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Leaving China from A Sourcing Perspective Is not the Right Move

Dropshipping

China has long been the hot spot of sourcing as well as manufacturing all types of products at the cheapest price. Wages for labor in China, which have large workforces, can be 80 percent to 90 percent lower.

 

Climate risks, cyber-attacks, the US-China trade war, and the ongoing pandemic are some of the reasons that have prompted many companies to re-examine supply chains from China.

 

Leaving China is not the right move for the businesses

But the truth is, leaving China from a sourcing perspective isn’t the right move for all companies. Making in China might also be key to tapping into the huge China domestic market. The manufacturing sector has changed, bringing new opportunities and challenges to business leaders. China is a country with relatively stable political and economic environments, productivity and efficiency in manufacturing, modern infrastructure, and a compatible legal system that international companies will hardly find anywhere else. Irrespective of the tensions in the political arena, China is still attracting a huge investment internationally.

 

Companies all across the world are seeing China in a totally different light in terms of doing business for the following reasons:

 

  • A huge network of dropshipping supplier base

China is one of the Asian countries where Western businesses can find a huge network of trusted Chinese dropshipping suppliers. These suppliers import raw materials, or sub-components of different products, and then give them to manufacturers to transform them into finished, ready for retail products.

 

  • China as a center for innovation

In recent years, China has evolved from its role primarily as a manufacturing center to a center for innovation. China now ranks 17th in the world on the Global Innovation Index: Energizing the World with Innovation, which ranks innovation clusters in 126 countries. There are a number of innovation hot spots in China that stand out as global players.

 

  • China will lower its value-added tax

The Chinese government has launched a series of Value-added Tax (“VAT”) reforms over the past few years to align its VAT system with internationally accepted principles, and to adapt to the economic development in China and the world at large. The government is also expected to upgrade the status of the VAT rules with respect to formal legislation and implementation rules. China will lower its value-added tax (VAT) rates as part of an RMB 2 trillion (US$298.3 billion) cost cut package, as the government seeks to reduce costs for businesses amid a slowing economy and tariff dispute with the US.  The 16 percent VAT rate, which applies to the manufacturing sector, will be lowered to 13 percent.

 

Conclusion

No other country can offer these sorts of benefits. And that’s why China is a favorite destination for sourcing managers and industry professionals around the world.

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