Once a famous personality answered a question on where to do business by saying “Go
West, young man!”, but now the term East has replaced the term West in the adage in which China is generally referred to in the term East. Many economists and business magnets are of the opinion that China is moving towards becoming the largest economy in the world. The relative cost of manufacturing in China is lesser than anywhere else in the world and hence it happens to be the cheapest location for small and medium business owners to source goods or parts.
Here we will focus on how small and medium sized business owners can focus on product sourcing agent in China. Also, we will share tips on how small companies can establish manufacturing relationship with Chinese companies efficiently with the help of Chinese product sourcing agent. The tips are:
- Search on Internet- The most cost-effective and easiest way to search suppliers from China is through online B2B platforms. Several names appear on the search results and only those entries labeled as ‘onsite supplier’, ‘gold member’ can be shortlisted from the entries. If the reviews are good it indicates a trustworthy supplier. In fact, some sites also endorse blacklisting of various members due to complaints. Certain sites offer facilities like credit check and supplier capability assessment to provide a neutral yet well informed opinion on the Chinese wholesale supplier. Note that verified does not denote the quality of product; it simply means that the supplier exists. Sometimes, you do not end up finding manufacturers at all; instead you will find only wholesalers. Also, there are other websites providing extensive well researched information on Chinese sourcing industries. Information on qualified and verified suppliers are provided along with industry reviews and best selling products; pricing and market information also happen to be an integral part of the detailed report. The best thing is that these websites always provide updated information.
- Social Media- Even if this is not the best Chinese product sourcing agent, yet one can receive reviews and feedbacks regarding suppliers from China. The risks involved in such sourcing information is that reviews are mostly anecdotal, reviews unverified and sample sizes may be small. Hence, the chance of proper sourcing is not optimal.
- Trade Shows- Trade shows are good way to spot legitimate suppliers. This is in fact the best way to meet suppliers one on one and have a discussion about their products, companies, and production capacity and quality control measures. Evaluation of manufacturers can be done by the client themselves. The Canton Fair is the biggest and most important trade shows held in China. It is held twice a year and allures thousands of participants with a wide range of products. The east China fair is another important trade fair held in Shanghai once a year and industry specific info can be gathered in this fair. There are other trade shows organized in various parts of the world with a formidable presence of Chinese manufacturer suppliers. However, the risk is that you may not be able to meet the best of suppliers because the participation is always not full. Always remember to ask directly whether the participants are manufacturers also.
- Commission Based China Sourcing Agent- There are several Chinese sourcing agents who work on commission basis for clients. Their fees generally range from 3-10% of the purchase price and they can help identify suppliers and arrange meetings between wholesale suppliers and small business owners. These agents take the heavy load off business entrepreneurs. However, it is still wise to keep a close watch on them to ensure that they are cost-effective. The one thing that you have to be very careful about is that the agents and manufacturers may have an existing commission sharing between them. However, the good news is that there are efficient agents who do not look to cheating the business owners.
- Sourcing Service Provider- Hiring a sourcing service provider can help you with the entire end-end process of product sourcing. In addition they provide vast array of services including supply management, quality control management, price negotiation, supplier identification, logistics and shipment management. Of course they charge fees and there are positives and negatives to this. These people can take most of your burden while sourcing but you will not be able to learn about Chinese markets directly. The upfront costs are higher for these people than commission-based sourcing agents.
- Trading Company- Buying small amount of products from these trading companies is another option one can try. However, the cost will be higher in this case and it is difficult to discover information about the supply chain as well. The owner must check about the product quality.
Product sourcing agents in China poses multiple risks for small business companies ranging from poor quality to steep price to fraud to enforcing contracts. Since China is a developing country, the risk for small business owners in Europe and USA is higher than others. The potential for cost reduction is a big influence but lot of research is required to move ahead.