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Elksourcing：Benefits of Sourcing from China

Apr 17, 2021 , by 露露

China has emerged as a hot sourcing destination in recent times. A large number of organizations resort to sourcing activities to reduce their production costs. This will give marketers an upper hand as they can sell their products and services at minimal prices when compared to their competitors.

There are some key benefits of sourcing from China:

1.    Skilled work force: The workers of the China are aware of the latest trends in technologies and more importantly, how to implement it in their operations. The education system in the China is different from most other countries. It is robust, affordable, and emphasizes professional skills like engineering and science. The labor force of the China is more and more versed in the technology development. This is indeed a major advantage for marketers as they can get access to the skilled workforce at lower rates. 

2.    Emerging labor market: This is another factor that is intriguing for marketers to conduct their sourcing activities in the Chinese markets. This is creating an expanding job market. The labor costs are also not high. Marketers are looking to make the most of this opportunity. Every marketer wants to get quality results at minimal costs. This is increasingly becoming possible with China procurement. 

3.    Communication: Although most of Chinese people do not speak English, with help of a professional sourcing agent, language is not a barrier while conducting sourcing activities in China. This creates efficient and effective vendor partnerships. When marketers assess their potential partners, they need to search for a correlation between a lower price and a good communication. This results in smooth workflow and minimal delays from miscommunications.

4.    Access to innovation: When it comes to innovation, China has a significant role to play. In this age of cut-throat market competition, every marketer is trying to adopt innovative methods to boost their businesses. This gains an added dimension with the China sourcing activities of organizations. According to research, innovation plays a significant role in enhancing the quality of businesses while simultaneously lowering delivery costs and improving the user experience.

5.    Supplier chain: If a company decides to conduct procurement activities in China, both marketers and suppliers can work collaboratively because of the complete supplier chain in China. 

6.    Cost-cutting: The average labor cost is significantly cheaper in China when compared to America or Europe. This factor also plays a great hand in reducing the production costs of organizations.

Conducting sourcing activities in China hold an array of benefits for marketers. More often, organizations take the help of sourcing agency while engaging themselves in China procurement activities.

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Elksourcing：Common Mistakes to Avoid When Evaluating Sourcing Agents

Apr 17, 2021 , by 露露

Many importers don’t have the expertise, or the time, to find and manage China manufacturing partners. They typically need help from a sourcing agent to handle these tasks:

·       Identifying, screening, and qualifying new suppliers;

·       Help in developing new products/styles with suppliers;

·       Ongoing management of the supplier relationships (communication, quality control, shipments follow-up).

What are the most common mistakes to avoid when evaluating sourcing agents and working with them?

1. Unreasonable expectations

Even the best sourcing agent will have a hard time getting you low prices, on-time shipments, and consistently great quality. If someone promises this to you, you are not talking to a professional.

Know what is most important to you, and plan accordingly. For example, if you absolutely need on-time and high-quality products, then you cannot work with the cheapest manufacturers on the market.

2. Not clarifying the sourcing agent’s responsibility

Let’s say you work with a third-party service provider that takes care of the sourcing/production side of your business. What guarantee do they offer in case a supplier scams you? If shipments are behind schedule? And if you receive junk product in your warehouse?

Will they at least pay some of their fees back to you? Do you have a contract with them?

3. Failing to consider the agent’s geographical presence

If you purchase products that are mostly made in Guangdong province, don’t work with an agent who is only present in Zhejiang. How often will he have face-to-face contact with suppliers (not to mention controlling product quality)?

This is the problem with individual agents: they generally know only one industry in one area.

4. Assuming that they follow a rigorous process

When you evaluate sourcing agencies, try to understand how they work. Request to see their order management system (if any). Even better, ask for examples of factory visit reports, product QC checklists, and QC reports.

If the agent is more disorganized than the manufacturer, he will give you knew headaches.

