In theory, the profits expected are huge but on the ground, it is not as easy. Many companies will have difficulties in dealing with Chinese suppliers.
Sourcing is an English term that refers to practices aimed at finding, evaluating and contracting with suppliers of goods and services.
The main tasks are:
A. To increase competition in the panel of existing suppliers for lower prices.
B. To identify new suppliers in the international market.
C. To discover innovation offered by new suppliers.
Here are a few things to notice for sourcing in China:
1. Use a local representative
Quality control will be a key factor of success for your sourcing activities in China. Then having a local person who anticipates problems in China is crucial. Import export in China is not an easy task!
Chinese have a different view toward quality. A product with a defect may be acceptable to your supplier, so you need a quality controller to protect your interest. Or as you may know it is always rather difficult to solve problems when you are far away.
Many companies think they can deal with Chinese factories by e-mails only. They will soon realize it is far from being obvious.
The main difficulties are: cultural differences, linguistic misunderstanding and different time zones.
Then a local representation will help you for several things such as traveling in China or negotiating prices.
2. Using a sourcing company
This is convenient and easy as they take care of everything. You can find a lot of sourcing companies in China, but few are serious.
Often that is the problem you expect least that will cause you the biggest damages and require time and effort.
Do not ever underestimate the power of networks and relationships in China, a local agent will be required to develop them.
You will have to pay attention to the dark side of Chinese suppliers. A common mistake is to believe that when you did find the right supplier the job is more or less done. This may be okay for a while but the supplier will not hesitate to do more if you engage a true relation with him. A supplier who has not seen his client for a while will soon not fully satisfy its customer orders in terms of quality or timing.
3. Supply chain management
Nowadays, the Internet makes it easier to find a supplier. Alibaba, Made in China or other websites can help you for that task.
Sourcing in China is to identify not only one supplier but many of them. In China, it is always important to have different sources of supply if you want to avoid the risk of seeing your supplier flying away or if you want to stop your relation.
In addition, you will have to visit the supply chain manager. If a supply chain manager feels your presence he will do better job.
4. The issue of management in China
Do not underestimate the time needed to deal with problems in China.
In all stages of the production we encounter problems, especially in the beginning.
An expert in sourcing will know what kind of glitches can quickly become huge problems if a quick and efficient decision is not made.
It is important to always have a look on your production.
In Europe, if no news means good news, but in China it means very big problems are occurring.
You may have to harass your partner and ask for a schedule if you want to follow the state of your production. In Chinese factories, the priority is often given to the largest customer, to new clients or to friends. If it is not your current situation you better ask and check everything to reach your goals that is to say a good produce timing with an acceptable quality.
In China, it is important to ask in advance who will pay for unpredicted costs.
Often, they will ask you to pay for shipments, samples, fumigation fees, brokerage and the list goes on and on.
Some of these fees are mandatory but often they are just trying to cheat you.
If your Chinese supplier knows that you do not have any representative in China, he will usually try to make you spend more money for over costs.
You also have the myth of the red envelope for customs in China … Sometimes that may be true, but many times some use this trick to get the envelope for themselves.
This may sound shocking but for many Chinese western people are likely to be seen as pigeons. Then you will have to show that you know your business and that are not going to accept to be cheated.