The Complete Guide to Sourcing in China

There are many benefits of sourcing your products in China. However, it may take time to find the right suppliers, negotiate, and secure a good deal.

Most suppliers often face many issues when finding a supplier or after going into business with one, the product delivered did not match the specifications and was of poor quality.

It takes a lot of experience to understand the Chinese market and how to deal with suppliers which is why you need all the help you can get.

This article will outline some of the best practices, tips, and everything you need to know to help you source products in China effectively.

What is China sourcing?

Sourcing is when you look for a supplier to help deliver you the best quality of goods or services for your business.

Similarly, Chinese sourcing is when you find quality goods and services with the help of local suppliers in China. Depending on the size of your business, importing goods from China may require many suppliers with different experiences for your industry.

For example, if you're a small business owner, you may require a few Chinese suppliers, whereas large enterprises may require a sourcing company in China.

Why should you source products in China?

China is one of the biggest countries that trade globally with supply chains that can serve businesses of all sizes. They can produce, maintain, and distribute products on a large scale.

For this reason, sourcing products in China would already be a good idea. But there's more.

Here are other reasons why you should consider sourcing in China:

• Suppliers options: There are dozens of suppliers you can choose from in China. So depending on the size of your business, you can choose the suppliers that fit within your budget.
• High-quality products with affordable prices: Given several options of suppliers available on the market, you can look for those that offer affordable prices with products that are of high quality.
• Low labor costs: If you seek skilled laborers at low and reasonable rates, China is definitely the place to consider. As a country with a high population, one of the components that affect how much a product sells is the cost of labor.

A step-by-step guide to Sourcing in China

If you're looking to source products from China, you might find it challenging. The process is often time-consuming and complex, but it doesn't have to be.

Let's take a look at a step-by-step guide to sourcing in China that can help you navigate the complexities and streamline the process.

1. Spend Time Looking for a Supplier

If this is your first time sourcing in China, your first option might just be to do a quick google search.

There are many websites where you can get connected with suppliers such as Alibaba and Made in China.

However, it is not easy to distinguish between a reseller and a manufacturer online, so you need to choose carefully.

Websites like Alibaba mentioned earlier can help shortlist manufacturers during your search. These platforms have a feature where they rate different suppliers and manufacturers across China.

It would be best to keep in mind that these ratings might not be reliable as any supplier that pays for the Alibaba premium membership can get a gold supplier rating.

So, you need to take time with your search and conduct additional checks to ensure you have found the perfect supplier.

🕵️ Pro Tip: It is better to choose a manufacturer when you supply products with technical requirements as you can source directly from them.

2. Hire a Sourcing Agent

If you are sourcing in China for the first time and are willing to spend some money, hiring a sourcing agent might be a convenient option for you, especially if you are looking to acquire products with technical specifications.

Again, this is a convenient option if you want to stay wherever you are and not travel to China to conduct factory and quality inspections.

Your sourcing agent will take care of all of that.

Other benefits include having an experienced agent who can speak the language and negotiate with suppliers on your behalf.

Companies such as Lazpanda have a strong reputation for sourcing products for businesses, saving them time and money, and making the entire process extremely smooth.

Lastly, when you use a sourcing agent, you are far less likely to get scammed or be a victim of fraud.

3. Conduct Supplier Verification Checks

After making a list of suppliers based on their experience, you will need to verify this information.

Things to verify include whether the suppliers are a factory or just a middleman and whether they have had the previous technical expertise and the ability to produce what you are looking for.

You can verify this information by examining the suppliers' VAT invoices, audited accounts, or the factory's registration records.

You can call the supplier and ask for their registration number and business license number.

While this is not always the case, it is often a red flag if your supplier does not have a landline number and only operates using a mobile number.

Suppose your supplier fails to provide a business license or a company registration number.

In that case, you should avoid doing business with them.

All registration numbers can be verified by the local administrative government or the local Bureau of Industry Commerce.

Lastly, it would be best to ask for references from the supplier's previous clients to verify their history and reliability.

