Over the past 20 years, China direct sourcing has been the most popular trend. Importers have lowered FOB prices by doing away with trading companies and going “factory direct”. It has, however, resulted in higher overall costs and reduced dependability.
The good news is that importers may function much more professionally if they handle everything themselves. However, you need to do a plenty of work.
Most importers were collaborating with trading companies fifteen years ago. Although this system was expensive, customers were providing their money to experts who were handling tasks like quality control and problem fixing, among others.
The trend of sourcing directly from China
Foreign customers with an interest in China have developed organic partnerships with manufacturers over the past 15 years. Several of them have made an attempt to get rid of Hong Kong trading businesses in an effort to cut expenses and tighten control.
Some big importers have established regional offices in China, the city where their goods supply is based. Often, these offices have full control over everything, including managing suppliers, keeping an eye on orders, and assuring quality.
Few steps to direct China sourcing
1. Search from the internet
The internet is used by millions of people to find products that meet their needs. Two of the best search engines that can assist you in starting your business in China are Bing and Google.
2. Recognize your sense of privileges
The porter will put up with everything and deliver your package to your doorway if it is extremely tiny and exclusively for personal use, or if the item is not too complicated.
You will be able to spend less time and money as a result. Nevertheless, before investing in commercial interests in a nation like China, whether you are a company or an individual, you must ascertain whether you have import rights.
3. Create more than one source
You must build not just one vendor but at least two to three vendors when developing China direct sourcing solutions in Asia. You will have adequate flexibility as a result, and any malfunction or other issue at the supplier’s end won’t stop your production.
4. Negotiate the price
Depending on the size of the organisation, there might be a significant difference in both rates and business terms. So, you can have a win-win situation while negotiating the price, hence you must do enough research about the firm with which you are talking.
One benefit of China direct sourcing is that there are many sources for goods that are identical, giving you lots of room for bargaining. Hence, you must conduct sufficient market research.
5. Come to a certain basic understanding of supplier specification
Although they have made great strides thanks to mass manufacturing and the implementation of numerous quality control methods in response to consumer demands around the world, Chinese products have always had a quality problem.
Understanding the specs is one of the fundamental problems that develop.
It is possible that the understanding between you and your supplier may not always align.
As a result, while working with any Chinese provider, you must clarify the fundamental requirements in great detail and come to an understanding.
6. Get alert if any issues arise
Finding certain insignificant problems that occasionally surface might be aggravating. The worst-case scenario is if the same goes unnoticed at first.
The individuals in charge of inspecting the quality of the product arriving from China must be quite perceptive enough to sound the alarm.
The difficulty might frequently be shared by the supplier and the customer. As a result, you must establish a task force that will be in charge of sounding the alert.
7. Develop a professional relationship
Maintaining a positive working relationship with your supplier is essential once you have determined the product quality of your Chinese source through China direct sourcing.
Any difficulties can be readily resolved mutually after the consumer and supplier have built mutual trust.
8. Recognize the importing interests
Make sure the analysis has been done. You should find out approximately how much your goods should sell to break even on sales.
Choosing a product that you can sell should be your top concern. Which products you will sell will decide everything that you do. They will impact your deal, your profit margin, and the strategy you use.
9. Estimate the total expenditure
It is crucial to arrive early for scheduled expenses. Nobody enjoys losing clients or money. If it turns out to be more expensive than you had anticipated, you can look for ways to cut after knowing the cost details. You can go and start the process if your financing is in order.
10. Discuss with your Chinese supplier and set an order
When placing your order with the retailer or shipper, specify the delivery requirements. Once you have selected your supplier, request that your future investments include the coordinated strategies, full report, and value per item.
11. Set your shipment vehicle
Shipping goods comes at a price, including charges for containers, packaging, terminal handling, and dealer fees. Each of these factors needs to be taken into account when creating a budget to get a full picture of shipping expenses.
12. Shipment time in China
International product shipping is time-consuming. Deliveries from China typically take 14 days to reach the American West Coast and 30 days to reach the American East Coast.
13. Acquire your shipment
You should send an email to your supplier informing them that you have received your items, but have not yet checked them once you had obtained your goods and deliveries, and you have ascertained the rate, packaging, and brands.
Will you benefit by sourcing directly from China?
Numerous sectors believe that China direct sourcing will result in a big cost decrease because of China’s enormous manufacturing capability. Different brands are making use of this opportunity these days, and as a result, the quality of Chinese goods has also improved.
Because China’s labour costs are so low compared to other countries, most industries that are looking to source a variety of industrial goods find it to be incredibly advantageous to do so.