5. Accepting an inappropriate compensation structure

Giving a commission to a sourcing company is very common. Finding and managing a good supplier it is a lot of work. But, if you keep re-ordering the same products from the same sources, you will probably pay more than you should.

Another option, which better reflects the agent’s work, is to pay a flat fee for each job: identifying and screening suppliers; following each new product development; managing each order’s production & shipment.

6. Insisting on going “factory direct”

If a sourcing agent is watching for your interests on the ground, you should try to purchase directly from a manufacturer, right?

Well, not always. If you import small quantities, large manufacturers will seldom be interested in your business. And trading companies might be the right solution to place production in smaller workshops.

7. Not checking the market price by yourself

How do you get an idea of the market price for a given product? You simply (1) request quotes from 10 companies listed on globalsources.com, (2) eliminate outliers, and (3) calculate the average price.

If the supplier’s price is above the market price, your agent might get a hidden commission. Even the multi-billion dollars “contract manufacturers” play this game when they sell to mega-retailers, so it can happen to you as well.

8. Not asking for reporting on production status & quality

A sourcing agent should work for you, the buyer. You should be briefed every time your agent visits your manufacturers.

·       If they only report on production status when a shipment is delayed, you should ask for regular updates on every production run.

·       If they fail to notice some quality issues, you should request them to appoint a professional third-party inspector (at least for final random inspections). And you should be in CC of the report.

9. Micromanaging production yourself

Some importers ask a sourcing agent for help but keep interfering. They show suppliers that they are the ones taking the decisions. Then what happens? Suppliers don’t listen to the sourcing agent anymore.

Make sure that your sourcing partner is involved in all decisions (you pay for their professional advice, right?), and that your suppliers know that.

10. Relying too much on a third party

What happens if your sourcing agent goes out of business? Or if they re-negotiate the deal and they want you to buy from them? You should be prepared for these situations.

Don’t get locked into a relationship with an agent. You need to know the main actors in your supply chain, and you should get regular reporting on the situation on the ground.

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Elksourcing：Tips for Your First Sourcing Trip to China

Apr 17, 2021 , by 露露

The best way to reduce the likelihood of having problems with overseas suppliers is to visit them, especially before you place your first big order. As China is so far away and so different from western world, many new businessmen feel daunting for the first sourcing trip to China. Here are some tips.

1). Locate where your product is supplied

China is massive and you are sure to lose track unless you have all your products listed and suppliers located in advance. Coming prepared will save a lot of your sourcing time and keep you from getting distracted. 

2). Use a sourcing agent 

You are sure to find multiple suppliers in China selling the same product at different prices. This makes it necessary to use sourcing agents who can best accommodate your needs to make sure that you crack the best deals at rock bottom rates.

3). Don’t fall for counterfeit products

In China you can find awesome replicas of leading international brands but don’t fall for them. Importing counterfeit products from China and selling them at a high price in your country can get you in big trouble. You would not only lose your rights as a trusted online seller but also invite legal hassles. Although buying counterfeit products seem like an alluring deal, it is advisable to stay away from them.

4). Research your options carefully 

China has a downright overwhelming variety of products that can trap you into making a hasty decision, but beware! Suppliers may try hard to convince you into deciding but the best way is to explore all the options you have and finally make an informed decision.

5). Customize your products 

If you have a particular product in mind which is not on the market, you can have it custom made. From adding attributes and changing colors to modifying functionality and printing your logo, everything can be done within your desired budget, provided you know how to negotiate, or with the help of a good sourcing agent.

6). Gather information from different suppliers

This task can be a little tedious and time-consuming if you do not have a China sourcing agent by your side. To learn the best sourcing practices, you need to know your potential suppliers. Compile a list of suppliers and set up as many meetings as possible. Visit factories and verify if vendors are fully equipped to fulfill the claims they make in terms of volume and timely delivery.

