Introduction
Sourcing in China is becoming more and more popular due to the low cost of labor. However, there are many things you need to consider before you take that leap into the world of sourcing.
One thing people may not know about sourcing is how much it can affect your company’s reputation. If this scares you off, don’t worry! Here are some pros and cons to keep in mind when deciding whether or not Sourcing in China is right for your business.
Three methods of Sourcing in China
Sourcing in China is the process of finding products directly from China to sell in your country or another one. It can be done through three main ways:
Search for suppliers on several B2B platforms
This approach will let you find easily most suppliers, with very different strengths and prices. You can try doing some lower-cost purchases with small quantities first to test it out (for example, something like 5 pcs is not expensive), but keep in mind there are risks involved when dealing with companies based in China.
If you want an easier experience, which usually means less quality control and more headaches down the road, try purchasing inexpensive items that would normally cost over $100 using this method.
Sourcing directly from Chinese factories that have foreign owners.
Sourcing on the ground through your own employees or trusted suppliers you know.
Sourcing on the ground is less convenient but usually give better results, especially for more expensive items with higher margins.
There are also companies who can help you with this, which will be discussed in some other articles on China Sourcing Hub. Keep in mind that costs are higher this way, so it might not be worth it for small quantities of inexpensive items to purchase using this method.
Cooperating with sourcing agencies
In the sourcing industry, a sourcing agency refers to an organization that is typically responsible for finding new suppliers and raw materials from overseas markets for client companies.
Sourcing agencies often use a variety of sourcing business models and may work on a for-hire basis, as an extension of client company’s procurement department, or both within the same firm.
Sourcing agency activities can include product development, market research and analysis, negotiation assistance, quality inspections and management consulting.
Sourcing agencies are companies that specialize in Sourcing, which is the process of finding resources and suppliers from overseas markets. Sourcing agencies often serve a wide range of industries including automotive, chemicals, consumer goods, electronics, energy and utilities, financial services, food and beverages, healthcare/pharmaceuticals ,automobiles, industrial manufacturing , infrastructure engineering & construction , life sciences & healthcare , logistics/transportation/shipping , natural resources, office products & equipment , paper and packaging, telecoms/IT/networking , travel retail Sourcing agencies are different than Sourcing consultants because Sourcing agency’s sole purpose is to find new suppliers for their clients .
Sourcing consultants help companies with various other areas of their business. Sourcing consultants tend to be more of an extension of the companies that they work for. Sourcing agencies are typically more transparent than Sourcing consultants, because Sourcing agency’s will often post their daily activities online or in social media
Why we recommend Pangea Sourcing
Pangea is your No.1 choice for product sourcing in Australia. With factory partners in China, United Kingdom, Hong Kong and other markets you can be sure your products are sourced from the right place.
Pangea’s mission is to be a sustainable, ethical sourcing provider who helps our customers save over 20% on their orders Pangea’s vision is to help Australian businesses by providing sustainable, high-quality products at the best possible price
Tips & Suggestions of Sourcing in China
1. Efficiency of communication
– Probably one of the best thing you can do to start sourcing properly is training yourself to communicate effectively with suppliers and factories without too much hassle (and wasting time). The more able you are to explain exactly what you want, the less time and problems you will spend later.
2. Problems you have never met
– Sourcing is not just about finding suppliers who can provide exact specifications for your products. Sourcing is all about open communication with other human beings that speak different languages than you do, which means there might be some challenges you haven’t faced before, like miscommunication or strict/unreasonable requests made by factory owners. This also involves knowing how to deal with timezone differences (which could be tough if you are based in Europe or America).
3. Sourcing directly from factories
– Sourcing on Alibaba/Aliexpress is pretty much useless by itself unless you plan on selling low cost items that don’t require too much management after the sale;
chances are an automated platform like this won’t let you optimize your processes or have enough room to communicate freely with your suppliers. Sourcing directly from factories on the other hand is more time consuming but it will be worth it in the end for many reasons, not just because it can cut costs down by a lot.
4. Lower price than your competitors
– Sourcing is all about selling stuff cheaper than competitors do, so if there are no competitors or this is something that doesn’t exist yet where you come from then this might not be an option available to you.
This said, sourcing also lets you find new ways of improving your product and/or making it cheaper without losing too much quality.
5. Communication with factory for win-win outcome
– Sourcing is about open communication between different parties wanting to achieve similar goals (buying and selling); therefore, you can make things easier for everyone involved by reaching some sort of win-win agreement.
Sourcing is not just about giving instructions and instructions only, but please avoid just telling suppliers/factories what to do without any explanation whatsoever.
6. Establish relationship with factory
– Sourcing is not just about buying stuff; it’s also about developing the right relationships with factories in order to get more new products made in the future or even sell your own brand directly through them (by working together). Of course this doesn’t happen overnight, so be patient while building up your knowledge base on China Sourcing.
– Sourcing depends heavily on communication between different parties. It doesn’t matter how many years experience you have when it comes manufacturing if you are unable to communicate properly with suppliers or vice versa. Sourcing also heavily depends on availability of information, so try to stay up to date as much as possible both with current events and new technologies.
7. Sourcing is an comprehensive process
– Sourcing is all about researching, communicating, negotiating and closing deals; this will take time but it’s better if you do things properly rather than rush into things. Sourcing is not just buying stuff from Alibaba/Aliexpress anymore now that there are more efficient ways of doing this sort of thing
8. Manage your inventory
– Sourcing is pretty much useless if you don’t know how to manage your inventory accordingly based on what stock levels are like at any given moment. One important thing is this: even if you source stuff from China, it doesn’t mean you will be able to sell them all at a higher price. Sourcing still depends on your marketing skills to increase demand and that won’t happen if you don’t have a proper drop shipping system that can maintain a certain level of inventory.
9. Lots of research
-Sourcing alone doesn’t guarantee success because Sourcing requires a lot of research to be done so that you can figure out which suppliers are reliable or not but this usually takes up a lot of your free time which could have been spent doing something more productive for your business such as marketing yourself better on social media instead of wasting hours upon hours just trying to find the best supplier in China with the product(s) being provided by Sourcing Intelligence.
Sourcing is no longer an effective strategy because using Sourcing Intelligence allows us to learn from our past experiences through data analysis rather than having to go through the whole process yourself when sourcing for new products which Sourcing Intelligence allows you to do without having to waste time, energy and money in Sourcing by itself.
Sourcing & Sourcing Intelligence go hand in hand because Sourcing Intelligence allows you to apply what you’ve learnt from your past experiences into future Sourcing Strategies rather than investing time, money and energy into Sourcing alone when Sourcing Intelligence is the only way of guaranteeing success with Sourcing.
10. The importance of marketing
– Sourcing alone doesn’t guarantee success because even if products are sourced for cheap, this doesn’t mean that it will sell quickly or not at all since there are many factors that come into play such as marketing yourself properly on social media through Search Engine Optimization (SEO) so potential customers can find your products easily
Conclusion
China is a huge market and with the right sourcing company, it can be an extremely lucrative one.
Pangea Sourcing offers sourcing services in China, product development and quality control services. If you are looking for a reliable company to work with that can provide all of the above options at competitive rates, then we encourage you to reach out! We would love to hear from you today so please contact us via email or phone.
Let’s talk about how our team could help your business succeed by providing an effective sourcing solution tailored just for your needs. There is no need to try everything on your own when there are experts only waiting for the opportunity to serve as partners in success.