Many western businesses outsource production to China to reduce operating expenses and utilize China’s massive cheap labour market. For retailers looking to acquire labour for factory costs, China remains an enticing location. An eCommerce store can typically save 10 to 50 percent on the cost of the goods when planning to produce new item in China. Still, the management of Chinese suppliers calls for expertise and experience.
You must consider the organisational difficulties and potential problems associated with exporting the final product to another nation. It is already widely known that purchasing low-quality goods from China might result in a scam.
But these are crucial difficulties that come with doing business with foreign manufacturers which goes beyond the language barrier. Most of the situations can be avoided with adequate planning and timely execution of the manufacturing and sourcing procedures.
Today, we will discuss some common mistakes to avoid manufacturing and outsourcing from China, finding a new supplier, and sourcing the product.
A solid sourcing plan is essential when planning to purchase from a supplier that produce new item in China. After all, dealing with suppliers and transferring a substantial amount of money abroad can be risky. So, it is crucial to provide clearly stated expectations and terms for each sale.
A sourcing strategy acts as a map for locating the manufacturer of the best goods. It should provide information on the items’ specifications as well as possibilities for turnaround times and quality assurance.
Ignoring the supplier audit
Many businesses or individuals eager to source from China do not do thorough research on the suppliers. This may result in certain drawbacks in the future.
You should be aware that trade exhibitions, emails, and phone calls don’t give a complete picture of the conditions and capabilities of the supplier’s factory.
As a result, many inspections and site visits are required before the contract is set. This will help you avoid any issues with the product by ensuring that the supplier can deliver the best products in addition to abiding by social and environmental standards.
Several businesses make the error of not staying in close contact with their Chinese product partners. Contact your Chinese suppliers regularly for updates to prevent any miscommunication. Learning about the product’s development can make effects more transparent, which can help you get your product created effectively and correctly, especially if you are not physically present in China.
Also, you need to be able to contact your supplier in case there are any issues or modifications to the timeframe so that both parties can respond quickly.
We can prevent issues if we have a local sourcing agent with extensive knowledge of the field. This agent must be fluent in Chinese and qualified to participate in quality checks and any other logistical or product-related requirements.
Many businesspeople believe they can manage operations forever to cut expenses, but the importance of having someone on the ground cannot be ignored.
No written contract
Written contracts are required for significant deals. A retailer is safe from any mistakes a supplier might make during the process to produce new item in China.
Additionally, it shields the supplier from any requests made by a store that go beyond those specified in the contract. It is extremely necessary for large and non-commercial orders.
Concentrating primarily on the cost
Although Chinese manufacturers indeed offer significant profit margins, cost should not be the main issue. It’s not ideal for a business to concentrate on pricing and cheap suppliers if it wants to keep its good working relationship with its manufacturing partners.
The emphasis on expenses may also obscure the importance of developing products. Thus, if the price is extremely low compared to the market value, it is wise to avoid that supplier.
There are many advantages of getting hold of supplier that produce new item in China. However, it should also be noted that China has different culture and language. Always avoid these mistakes to maintain a healthy and profitable business with China.