7). Use a checklist 

Visiting factories and meeting vendors can get you really busy, leaving a little time at your disposal. It is difficult to keep track of everything once you get caught up with suppliers and services. Listing down all the questions and queries in advance will help you remain on the right track even with a hectic sourcing schedule. Visiting a supplier in person is very different from having your queries answered online. With a good checklist, you are in a better position to finalize your deals.

8). Do a compliance check 

A compliance check plays a decisive role in determining the right vendors. It eliminates unnecessary hassles and saves a lot of your time. Partnering with vendors who comply with your country’s regulations and requirements will help you maintain industry standards and deliver quality products and services.

Follow these tips, you will you will manage your China sourcing trip more efficiently. If you want to avoid the complications that arise with language barriers and communication gap, you can use a reputed China sourcing agent who can find legitimate suppliers and negotiate on your behalf.

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Elksourcing：Tips about Negotiations with Chinese Companies

Apr 17, 2021 , by 露露

Before you negotiate with Chinese companies, knowing what is considered good manners and respecting their partners is particularly important. Communication etiquette is always a feature which differentiated one culture from another, it’s especially important in China.

1). Must-do preparation steps

Before you start any negotiations, you should prepare in advance. The first important stage is your outfit. The Chinese consider that the only proper way to dress up for a business meeting is to wear an elegant black or dark outfit, which applies for both women and men. Having your own business card is another must: not only does it facilitate further contact, but it also is an important element of the ritual. – You should have a sufficient number of business cards – if you run out of them, it will be considered a faux pas. Your business card must include your name and surname, job title and your company name. It is recommended that business cards be printed double sided, with the English version on one side and Chinese on the other, as English is not widely spoken there. A business card prepared this way will let the Chinese party identify his/her interlocutor’s place in the social hierarchy.

2). Get to know your interlocutor

One of the biggest faux pas you may make at a business meeting is “humiliating” your interlocutor, namely saying something or behaving in a way which could suggest that he/she holds a lower social position than he actually does. In order to avoid this kind of situations, there are special recommendations which transform a business meeting into a ritual where every step has a symbolic meaning. A business meeting may start with a normal handshake though we should remember that not all Chinese like this way of greeting: a nod or a bow is more natural. Nevertheless, the best thing you can do is leave the initiative to the other party. After the meeting commences, you should introduce yourself using the information printed on the business card. Then the Chinese party does the same and it is crucial to remember all his/her particulars. If your interlocutor holds a high-ranking position in the company, e.g. a director, you should address him/her by his/her job title. Moreover, in business contacts you should always call your interlocutor by his/her surname. Using first names is out of the question.

3). Business cards and gifts

After the introduction, we move on to the ritual of business cards exchange. Once you get one, you need to study it carefully while holding it in both hands. – If you do not read the business card or if you put it into your pocket (especially a back trouser pocket), it will be taken as a very serious offense. During a business meeting, especially at its end, you may receive or give a gift (a bottle of good cognac is a good example of an appreciated gift). It is advisable not to unpack the gift in the presence of the person who gave it, you should do it later. It is also better not to give the gift in the presence of third parties.

4). Restraint in negotiations

During the negotiation itself, you should follow some basic rules of behaving towards the Chinese. You need to be punctual and very polite (behavior such as touching your interlocutor or pointing at something with your finger is unacceptable). A very serious faux pas which may result in ending the negotiations is criticizing the other party, their project or proposals. If the negotiations are held between groups, then the group members may not be critical of the position of their team leader. When negotiating with the Chinese, there is no room for being expressive. – More often than not the Chinese speak ambiguously, they are not very emotional and the result of the negotiations may remain unknown until the end of the process. You should also remember that in China an oral agreement is more binding than a written one. After signing the documents, the Chinese party may suggest introducing additional amendments.

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Elksourcing：Key Process about Quality Control and Improvement

Apr 17, 2021 , by 露露

As learned from 20-year experience in quality management, I’d like to share with you the process about quality control and improvement.

