12 Common Mistakes to Avoid When Sourcing in China

Acquiring goods, equipment and raw materials from China can be cost-effective, easy, and scalable. The World Trade Organization has named China as the top merchandise trader set for further expansion. Across the country, there are countless factories and businesses that specialize in industrial design and manufacturing of top-quality goods. The important objective is to avoid pitfalls, which, as always, exist, and to find the right business partner for you.

There are many common mistakes buyers and importers make when sourcing from China that end up costing them time and money. Prior to placing any orders, it is crucial that you are 100% satisfied with the suppliers that you will be working with.

Additionally, the Chinese border has been closed from 2020 and into 2021 due to COVID-19, making it harder for businesses to come to China in order to make partnerships with potential suppliers. Many businessmen within China have created new contact points online and through social media, but there is still an essential step in the assessment process to view the supplier in-person.

In order to best avoid complications or potential business-threatening errors, Winton Asia has compiled a list of the twelve common mistakes to avoid when sourcing from China.

With over 10 years of experience in this industry, we are able to provide you with some of the most accurate and up-to-date China sourcing information.

For a tailor-made due diligence roadmap adapted to your individual needs, contact us today

1. Omitting a Supplier Checklist

At the preparatory stage, it is important to have a list (even if brief) of the minimum criteria expected from a supplier.

Key points might include:

  • location of the manufacturing plant
  • size of company assets and share capital
  • production output capacity
  • quality control procedures
  • certifications

Such details may act as initial indicators of the reputation of your potential supplier and are very useful at the shortlisting stage.

2. Not Ordering Samples

It is vital to order samples or ask your representative in China to assess them, even if you are short of time. Physically seeing the sample allows you to get a better idea of the final product’s quality based on your standards, delivery capabilities, and speed.

3. Not Forecasting Costs Accurately

You have found a supplier ready to ship a product at a cheap initial cost. Is there a guarantee of huge returns on your investment? Not quite yet. There is a lot more to take into account that can decrease your ultimate profits such as platform seller fees, courier costs, photography, or even random customs charges or returns.

Winton Asia has detailed insight into the cost management and tracking field. We can keep your operating costs lower and streamline the sourcing process.

Contact us to find out more

4. Creating Unrealistic Production and Price Targets

All businesses want to keep operation costs low and profits high. Trying to manage this at the expense of the supplier will cause friction and could harm the business relationship between you and the supplier. Do not put too much pressure on pricing, setting unrealistic targets, and over-bargaining. Otherwise, you might end up losing key vendors or receive bad-quality products.

5. Not Balancing Details

You need to find the right balance between overloading suppliers with information and not providing enough details. Determine at the outset the importance of smaller specifications such as packaging, design, barcode size as well as larger manufacturing concept issues. Assume that there will be no initiative from the factory. Clearly identify and communicate to the manufacturer what is needed of the final product and get their feedback on the viability and any extra costs that might flow from catering to special requirements.

6. Overlooking the Communication Barrier

Do not assume that every message you send will be interpreted as you intended. There is potential that language barriers might influence the communication that you have with suppliers. Bear in mind that English is a foreign language for many sales representatives of the factories. Take into account the additional factor that managers of the factory may not feel comfortable clarifying details they are unsure about.

In order to ensure that your goals and requirements are easily met, simplify your requests and double-check with the suppliers to verify that they understood your instructions.

7. Not Paying Attention to Packaging

To ensure that everything down to the packaging is suitable for your needs, perform a shipment assessment of your supplier. Check with suppliers before having any products shipped to understand how they carry out packaging, what freight method they will use, and how they secure fragile items to avoid damage to the goods.

Shipping is one of the last legs of the supply processes, and many eventualities are out of control. By checking on the supplier’s safeguards for quality shipping and care, you can minimize the risks in the shipment process.

8. Choosing the Wrong Payment Options

Payment can often be tricky when working with foreign suppliers. Due to additional safeguards on international transactions and bank requirements, the subject of some payment processes can get rather controversial.

It is your responsibility to use the safest and most secure methods to ensure that your payment is protected and goes through easily. Rather than using credit cards and wire transfer, go for safer options, for instance, escrow, letter of credit, or a bank credit line. This will give you better protection and you will be in a stronger position to recover your money in case of disputes.

9. Forgetting Insurance

Nine out of ten times, your product will duly arrive in time and good condition. However, that one time when it does not can cause substantial losses, not to mention stress! There are going to be times where slight hiccups in the process could seriously impact your business.

During this COVID period, we have seen large shifts in the manufacturing and shipment capabilities of many suppliers. It is contingencies like these that your business needs to be ready for. By choosing appropriate insurance plans, you can be sure that your shipments are covered in case of delay or damage. Although the chances of cargo damage are slim, having insurance provides extra security in terms of loss or damage to the goods if accidents do occur.

10. Not Getting Terms and Conditions Cleared in Writing

Most suppliers will be reliable, professional, considerate, and provide high-quality work. Yet, there will be instances when some processes are overlooked or do not come out as expected. Having your terms of the deal on paper in a well-drafted contract is vital. Include clauses for such aspects as quality control and manufacturing time. Negotiate the contract terms in detail with the supplier before placing an order to confirm that everyone is on the same page.

11. Relying Solely on the Internet for the Information About Suppliers

Internet fraud is on the rise in this digital era. There have been cases of stolen business identities and impersonations. In addition, unscrupulous opportunists may exaggerate the capabilities of their businesses in their marketing materials and corporate websites.

The key to finalizing the supplier selection successfully is to inspect the manufacturing plant. By visiting the supplier in person, you will be able to get a further understanding of the company you will be working with, their manufacturing conditions, quality control, material usage, and many more details. These aspects are vital in assessing the reputation of the prospective partner and may play an important role in the development of the collaboration, for instance in such matters as securing certificates and licenses for his products in your country.

Not able to get to China easily right now? Utilize professional assessment services like the ones we offer at Winton Asia. Our team has inspected countless factories and suppliers. We can go to your desired supplier in person and probe all the questions you need to know…

12. Not Checking the Quality of the Products Prior to Dispatch.

Prior to international shipment, it is essential to gain some assurance of the quality of the goods intended for dispatch. By inspecting the goods prior to them leaving the facility, you can verify the quality of the items and ensure that they conform to the required standards and specifications. There are Quality Control managers in many supplier factories, but many international businesses opt to have their own representatives visit factories prior to the international shipment.

If you do not have a QC management partner or cannot come to China currently, Winton Asia has QC professionals that can visit suppliers for you to guarantee that your shipment meets all of your requirements before it leaves China.

There are so many other aspects to consider, be it cultural, product quality, or its control. We will talk about them in our future articles. Stay tuned, and if you are seeking professional assistance and sourcing services in China, feel free to reach out to Winton Asia for more details.

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