4. Find a Balance Between Price & Quality

The biggest benefit of sourcing in China is that your cost is significantly reduced due to low manufacturing and labor costs.

When negotiating the price with your supplier, you should remember that all suppliers have a general minimum cost to manufacture the product.

Here is where you need to research the costs of the product and the market price to get a good idea of what a reasonable price is.

With this information, you can tell that when you are offered a price below the market price, the quality of the product may not be the best.

Going below the minimum market price or the product's cost price should be a red flag as the supplier is compensating for something missing that you might not have realized as yet.

To protect yourself from dealing with such consequences, you should avoid working with suppliers that offer you a price that is way too low.

5. Buy Directly From Suppliers

Eliminating the middleman and buying directly from the supplier gives you more control of the entire manufacturing process.

Additionally, you also avoid paying extra fees or commissions to the agent or middleman.

If you have the time and experience to carry out your own search, effectively communicate with suppliers, and oversee the manufacturing process, this is something you should consider as it can significantly lower your costs.

Moreover, communicating and buying directly from suppliers avoids the risk of miscommunications and delays in sending money to China as you no longer have to rely on them.

6. Effectively Communicate with Your Suppliers

The major challenge businesses face when sourcing in China is the lack of clear communication due to the language barrier and cultural differences.

Therefore, most of the issues in dealing with suppliers come from misunderstandings and miscommunication.

It may be worth hiring a translator as miscommunication can cause huge delays in delivery and production times, negatively impacting your business and its profit margins.

All technical details such as product specifications, technical requirements, and packaging guidelines should not be arranged orally and should be put in writing in both languages.

You should also make sure to discuss the progress of the work so all issues can be dealt with immediately and ensure that there is a good flow of communication.

7. Conduct Quality Control Inspections

Conducting regular quality inspections is crucial to ensuring that your product is made correctly and that its quality is not compromised.

Having a regular check on the manufacturing process ensures that things are not left to the last minute and that any issues that turn up are dealt with immediately as it's easier to fix problems during the manufacturing process than after the final product has been made.

Tips to consider when sourcing in China

Now that you know the steps you need to take when sourcing in China, it's important to understand some of the important factors, which will be beneficial to you in your journey.

Let's dive deeper into each tip.

Always Negotiate with Suppliers

After you have spent your time shortlisting and finding a supplier, you have to start negotiating. The goal is to create a situation where both parties benefit.

Before you negotiate, make sure you have all the data and information to present your case. This gives you strong reasons to refute your supplier's claim and that you're aware of the situation.

Other important tips you should consider are:

• Be confident when making a deal, so the supplier also has confidence in you and your business
• Don't be afraid to say "no" to your supplier, if a deal is not right
• Always remember that there are better suppliers that meet your requirements

Make Sure to Order Samples

It is always a good idea to order samples before committing to one supplier and ordering in bulk. You don't want to make a huge commitment and waste money without testing the end product.

When you receive your first order of samples, you should:

• Inspect a few units (to ensure the consistent quality level of products)
• Look out for any defects, damages, or any poor-quality components used.

If you are not satisfied, you can ask for a second round of samples with the necessary changes made or simply opt for another supplier.

Other factors to consider when ordering your first round of staples are the location of the factory, the payment methods available, and the time it takes to deliver.

Build a Professional Relationship with Your Supplier

Whether you are ordering online or physically going to China to meet your supplier, you should always build a professional relationship with them.

There are many benefits of having an ongoing relationship with your supplier as they may give you discounts and better deals.

Additionally, suppose you are looking for another supplier to manufacture a different product.

In that case, they can introduce you to some reliable ones using their network.

📱Recommendation: If you are sourcing online, make sure to use applications available in China, such as WeChat, QQ, and Momo to communicate with your supplier.

Final words

It is important to keep these tips in mind when sourcing in China, especially if it is your first time.

As a beginner, you do not want to be scammed or taken advantage of, as it can severely impact your business.

Taking your time throughout the process and not rushing things is the best option as you can carefully consider all factors and make an informed decision regarding who and where to get your supply.