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What’s the Difference Between China Sourcing and Procurement?
Today I’m going to talk about the difference between China Sourcing and Procurement?
What is sourcing?
What is procurement?
Why are they so important?
Are they the same?
The types of them
If you want to grow your business, this topic would be helpful for you.
Let’s dive right in.
Chapter 1: Sourcing and Procurement Overview
What is sourcing?
Sourcing is finding the right supplier to provide you with products or raw materials you need to create your product or run your business. When you say the right supplier, it should be the provider of high-quality but low-cost products, so you’ll get a margin or profit.
You can choose a local or domestic supplier or a foreign supplier. Sourcing China products and services are top-rated because China is a big marketplace and product source for thousands of global companies. The number 1 reason is the affordability of the product and the quantity the suppliers can produce.
Sourcing involves a critical process so you can achieve your target. When a foreign company is sourcing products from China, you may encounter different suppliers who will claim they are factory or direct sources. However, 90% of suppliers you can reach through Chinese marketplaces consist of wholesalers and traders.
China sourcing has improved over the years. Finding the top China sourcing agents to help you with the sourcing process ease the burdens and hurdles of doing it alone. It means that they can do the sourcing of the fit suppliers for your product requirement.
Why is sourcing important?
There are several reasons why sourcing, mainly China sourcing, is beneficial. China is the world’s largest producer and exporter of goods. It is also the largest manufacturer of industrial goods.
Since 2015, manufacturing has been the country’s largest sector. In China, you can get practically everything. Due to this, companies globally outsource their products here. Here are some reasons:
Low-cost and Affordability
The number 1 reason foreign businesses are sourcing China products is the low price. Due to this, Chinese suppliers and foreign buyers benefit from this because the supply chain is consistent. Buyers order in bulk numbers, and they benefit from low prices.
On the other hand, suppliers, particularly direct factories and manufacturers, expand their network, and their sales rise accordingly. They offer significant discounts or lower prices when they order in large quantities. Sometimes, they lower their MOQ for their long-time clients.
Partnership and Reliability
In China sourcing, the search for a reliable supplier is critical. For example, when selling online or via Amazon FBA, your goods must be of high quality. Many buyers will choose you if you sell high-quality, long-lasting products. This is why you need a trustworthy supplier.
Forming a partnership with a supplier who will provide you with high-quality products is essential. Your business grows when you can rely on the services of your suppliers. Sometimes, they offer more than one service, such as labeling and customization.
A China sourcing agent is a great help when looking for good suppliers. When we say good suppliers, it means they are not only good for a one-time order but are consistent with every order. They help you become successful in your business.
If there’s one thing you try to avoid when purchasing, that is losing money. When sourcing products from China, you get awareness about the suppliers you are dealing with. You get to know the dangers of dealing with unverified suppliers.
China product sourcing is not easy. You may find different suppliers online who can pretend to be direct sources, but some risks come with it. Sourcing in China becomes easier when you seek help from a sourcing agent China.
When you want to avoid risk when purchasing, you need to ensure you are dealing with suitable suppliers. It will save you precious time, money, and effort.
What is Procurement?
Purchasing products or services is known as procurement. Because businesses must request services or acquire items, procurement is vital in the industry. It consists of different tasks. Sourcing is just one part of the process.
In China Procurement, there are certain factors to consider. Even if you can find millions of products in China, your buying decision should be in line with your company objectives. For example, when you want to sell electronics, you have to consider the technical aspects and the cost to repair a damaged one.
When procuring a product or a service in China, the product must be easy to sell or not costly to repair. Before you make a contract, you need to inspect the product by getting a few samples and evaluating it. Some other factors to note are:
- Warranty and returns
- Counterfeit products
- Communication problems
- Fraudulent sellers of low-quality goods
- Shipping charges
- Filing a lawsuit
- Customs tax and fees
- Shipment issues
Why is procurement important?
According to MSI, some companies without a procurement team can be challenging. This team ensures that the company acquires all products and services correctly. It allows projects and procedures to run smoothly.
Below are other important reasons:
Smooth business operation
You can run your business smoothly in China procurement once you find a supplier that values you as a client. Since you are acquiring a product or service, your main goal is to be directed to the right company that can confidently deliver and to whom you can build trust.
Procurement doesn’t stop in just sourcing a low-cost product. But it continues with maintaining, sustaining, and growing the revenue. When you procure with China suppliers, you can establish a smooth operation in your business.
