4 Commonly Used Methods for Sourcing from China (Infographic)

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Importing from China is a daunting task. There are hundreds of thousands of factories throughout China whose quality and capabilities cover a wide range. Finding the right supplier is crucial and most people underestimate the time and resources required to set up a successful operation. Quality and trust are the #1 concern for professionals working with low cost country sources.

Options for Establishing China Sourcing Partners

1. Trade Shows

Pros

  • Opportunity to talk to potential suppliers face to face about their companies, products, productions capacity, quality-control procedures, and other key business areas
  • Direct interaction helps in evaluating suppliers and verifying their abilities
  • See product samples first hand

Cons

  • Requires international travel
  • May be limited to a small pool of potential Chinese suppliers (many of them don’t attend these trade shows)
  • Not all representatives attending trade shows are actual manufactures (some are brokers or wholesalers)
  • Many Chinese exhibitors have limited spoken English skills

2. Online Resourcing (Alibaba, Global Sourcing)

Pros

  • Simplest, least expensive method to identify suppliers
  • Huge range of factories (more than a trade show)
  • Tolls and information provided; easy to use
  • Ability to contact multiple suppliers quickly at once
  • Good for small, low value items

Cons

  • High-risk sourcing method
  • Risk of fraud (some businesses may not be what they seem)
  • Hard to distinguish actual factory reps vs. brokers
  • Outdated information
  • Takes a lot of time and effort to communicate back and forth by email
  • Details lost in translation; lack of clarity
  • No personal relationship
  • Must conduct your own due diligence; no on-site factory audit

3. Agents

Pros

  • Help identify and verify suppliers and facilitate communications
  • Someone is on ground to conduct quality checks
  • Lots of agents can be found online
  • Fees range from 3 to 10 percent of purchase price
  • After working with sourcing agents a few times and becoming familiar with process, you can eventually manage deals without their help

Cons

  • Lack of ability to know true cost
  • Hard to regulate performance and commission – no incentive to keep costs down
  • Might be hard to find trustworthy agents – difficult to check references
  • Lack of familiarity with specific industries (but may not admit so up front)
  • Agents not staffed equipped or sophisticated enough to manage production and quality control or offer support
  • Won’t necessarily have clients’ best interests in mind (usually operate based on personal relationships)

4. Full-Service Project Management Firm

Pros

  • Most convenient and risk-free sourcing method
  • Scale – have leverage with factories with volume of other clients
  • Handles entire sourcing process from beginning to end
  • Provide wide range of services: supplier identification, price negotiation, supply management, quality control management, logistics and shipment management, and other sourcing matters.
  • Can respond quickly to urgent matters
  • Have only clients’ interests at stake (not beholden to specific factories)
  • Cost savings from avoiding international trips
  • Relieves hassle of identifying and verifying suppliers, productions inspection, product quality control, and logistics
  • Allows focus on existing U.S. sales and opperations

Cons

  • Front end fees for managing relationship
  • No opportunity to learn about Chinese Markets

Project Management Infographic-1

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