4 Commonly Used Methods for Sourcing from China (Infographic)

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• Outdated information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