Many predict that China will become the largest economy in the 21st Century and surpass the United States. Even though China’s manufacturing costs have increased in recent years, it is still a great place for American manufacturers and retailers to source parts or goods.
This is the first article on U.S. companies sourcing goods in China. It focuses on companies that can’t afford to set up overseas manufacturing or offices but can still source suppliers in China. This article will discuss how a small U.S. business can and should locate suppliers in China.
Internet Search:
Searching for Chinese suppliers is the easiest and most cost-effective way to find them. This can be done via search engines like Bing and Google, and these sites list thousands of suppliers. You can simplify your search and find legitimate sources faster by filtering the results to only those entries that are labelled “gold member,” “verified source,” “onsite supplier,” “accredited provider”, or “made-in-China.com.” B2B sourcing platforms may endorse service provider lists or supplier blacklists, and Alibaba, for example, has a list of banned members.
Some online sourcing agent websites offer additional services to protect buyers. For example, Global Sources has supplier-capability-assessment services & credit-check services that will provide suppliers’ key business information, including company production capabilities, status, and product quality.
Verified suppliers on these sites do not necessarily signify that companies exist, and it does not mean that they have produced quality, reputation or production capabilities. A gold member at Alibaba, for example, is a status that is paid. These sites may have large lists of suppliers, but some are just wholesalers or traders, not manufacturers. Wholesalers or traders won’t give you the best price, so do your research on potential suppliers.
Global Sources also offers China Sourcing Reports (CSRs), which have in-depth studies on specific sourcing sectors in China. The CSR will help you find reliable suppliers and their contact information. The report includes industry overviews, top-selling products, and pricing and market information. However, this information is not always up-to-date.
Social Media:
Although social media can be a great way to find suppliers, it is not always the best platform. Although only a few suppliers have a social network presence, they can provide valuable feedback and reviews about potential suppliers.
Be cautious about relying on these platforms. Also, remember to do your research as often the information is unverified, reviews are often anecdotal, and sample sizes can be small.
Trade Shows:
Another way to locate legitimate suppliers is through trade shows. Trade shows allow you to meet potential suppliers and learn more about their businesses, products, production capabilities, quality-control procedures, or other important business areas. This direct interaction can be very useful in helping you to evaluate suppliers and confirm their capabilities.
There are two trade shows worth mentioning in China. The Canton Fair, China’s largest trade fair, is held twice in Guangzhou, and it is located in southern China near Hong Kong. With a wide range of products, the Canton Fair attracts thousands.
The East China Fair, held in Shanghai once a year, is the largest regional trade show in China. Other regional trade fairs are held in China, which is often industry-specific. For specific industries, search China Sourcing Fairs.
Directly from Suppliers:
After you have been able to verify, vet, and identify potential suppliers, you can either buy directly from them or through B2B sourcing platforms. If everything goes well, buying directly from suppliers can help you save money. However, it could also expose you to scammers or lose your money if the products are not as good as you expected.
The type of payment is another important aspect. You can pay through a bank credit letter issued by your bank or an escrow agreement with a trusted third party. You can also use other higher-risk payment options like wire transfers or credit cards. However, these payment options do not always offer reliable dispute mechanisms that allow you to recover payments in the event of fraud or any other contractual issues.
Commission-Based Sourcing Agent:
A commission-based China sourcing agency with experience can help you if buying directly from a supplier seems like too much hassle and risk. These agents can help you identify suppliers, verify them and facilitate communication. These agents can charge fees ranging from 3-10 per cent of the purchase price.
Hidden commissions may also exist between an online sourcing agent, Chinese manufacturers, and factories. Therefore you must deal with the agents who offer honest and transparent transactions with all the partis.
Sourcing Service Provider:
A sourcing service provider can assist you in all aspects of the sourcing process, including supplier identification, price negotiation and supply management. They can also manage logistics and shipment management.
Although there are some fees associated with sourcing service providers, there are also benefits and disadvantages. A sourcing service provider will help you identify and verify suppliers, control product quality, and arrange logistics. However, such a service will not allow you to explore the Chinese market. A sourcing service provider is more expensive than a commission-based agent and, therefore, expects higher upfront costs.
Trading Company:
If you only need to purchase a few products and don’t want to deal with the complexity of sourcing in China, a trading company might be an option. You will pay more for the products sourced from a trading company, but that is a trade-off. It will be difficult to find information about the supply chain and product quality issues.
U.S. companies face many risks when sourcing goods from China. These include poor quality products, fraud, and difficulties in enforcing contracts. These risks aren’t unique to China, but China is still a developing nation, so such risks can be much higher than in developed nations. This risk may be worth the opportunity to reduce costs. However, you must do your research before taking any action. We will be discussing common mistakes that U.S. companies make when seeking suppliers in China.
Conclusion:
It is crucial to find the right China sourcing agent if you want to source products from China. Your business can grow if you get high-quality products at the right price. It is important to take the time to find the right online sourcing agent, and it is crucial for the future success of your business.