Save money, time, and resources
In procurement, you negotiate and make contracts with suppliers. But before you get into that, you start with planning or forecasting. When you get to the sourcing part, you identify and select suppliers that can meet your needs and requirement.
With the China procurement process with suitable suppliers, you can save money, time, and resources. Why? Because they are true experts in this job and they know the ins and outs of importing and exporting to foreign clients.
To establish a process
Establishing a process means not rushing into the purchasing part. Instead, you negotiate and make a contract before you place an order. After a contract is made, you ensure that you still control or manage your suppliers by abiding by the terms stated in the agreement.
This process helps build a professional team. A sourcing agency in China like JustChinaIt can help foreign buyers achieve this goal.
Are sourcing and procurement the same?
Some would think that sourcing and procurement are the same. However, it is not!
As the term indicates, sourcing is concerned with establishing sources through which an organization’s supplies might flow. In contrast, procurement is primarily concerned with obtaining these supplies for the organization’s day-to-day operations.
Sourcing and procurement are different. When you do China sourcing, you locate and screen suppliers, contract them to provide you services, and maintain your relationship with the supplier. You can do it directly or get help through a sourcing agency in China.
While procurement is obtaining the products and services that your company needs, in the same way, you can do this easily with a China procurement company.
Chapter 2: China Sourcing vs China Procurement
Now that we know that sourcing and procurement are not the same, we will look into some key points to better understand the difference between the two. Are you new to China sourcing? Let’s explain each topic in detail.
What’s the difference between sourcing and procurement?
Sourcing China products and services can be a part of your business’ procurement process. Sourcing is a subsection of the overall tasks you do when procuring. Let’s give an example. When you think of sourcing clothes from China, here’s what “sourcing” covers:
- You look for qualified suppliers online, sourcing from China marketplaces, or hiring a sourcing agent in China to look for qualified suppliers. You can also attend some fairs or exhibits in certain places to meet several suppliers.
- After you choose your preferred supplier, you focus on building a good relationship so you can manage the supply chain.
- Lastly, you work on having a backup supplier if your primary supplier cannot cater to your product requests.
Now, here’s what procurement covers:
- You now execute the plan on how you can acquire the products you have sourced from the supplier. You will need to negotiate, purchase, receive, and inspect the goods. Then, you keep all the documents and records and document the whole process.
- In procurement, you focus on the “what “ of the supplies and not on the supplier.
- Procurement is primarily concerned with managing already established supply chains to ensure a consistent flow of services and products to the company.
How is a product in China sourcing done?
Some companies that first do the sourcing independently have experienced good and bad scenarios. One common mistake is the supplier they have chosen is not a direct source. They could be either wholesalers or traders who buy from direct sources.
Many would attest that finding the top China sourcing agents to help them with the sourcing made everything easier. Chapter 4 will discuss the advantages of hiring a sourcing agent in China. It is one of the best approaches to your product sourcing.
Let’s enumerate the list of things you do when sourcing from China.
Making a List of Suppliers
There are different ways to find a supplier. You can search on Google to look for manufacturers. You can find Chinese suppliers or manufacturers in directories or platforms that have been around for a long time, such as the following: Alibaba, Global Market, Global Sources, DHGate, HKTDC, and Made in China.
If you cannot find a China source products supplier, you can hire a China sourcing agent through a sourcing agency in China for a more reliable list of suppliers. 90% of direct suppliers are not visible on the online platforms. You can only get through them with the help of an expert.
You can also get some trusted suppliers through referrals. When your network is small, finding referrals is difficult. Referrals can come from peers or a China product sourcing agent who can connect you with direct manufacturers in China. Getting referrals takes time and money, but it’s well worth it.
Researching on a Supplier
You need to research very well on your supplier because this will mitigate risk and avoid fraud in your transaction. As mentioned, not all suppliers you can find online are direct suppliers. You can benefit more from a direct factory regarding price, terms, and product expertise.
It is insufficient to search the internet and go through a random list of China manufacturing products. When researching a firm, get as much information as possible. Look into the organizations they collaborate with, previous consumers, and reviews of their services.
Understanding Types of Supplier Delivery Options
For China source products, every supplier has different delivery options. For example, a supplier offers a continuous replenishment delivery. Suppliers make supplies on a predetermined timetable, frequently in short durations, depending on a company’s inventory data and real-time demand. They deliver in small batches rather than large batches.
Another type of delivery is the just-in-time delivery option. Companies receive supplies as needed under this approach. They reduce inventory levels and expenses by delivering what is required at the right time. It will increase efficiency and reduce waste, and use inventory management software.