1. Know customers’ expectations

What markets do you sell to, in what distribution channels? Knowing your customers and end-users will help you answer these questions:

A.    What is critical to quality? What is a must-have? What is a nice-to-have?

B.    What are issues they don’t want to see? The battery in a widget can’t get recharged, the thickness of the steel used for construction is below tolerance, small color variations on different units that will all be shown on the same shelves…

   C. What proportion of defective products (remember, you need to define what is defective in their eyes) can they tolerate?

2. Set objectives and approve samples & checklist

Based on what the above questions led you to discover, the best practice is to:

1.    Draft a clear and specific specification sheet, including defining the most common potential defects

2.    Set AQL limits

3.    Approve samples that have the right touch & feel, and if needed also boundary samples (to illustrate the limit of acceptance)

   4. Have the suppliers confirm all these in writing (if possible under the frame of a legally enforceable agreement)

3. Qualify capable suppliers & critical sub-suppliers

If you are setting up the supply chain for a new product, this playbook will go a long way in helping you reach your objectives:

1.    Identify the critical components — those with high value and/or those associated with a high risk (and that usually means the highly customized components make that list) — or processes (typically surface treatment such as paint, anodizing, plating…)

2.    Use your documented objectives and a relevant auditing checklist to qualify those components’ suppliers

3.    In parallel and the same way, qualify the final processing & assembly manufacturer

4. Audit systems & processes, know where the risks are, plan accordingly

As part of the supplier qualification process, you will need to audit their quality systems and maybe also their processes. You will know where the major gaps are, and you will have an idea of the highest risks for your project.

When and where to do ‘Quality Control’

1. Inspect components and products based on identified risks

The critical components may be checked at the suppliers’ facilities, or in the assembler’s facility. And the production can be inspected at several stages. It all depends on the main risks that were identified.

If one process is particularly fraught with uncertainty, for example plating, it can make sense to be present during the pilot run and then during production.

2. Laboratory testing (compliance & safety, reliability)

This is often a complement to the QC inspections. Inspectors can pick samples at random and send them to a lab for testing.

People often think of compliance testing (to make sure you can sell the batch on your market with low legal risks) but much less often of reliability testing (to make sure your products won’t fail too early in the hands of your customers).

Ongoing ‘Quality Improvement’

1. Drive process improvements based on risks and on issues found

Needless to say, working closely with suppliers is a must. They need to be cooperative and open.

2. Set controls based on identified risks

If a manufacturing process lacks a structured way of ensuring good outputs, don’t take several isolated actions.

Taking a holistic approach and setting up a process control plan (and its close cousin, the preventive maintenance plan, if equipment is a common source of issues) will usually lead to faster and more sustainable improvements.

3. Update the quality standard, risk analysis, etc. over time

The planning is not done once and for all. New information surfaces every week. Some suppliers will change, some new defects will come up, some end users will complain, and so forth.

Keep a list of the sources of high risks you have identified and have not sufficiently mitigated. Then, adapt your plan for quality control and your focus for improvements.

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Elksourcing：Buy High-Quality Low-Price Products from China, Is It Possible?

Apr 17, 2021 , by 露露

It’s always a target to buy high-quality low-price products from China, choosing good quality product requires you to determine the product you are going to get. You should know what you need and for how long you need it. Also, you need to compare various options to get the cheapest possible products at the certain quality level.

1. Need to Have Certain Understanding of Your Products:

You should understand your products. It means that a certain product comes in a variety of different types and quality. You have to know each of its kind and quality. By understanding this you can choose good quality products from that whole range of product types. You can get information about your product prior to buying it. You can collect information about it on the internet too.

2. Learn to Judge the Quality of Products:

Another important point to consider in judging the quality of the product. So simply you can do this via the internet. The Internet is the best source of information. You can easily get to know the quality of the product from online searching. For this, you have to search the entire related product you want to buy. Get complete information about it and judge its quality. You also read customer reviews about certain products.

