Guide To Sourcing Products In China: All You Need To Know in 2022!
This guide to sourcing products in China is for businesses looking to benefit from Chinese markets in 2022 and beyond!
China took four decades to make itself stand where they’re today. The country has become a giant hub of production, outsourcing, and exporting products of all kinds and quality to other parts of the world. The cheap labor, free market, subsidies, and incentives for production also attracted the global leaders in different industries to set up their production units in China.
The boost of Chinese local industries and manufacturing has attracted many entrepreneurs and businesses to source their products from China. USA buyers have been on the top of the list regarding sourcing products in China. In this guide to sourcing products in China, we are attempting to cover all the necessary steps you must take when sourcing products from China or communicating with Chinese suppliers.
Is Manufacturing Moving Away From China?
Before we move on to tips to start product sourcing in China, it’s essential to ask the burning question regarding manufacturing moving away from China.
The reasons for some companies are the tension between China and USA. It’s true that many global companies like HP, Dell, Zoom, AirBnB, Nintendo, Old Navy, etc., have been moving their operations out of China. The exit of AirBnB from the market was due to the suffering tourism industry after the COVID-19.
Many companies and businesses consider Vietnam the new heaven for low-cost production. It’s the reason why the manufacturing industry in Vietnam witnessed a growth of 30% in the last few years. However, saying that manufacturing is moving away from China is just an exaggeration of the facts.
China’s Purchasing Managers’ Index(PMI) has increased from 46 to 48.1 in May 2022. Therefore, it can be said that Chinese markets are recovering from the pandemic and the news of the industrial exodus from China is overblown.
How Do You Source High-Quality Products From China?
Let’s move back to our guide to sourcing in China. Here are the things you should ensure when looking to source high-quality products from China.
Do Not Let Golden Sample Mislead You
Golden Sample is the term used for the exceptional and high-quality sample sent by Chinese manufacturers or suppliers to buyers. The purpose of the sample is to know about the quality benchmark of products manufactured by your supplier. However, the chances are high that the actual order will not match the sample quality.
To overcome the risk of such disappointments, ensure that the manufacturers have the needed production capability and expertise to deliver the promised quality. Communicate your expectations, specifications, and standards to the suppliers.
We usually suggest customers have every requirement listed before continuing with their purchase order. It is fundamental to make sure that your supplier is on the same page as you.
Make Sure Products Meet Your Country’s Standards
Whether sourcing a new product from China or working with a new supplier/manufacturer, source the products that comply with the USA standards, let’s say for a U.S. buyer. Chinese manufacturers and suppliers are in business and follow different international and national standards & safety guidelines in their operations. However, you must ensure that the safety guidelines, quality controls, and standards prescribed by your country are met by the supplier/manufacturer in question.
Simple. Free. Advice. No Obligations.
Cost Estimation Is Necessary
Affordable pricing is one of the biggest reasons businesses worldwide rely on the Chinese market. Your sourcing from China can get even costlier with taxes, packaging, customs clearance, etc.
However, logistics costs in China can be as high as 50% of the actual product price. Therefore, when sourcing from China, factor the logistics price and other expenses in the cost per unit.
Build a relationship with your suppliers.
It’s probably the most critical point in our guide to sourcing in China: start building relationships with your suppliers.
Do zoom calls and WeChat group chat/ WeChat video calls instead of emailing back and forth; some facetime can benefit you and your supplier. It may be easier to understand each other, and it's always nice to be able to put a face to a name.
A long-term relationship with your suppliers will benefit you in the end; they would be more open to negotiations and possibly pricing.
When suppliers have new products in their catalogs, they would consider you first.
Packaging Can Say A Lot About Products
Packaging is somewhat similar to the golden sample as it can mislead you to buy from certain suppliers or manufacturers.
Manufacturers ensure that sample packaging, quality, material, etc., exceed your expectations. Therefore, you can easily get caught. Consequently, it’s always advisable to hire a sourcing agent in China to take care of such aspects of your shipments.
How Do You Source A New Product From China?
Now to the second part of the guide to source products in China: what if you’re new to sourcing and asking how you source a new product from China.
So here’s the answer to what to consider in sourcing new products or sourcing for the first time in China.
Send Product Prototype To The Manufacturer
The best way to get started with a new and unique product is by sending a prototype to the Chinese manufacturer you want to get production done.
This practice will increase the chances of getting the product according to the specifications, standards, and requirements. Besides, you can also compare the gaps between the prototype and the product manufactured by the Chinese manufacturer.
Before sending any prototype to the supplier, we would also recommend signing a NNN agreement to protect your hard work and your product idea.
At GlobalTQM, we take this measure at heart because we know how important it is to preserve your work, design, and idea!
Factor The Cultural Differences In Your Talk
Launching a new product in the market is complicated and time-consuming, and it requires a lot of work, failed efforts, dedication, and thought process. And when you decide to source the product manufacturing in China, cultural differences might affect speed and process.
Most Chinese suppliers are less likely to ask questions, leaving many ambiguities and uncommunicated expectations. As a result, the buyers in the West might have to spend a lot of time suggesting improvements.
Therefore, you must consider the cultural difference when dealing with Chinese manufacturers. Either make sure that all expectations and requirements are well communicated and understood by both parties. Have detailed description and requirements, i.e., Pantone color code to describe your colors, have measures in mm instead of cm etc...…
Or you can collaborate with a China sourcing team to act on your behalf and ensure that the production meets your requirements and expected standards.
When you’re sourcing a new product from China, you must consider the following factors besides the ones we have already discussed in the guide to sourcing products in China:
- Leadtimes are the reality, and you must plan your market launch according to the production lead times. Especially now, with shipment delays and Covid delays. It is critical that you start soon and you calculate your lead time.
- Do not pay the total amount of the order upfront. If you plan to do so, work closely with the sourcing companies in China which ensure that your rights and money are protected.
** We usually recommend negotiating a clause about final payment with the final inspection of your shipment.
- Sudden price changes can affect the price per unit. Therefore, you must sign a fixed price agreement with the Chinese manufacturer for a specific quantity. (this does depend on the materials of your product)
- Make sure that you’re dealing with reliable suppliers.
How Do You Source Chinese Suppliers?
Our 30 Days Sourcing Package is essential for finding reliable manufacturers in China.
We have a team of 50+ experts on the ground in China to help you find reliable factories and trustworthy suppliers, coordinate your production, evaluate & inspect your final shipment, and ensure your shipment is processed timely to save money and headaches.
After sourcing, there are various options you might want to consider.
- Sample Concierge is for every buyer who needs to review and compare samples before placing orders with their Chinese suppliers but can’t waste time or money on receiving incorrect samples. The reality is samples often arrive broken or inaccurate, but the more considerable frustration is you can't confirm orders until you review and sign-off samples. (Click here to see more details.)
Simple. Free. Advice. No Obligations.
- Order Management, So you have found your supplier, are ready to move forward, and place your first order; this will put all the commercial documents, agreements, and quality checklist in place and front-loaded with your manufacturer. (Click here to see more details.)
- Pre-Shipment Final Inspection ensures the factory has produced their goods according to all their requirements with good quality before the goods leave the factory in China. (Click here to see more details.)
China Trademark Expert package is for every entrepreneur & e-Comm seller who wants to protect their hard work and effort invested into building their brand. (Click here to see more details)
To know more about doing business in China or any tips and tricks to sourcing in China, check out the GlobalTQM Podcast.
Learn more effective ways to inspect than AQL....You can’t inspect the quality into a product |Ep.40
Why is my Supplier Slow in Getting Back to Me? |Ep.035