Suppliers deliver goods when the customer requests them in an on-demand delivery approach. This gives you the option of deferring delivery and payment – until your stock reaches the point where reordering is necessary.
In this scenario, choosing a supplier with a large inventory and can be flexible when order deadlines vary frequently is vital. The provider must be prepared and deliver on time if a company requests it. The top China sourcing agents can help you choose the best option.
A trusted China sourcing agent would tell you that negotiation should be fair bargaining. You can find the proper manufacturer using a win-win method. Fair negotiation is part of that. Don’t disregard the quality if you’re looking for the best deal.
You can share your information with potential vendors and negotiate with them. You can also inquire about costs dependent on the quantity purchased. It will assist you in determining how to approach their MOQ when submitting your purchases.
When you negotiate, you should also consider that you want a long-term partnership with your supplier. Do not always go for suppliers who can promise you the lowest price possible but cannot commit to quality. It will be your loss in the long run.
Securing a contract
After negotiating with your China direct sourcing supplier or wholesaler, it is time to put everything in writing. When your supplier cannot understand your terms and conditions because of the language barrier, you need to ask help from the best sourcing agent China.
Here are the things you need to put and see in the contract:
- Specifications of the responsibilities that the supplier has agreed to provide to you
- Responsibility and duties of each party
- The standard of the goods or services delivered
- Delivery terms and conditions
- Duration of the contract
- Payment terms and conditions
- If there’s a loss caused by negligence, they must provide indemnity
- Repercussions of a contract breach
Types of China Sourcing
Finding suitable suppliers may take time and effort. Though Google is beneficial for showing some lists of possible suppliers, you still cannot get all the direct sources from China.
Today, foreign buyers primarily seek help from top China sourcing agents to get to the direct source. A China sourcing company has considerable potential to connect you to the best direct sourcing China suppliers.
If you are searching for a “sourcing agent Guangzhou China” to help you import goods from Guangzhou; an expert agent will also connect you to their vast network of suppliers.
If you are sourcing outside of China, sourcing can be easy if you speak the same language. However, the need for the best sourcing agent China is to assist you when dealing with suppliers who cannot speak non-Chinese languages.
We will explain to you the two types of China sourcing:
Sourcing directly means going to the direct manufacturer or genuine factories. These factories make products to supply to all local suppliers once and buyers. If you purchase directly from them, they will give you a low price based on the number of your orders.
Just like when you are sourcing outside of China, you contact the manufacturer directly.
The most practical way to outsource in China is to connect to the manufacturers directly. This is especially true when dealing with a significant or major transaction. You can get a better deal because you are buying straight from the factory.
A sourcing agent in China can introduce you to genuine or direct sources. If you have exhausted all your steps and still cannot find a good supplier, you need to try a sourcing agency in China. They can help you locate, negotiate, and purchase when sourcing China products or services.
Sourcing through wholesalers or traders
When you look for Chinese suppliers on online platforms instead of hiring a sourcing agent in China, you will end up with traders or wholesalers. They are the other types of suppliers who do not make goods but sell the products of direct suppliers.
Manufacturers sell to trading companies. However, traders make money by adding a markup to the cost of the actual product. They can supply goods to a company in a variety of product categories. They are not focused on just one product.
On the other hand, wholesalers buy in large quantities. Then, they sell them in smaller numbers or units. Some businesses prefer these wholesalers because they have access to warehouses in the United States.
Working with wholesalers has the added benefit of shorter lead times. They also have reduced minimum order amounts. Unfortunately, most wholesalers only sell things that are ready to use. They are unable to change some specs or packaging. They do not provide custom products.
Can you outsource procurement?
Indeed, when you outsource procurement, you can manage your purchase solutions with purchasing professionals through outsourcing. It will also allow your company’s professionals to concentrate on their areas of expertise. They won’t have to waste time looking for the best suppliers, evaluating prices, and creating purchase orders.
A company can benefit a lot from procurement outsourcing services. China procurement services can take the hassle away and help you save money instead of hiring more people to do the job.
If a sourcing agent China can help you connect to the direct product suppliers, procurement services can choose a third party to do the tasks covered in the procurement process. Procurement experts in China can have access to databases of verified and genuine direct suppliers.
Chapter 3: China Sourcing Company
Have you done sourcing by yourself and found it unsuccessful? Do you only rely on the sources you can find on Google or Chinese B2B sites?