3. Find a Strong Factory:

It is a common thing that products come out of the factory and then go through the retailers, wholesalers, and several other links before they get displayed in the retail store. Most importantly, the price of the product will also increase the process. Usually, it happens that the goods you buy from a certain store will be several or even a dozen times more than the wholesale rates. So, the easiest way to get a quality and low-price product are directly from the factory.

A factory is liable to survive, depending on the quality of the product. In this regard, you can choose a factory; you can select suppliers according to the company’s qualification, production capacity, and much more. Definitely, the perfect way is to go to the factory and pick the product you need to buy. If this is not convenient for you can get yourself a purchasing manager.

4. Find a Local Sourcing Agent to Help You Buy Products

Getting things from other countries, you’d better choose a local sourcing agent in China to help you buy high-quality products at cheap price. A professional China sourcing agent with rich experience, can help you find the right source of goods and quality suppliers in the shortest time. Without language barriers, he or she can run a business negotiation easily, and get the best price. After that, they will help you with product quality control，packaging and shipping, until delivery to your hand.

Now that we know how to find high-quality products, how do you buy these high-quality products at relatively low prices? For this, you have to consider the following mentioned points.

1. Compare Between Multiple Suppliers:

Compare several suppliers and their products. Within the supposition of getting equal quality, prioritize those merchants with low prices. But judge the quality of the product. You are needed to buy the high quality and low-priced products. Compare the quality and price of several suppliers and buy from the one offering fewer priced with quality goods.

2. Compare the Price on Online Shopping Platform

There are several famous B2B websites in China, like Alibaba.com, DHgate.com, Made-in-China.com, and etc. These platforms are packed with a large number of product manufacturers and suppliers, whose products are labeled with the approximate product price range. We can know the price of the product roughly through this range.

3. Directly Go to The Factory:

To get the lowest price you can directly visit the factory. It will not even charge you for the supplier. Simply visit the factory and select the items you want to buy.

4. Anti-Season Purchase:

Find out the anti-season of factories and wholesalers. Both of them have peak and off-season both. Mostly in the off-season, the products are available at quite cheaper prices. So, grab your goods in the off-season to get cheapest price.

5. Use Discounts:

The factories sometimes offer discounted prices and discounts. You have to grasp this opportunity to save a lot of your bucks. Availing the discount will give you high-quality products at a much low-price range.

While buying things from China, you can get assistance from a professional China sourcing company, it will guide you about all the profitable products to import from China. China is a big country and has a big number of suppliers, retailers, and wholesalers. All in all, it is recommended to you to get assistance from professionals.

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Elksourcing：Common Misunderstandings about International Sourcing

Apr 17, 2021 , by 露露

International sourcing is a significant activity in today’s business scenario. It involves identifying products and processes for procuring from an international supplier. However, there are some common misunderstandings about international sourcing. 

1. Approaching a good supplier is the only path to successful sourcing

Many business owners have the misconception that products can be procured successfully, only if the supplier is reliable. However, sourcing does not end with a single action. The business owner has to choose a souring agency, which in turn selects a supplier from whom cost efficient products can be bought. You should create effective supply chain management, training and proper relationship with the agency and with the supplier.

2. Multinational companies are the sole buyers of international products

At one time, small companies did not have the resource or intention to procure products from international suppliers. But, in course of time, the economy has evolved and now, small companies can afford international procurement.

3. Direct sourcing is the only way to save costs

Many companies believe that direct sourcing is the only opportunity to save costs. Direct sourcing is the act of purchasing products for the purpose of sale. It contributes to the revenue of the business. Indirect sourcing is the process of purchasing products that are used to run the business and the action does not help directly in earning revenue.

An agency offering sourcing services can inform you that indirect sourcing from international market can also save your company a lot of extra expenses. Tables, chairs, electrical appliances, computers, etc. can be sourced from international suppliers.

