and exporter of goods, to manufacture or source products and this is for good reasons.

1) Lower costs

China is the world’s leading manufacturer and exporter of products; with an increasingly competitive and transparent marketplace, it is becoming more and more important for businesses to manage costs in the ir supply chain as efficiently as possible.

With a population of more than 1.4 billion, China has access to a huge and low-cost labor force for manufacturing. Although wages in China have been rising, the labor force is still cheaper compared to developed countries.

Products that are labor-intensive, especially, enjoy cost advantages to manufacture in China.

2) Huge supplier base

The high competition between Chinese factories has a positive effect on your business.

They often over deliver, accommodate your product specifications request, or even offer you a quicker fulfillment time.

3) High quality

The level of manufacturing technology and skill in China is relatively high. This combined with a strong work ethic in Chinese culture makes it possible to get world-class products manufactured. 

Moreover, the infrastructure within China is in consistent development making it a key focus of their economic development plans. This results in improvements in roads, rail networks, ports and airports for better connectivity in the country, which benefit businesses from transporting materials and finished products more efficiently and at reasonable costs.