You need to try the service of a sourcing company in China.
What is a China sourcing company?
A sourcing agency in China refers to a company or agent that will communicate and negotiate with manufacturers on your behalf. They have an extensive network of manufacturing enterprises. A licensed sourcing agent China has access to a database of suppliers. They will locate the appropriate factory to meet your needs.
They will assist you from the first steps to the final purchasing steps. A sourcing agent China can also help deliver your purchased items. Commissions and fees are two ways they can make money. The China sourcing company has expertise in getting you to a suitable direct supplier of products.
What are the advantages of a good sourcing agent in China?
It helps you get a direct supplier.
90% of Chinese suppliers are inaccessible to foreign buyers. A sourcing agent China like JustChinaIt will connect them with these hard-to-find suppliers who offer reasonable costs of products. They will bargain and negotiate on your behalf if you do not speak Chinese.
For example, if you want to import from Guangzhou, you can hire a sourcing agent Guangzhou China to help you find direct factories. With a China sourcing agent China buying agent, you can list qualified suppliers that offer you competitive prices.
You certainly want to make a profit from your company. Getting help from a sourcing agent China is necessary to get the most incredible price offerings. You can choose from a directory of recognized and legitimate suppliers.
You can avoid buying “disposable” products.
Avoid purchasing low-quality goods. One of the famous places where foreign buyers import is in Guangzhou. A sourcing agent Guangzhou China knows where to find the best suppliers so you can get the best quality of products.
The top China sourcing agents will inspect the products rigorously to guarantee that the buyer does not receive the incorrect items. If you order in bulk, the sourcing agent Guangzhou China can check them before they are delivered. They can visit the factory and inspect the quality before closing a big purchase.
Not every vendor is the same. Some suppliers will offer you a low price, but the quality is as good as garbage. With the help of a sourcing agent Guangzhou China, you can connect to a list of suppliers who offer high-quality products.
Get professional and quick service
When finding the best suppliers for your business, a sourcing agent China is an expert. They have an extensive network of legitimate wholesalers and certified factories, and the buyer can get excellent service with the help of the sourcing agency.
Just like in our previous example, if you need speedy and reliable service, you can hire a sourcing agent Guangzhou China when you want to purchase from a direct supplier in Guangzhou. The top China sourcing agents can ask and send you samples, check the company’s certifications, and negotiate with transparency.
Hiring a licensed sourcing agency will help you with your sourcing faster. They will not cheat on you. There is also a sourcing agent China drop shipping, that can help you find dropshipping suppliers. You can save more time and effort instead of going to China and doing everything.
What services does a China sourcing company offer?
A China sourcing company can do more than just sourcing. They offer a variety of services for your sourcing or procurement needs.
You can get services like price comparison, shipping or consolidated shipping services, warehousing services, and more. They can take care of all your sourcing needs and get your products delivered to your business or place or even Amazon warehouses.
Looking for a qualified, professional, and reliable sourcing agency is crucial for your business. JustChinaIt has services you can trust. Their expertise and clients’ trust keep them on the top list of the best sourcing agent in China.
Chapter 4: Is Chinese Sourcing and Trading Company The Same?
A sourcing company and a trading company are not the same. When you choose a trader to be your supplier, they can offer services to you. But you have to be aware that not all traders are experts in sourcing.
A trader can speak English so that you can communicate without difficulty. They can even give you a low MOQ for a product you like to order. But that’s not all you need to know.
If you are new to sourcing, you may think a sourcing company is an additional expense. Some sourcing companies may charge a large amount for their services, so it is essential to find a reliable expert who offers reasonable pricing.
You can see the differences between a sourcing company and a trader in the table below.
|Specialty||They are professionals in quality control, trade, and supply chain.||They specialize in a product or industry.|
|Knowledge and Expertise||They are experts in creating goods to produce an efficient and successful supply chain.||The trader only has a greater understanding of their products or sectors.|
|Managing Complaints||They represent the client and resolve issues. They will negotiate and check the contract terms if the company needs compensation.||The trader is the supplier, so the buyer talks to the trader to handle any problem.|
|Scope of support and objective||They have partners that can provide various services on a campaign basis. They have designers, product checkers, and engineers.||Trading companies have a more extensive network of materials, components, and accessories for the products they sell.|
|Network||Wide network||It may be limited or extensive depending on their years of expertise.|
|Other Services||They can offer OEM, design, packaging, or product customization.||They recommend other products of the same kind.|