Sourcing products from China is cost-effective, so worldwide businesses prefer to take advantage of this opportunity and enhance their finances as well as stay competitive. For more than 15 years, China has been the number one manufacturing hub around the globe.
The start was small involving mass manufacturing of products just the like ones you buy at the dollar stores. Nevertheless, across the year’s China’s manufacturing skills have evolved and today several popular worldwide brands have their products manufactured in China.
Consumer products made in China include electronics, automobile parts, sportswear, clothing, light fixtures, recreational goods, gym equipment, and more.
You may be interested to source products from China because of significant cost benefits. Nevertheless, you need to gain awareness about how the product sourcing process in China works.
Why are manufacturing costs low in China?
You are planning to outsource a product that already belongs to your inventory but are looking for inexpensive ways to get it. Or you have a new concept designed and want it customized at competitive rates. Remember, high volumes cut down the production costs. It is just like buying a couple of beer bottles and purchasing a whole crate.
Manufacturing products in China work similarly because vast quantities are involved. Domestic manufacturers can also produce bulk products in less but in China the rates are lesser because of low overhead cost and low labour cost. The Chinese factories are capable of manufacturing large quantities of products.
The entire infrastructure of China has been developed with exports in mind therefore everything moves flawlessly including the raw materials to the factory and the finished goods to the port. The supply chain efficiency is enhanced and thus the costs are low.
Besides, the raw material, overheads, and labour costs have risen in the past several years but simultaneously these expenses have also escalated in the western countries. Therefore, China is still an inexpensive location for manufacturing and sourcing.
In the past several years, the manufacturers have improved their quality standards to fulfil the needs of their western clients.
Is it suitable to manufacture everything in low-cost regions?
Every low-cost region differs in skills, expertise, and experience like Cambodia and Vietnam. Nevertheless, Chinese manufacturers are suitable for every business but as a smart business owner, they outsource parts or products from China that have large value and long shelf life. It can make a huge difference to your capital and gains. Choose fast-moving parts or products [does not get outdated in a year] to maximize your gains.
Outsourcing project is successful only with bulk orders. All the Chinese factories have MOQs or minimum order quantity requirements. It is the minimum production order a factory accepts because the manufacturer is unable to cover the production cost as the rates are low. However, MOQs can differ depending on product complexity. If the product is complex, the MOQs will be less and vice versa.
You need to choose the right item for manufacturing in China not because the large volume is equal to low per-unit rates. Nevertheless, for a reason that outsourcing for the first time is a challenge and you wish to ensure that the chosen item is worth the time and effort.
You need to think twice before deciding on a source for China. If done correctly sourcing to China is tremendously rewarding. The advantages of outsourcing to China are low production costs and myriads of manufacturers to select from.
There are some drawbacks like communication, time zone, language barrier, challenges to visit on-site, cultural differences, customs clearance, and long shipping time. However, when you work with suppliers in China, hire an outsourcing local specialist to represent your business.
How to outsource product manufacturing to China correctly?
Looking for a manufacturer in a strange country is tiring and frustrating. People familiar with China’s sourcing arena say that a country is a group of several regions and each region specializes in manufacturing different products. For example, Guangdong is a hub for electronic manufacturers, while Jiangsu & Zhejiang region holds textile manufacturers. For metal products Jiangsu, Guangdong, and Shandong regions are famous.
To get started, take help from the local sourcing agent. The sourcing agent in China is the local person that will handle the entire sourcing process on your behalf. It includes –
- Find and verify the supplier.
- Request for quotes.
- Assess the quotes.
- Negotiate the prices.
- Review your designs before giving them to the manufacturer.
- Get samples made for your approval.
- Finalize the manufacturer or supplier.
- Oversee production process.
- Control product quality through production.
- Check the packaging.
- Keep track of the shipping timeline.
Generally, large organizations set their office in China to supervise the project but small businesses can find this hard in terms of financial resources and manpower. Sourcing specialists are helpful and for a fixed rate they handle the product manufacturing in China on your behalf. The fees of sourcing agents are transparent, so you can factor theirs in your project’s total cost. The way they save your time, effort and money associated with frequent trips is generally paid off with hiring a reliable sourcing agent in China.
They are capable of searching for suppliers efficiently because they are familiar with the locals, regions, language, and even business culture. They already have a network of reliable suppliers to help find the right manufacturer for your project. The China sourcing agent is aware of the cultural differences associated with communication styles between the Western countries and China.
In case of an issue, the sourcing agent will directly work with the manufacturer and resolve it. They speak the local language that helps enhance communication and ensure a smooth production process. These agents have deep domain knowledge, so can discuss your project. This reduces the chances of encountering expensive errors and enhances the possibilities of success right from the start.
China sourcing agents are your representative on foreign turf and will committedly work in your best interest just like any other service provider in your country. You save significantly as there is no need to open an office and hire a dedicated team in China.