4. Sourcing has nothing to do with other departments in a company

Another misconception about sourcing is that it caters to only one department in a company. It is believed that the sourcing department works together with a sourcing agency to identify, understand and negotiate with suppliers. But the truth is that a business opting for sourcing services should interact with all its departments for enabling successful procurement. Each and every stakeholder in a company has the right to know about the procurement decision and its tentative outcome.

5. Cultural differences are not barriers anymore

The advent of technology has made trade easier to conduct. The global business arena has become more flexible allowing more and more companies to offer global service. You can opt for cost efficient service from a sourcing agency. With growing convenience in international purchasing operation, it might seem that cultural barriers are on the verge of diminishing. But in reality, you have to employ better techniques to meet cultural barriers. Starting from differences in language to work culture, everything should be dealt with efficacy.

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Elksourcing：Benefits and Obstacles of Sourcing in China

Apr 17, 2021 , by 露露

The economic and industrial sector of China has undergone rapid transformations owing to the favorable trade laws initiated by the Chinese Government. This is one of the reasons why marketers are choosing China when it comes to sourcing operations. 

Sourcing in China has the following benefits:

1). Low production cost

This is one of the major benefits of China sourcing. If an organization works with a manufacturing factory in China, the company can reap the benefits of lower production costs. Reduced production cost doesn’t mean reduced volume output. A large number of Western marketers are wooed by this fact.

In Western countries, the costs of production are higher when compared to the Eastern nations. Now, if a Western marketer decides to manufacture his product in the home country, the production costs are very likely to be higher. This is because Western nations are far more advanced than the Eastern countries in every sphere of operation. China has a growing industrial economy and is giving a tough competition to the Western countries. Marketers are looking to take advantage of it.

2). High output within a short period

It will not be wrong to say that the Chinese workers are more skillful than most of the workers of other countries. The Chinese factories are not limited in capacity and time, unlike some U.S. domestic factories. The Chinese workforce is aware of the latest trends in technology. They also know how to implement it in their operations.

Agencies that offer sourcing services make marketers familiar with the economic and political climate of China. The cost of labor is cheap in China. This is also a great advantage for organizations. Companies have the option to hire more people if there is an increase in consumer demand. In this case, marketers have to incur less money than domestic facilities.

3). Market expansion opportunities

This is another reason why marketers are opting for China sourcing activities. The economic and political climate of China is favorable for marketers to conduct business operations. The Chinese Government has initiated various reforms that are promoting the sourcing scenario of this country.

If an organization decides to manufacture its products in China, it will also get a chance to penetrate the local market. With the help of sourcing agencies, companies can reap the benefits of an established supply chain. China boasts of having a large number of factories under its name. With over 1.4 billion potential consumers, organizations can hope for better returns.

However, there are obstacles to sourcing in China:

1). Getting access to the right factories

As this giant has numerous factories, organizations face the difficulty of finding the right factory that fits their needs. Many Chinese factories do not deliver products as per the requirements of firms. Moreover, there are quality issues that take a toll on an organization’s brand name. Companies hire sourcing agents of China to minimize this problem at large. These procurement agencies have an idea about the Chinese factories and suppliers that can come in handy to organizations.

2).Language difficulty

This is another obstacle the Western marketers face while conducting their procurement operations in this country. There is no doubt about the fact that the Chinese language is very different from English. Most of the time, communication blunders lead to a fall in productivity standards. Companies should try to avoid such blunders by any means.

Hiring a Chinese sourcing agent can make things easy for organizations. A good sourcing agent can give the company updates regarding the production process. 

3). Shipping

Though the infrastructure of China is up to the mark, there are problems relating to the shipping of goods. When it comes to shipping, the suppliers pack the products and put on cargo ships. These ships sail around the globe and reach the marketers after a long period. This also increases the shipping costs of companies at large.

Organizations have to consider both sides before engaging themselves in China sourcing operations. Marketers need to formulate a sourcing strategy that meets their objectives. Go with China sourcing operations if you want to enhance the productivity of your company.