How to Strategic China Product Sourcing

By HX Wenli
 / 
May 17, 2022
 / 

This guide will show you exactly how to Strategic China product Sourcing
Including:
Pros and cons
Where to find sources
A mistake you should avoid
Lots more
So if you want to grow your business with China product sourcing, this guide is for you.
Let’s get started.

Chapter #1 China product sourcing basic

China has always been known for its excellent products and services. That is why they are named “The Worlds Factory.” Sourcing products from China has helped firms reach their standing in the global market. At the same time, this strategy helped them focus on the core of their businesses. 
Sourcing products from China has moved at a fast-paced rate. It is why even top firms in the world are now turning to China because of its low-cost products. Several firms, too, put up a sourcing company in Asia, specifically in China, while others decided to use the Chinese sourcing company or china product sourcing agent.

1.China product sourcing basic

What is the China product sourcing strategy?

Sourcing strategy is the supply chain method that helps many firms when sourcing products from China. Through this, companies and firms the way they gather data—looking into the suppliers’ structure and form of business. Because of this, firms will know if their criteria fit them and if they agree to work with them. They also use this China product sourcing strategy to buy power over finding the best possible prices in the sector. 
The China source products strategy is becoming more and more popular and many firms use this one. As the digital world improves, it is an aid in the change in purchasing power and supply chain operations. It even mandates the need to assess what the business bought, from whom, at what price, and how much. 
However, learning strategic sourcing is can be difficult due to the fact that it contains a vast set of subtopics. 

Why is the China product sourcing strategy important?

There are many sourcing strategies that businesses and firms should make use of, such as “source products China.” Based on the book released by Zycus, they explain the benefits of using strategic sourcing, which are as follows:

  • Lower the Expenses

Among the most evident advantages of this strategy is the higher chance for price cuts. It includes locating and selecting suppliers that will deliver the most value at the best price. Through this, you can find the best suppliers that will allow you to have a business to gain ongoing cost reductions. 

  • Ideal Suppliers

The first step in utilizing the sourcing strategy is examining the suppliers, including their competency, profits, and goals. In this way, businesses and firms have all the data on hand that they can use to match their goals to the suppliers. It increases that the company can maximize value generation at the lowest possible cost.

  • Business Goals Match

One china product sourcing strategy aligns the company, firm, or business buying efforts with its corporate goals and priorities. With this, the company and supplier will have a better alignment to achieve more robust business results while increasing efficiency and reducing supply chain risks.

  • Long-Term Supplier Relationships

Most made in china sourcing suppliers want to have a long-term tie with their clients, and for sure, it should be your goal too. This China product sourcing strategy creates a strong link between you and the supplier that will help support the skills of the suppliers and if they are suitable for your goals. 

By building a long-term relationship with the suppliers, you can get benefits and amenities that benefit your business. An example of this is getting a lower price, exclusive updates from them, and fantastic product services. 

How does the China product sourcing strategy work?

Using the China product sourcing strategy is the best way for businesses to use it. This strategy helps the companies with their sourcing procedures that are less price-focused and more long-term. At the same time, it allows the creation of a flexible approach that will add to the progress to the firm’s overall profitability in the long run.
The process of the China product sourcing strategy may appear complicated at first, especially for beginners. However, an option that you can do is to hire a China product sourcing agent since they are skilled enough to guide you from the beginning to the end. But if you are confident enough, then the strategy begins as follows:

  1. Assess the suppliers’ type of products, strategies, practices, and departments involved. 
  2. Create a China product sourcing strategy that is fitted and relies on your company’s objectives.
  3. Assess the suppliers’ portfolio and build a portfolio of suppliers.
  4. Create your guidelines and formats when asking for a proposal.
  5. Choose a supplier and negotiate with them.
  6. Integrate with your supplier and outsource products 
  7. Monitor if all is going well, and you can tweak the strategy if needed.

Chapter #2 Pros and cons of sourcing products from China

2.sourcing products from china

Sourcing products from China is among the best strategies to help you and your business. It is impressive if you want to be ahead of your competitors and get the best deal while still giving the lowest deal to your customers. 
However, even though sourcing products from China is one of the best places, you need strategies first. So before importing from China or contacting a China import agent, you must weigh the benefits and drawbacks. 
Let’s take a scan at the pros and cons when you source products from China:

Pros

1. Product Rate 

One of the best advantages, when you opt for China source products is their quality. However, there are many beliefs that if something is “Made in China,” it’s not good—which we should debunk. In fact, because of how high-quality their product is, many firms, even the large ones, choose China source products. 
Sourcing China manufacturers with years of experience and providing a wide range of products is always possible. You can find everything and anything in China because they excel in many things. For instance, Shanghai is known for providing products in industry development. It is why a china agent for import products related to this started to look in Shanghai first. 
The China factory sourcing industry is trusted since they have a long history of working with firms in many countries like the US and Europe. At the same time, they have collaborated with many growing countries in the world. As a result, they can now meet the demands and create an excellent grade of products. Plus, many china import agents, china product sourcing agents, and made in China product sourcing firms started to arise.  
However, it would help to consider the product rate and the price. The reality the product quality will depend on the amount you pay for. As a matter of fact, when sourcing china manufacturers, you can see how they need to generate a profit to stay in business. If you offer low prices, they might be forced to cut materials to meet your demands. 

2. A large pool of suppliers

Sourcing China manufacturers and supplier is now easy. However, if it is your first time sourcing suppliers in China, it’s possible that you can make mistakes. Especially if you’re looking into made in china sourcing websites, not all “suppliers” are indeed suppliers because most are trading companies. 
It is why to avoid these kinds of risks; it is best to work with a China product sourcing agent, a China import agent, or a Chinese sourcing company. Since these firms and agents have all the experience and requirements, they can match you with the suitable ones for your business. 
Because there are many delays and shaky factors in China that you may not be aware of, it is best to work with a China agent for import or a China product sourcing agent that knows everything is best. They will have the knowledge of the risk and the odds that you can use to improve your business. 

3. Low labor cost

Labor cost is one of the reasons whether your product prices will increase or not. As a result, many businesses choose to source products from China because they have low labor costs, which means they can price the products better. 
Despite its low labor cost, sourcing goods from China will get you the best quality. Many industries in China have years of experience in a wide range of products through the years. Their technology, skills, and training are competitive, making the total price competitive yet worth it.  

4. Bigger chances to scale up

The Chinese government has invested much in buildings and the growth of their economy to maintain the manufacturing sector. It is the reason why China has an industry that is protean and stands firm.
However, the many plants themselves enhance their learning of the supply chain. And due to their expertise, they were able to increase supply and output based on the large orders. Because a reliable supplier can scale up production to meet your demands, customers will be a huge asset to your firm.
In addition, sourcing china manufacturers, you can choose from many options. And one of these is choosing a supplier with lower MOQs and low prices or buying in bulk. It allows you to buy more and easily, so if you’re still a small business, a start-up, or starting out, this is for you. 
But to source a supplier or factory that will allow you to scale up and be reliable, you can work with a china import agent or Chinese sourcing company like JustChinait. 

5. Customized plans

If you want to source products China that is customized to your liking, brand, and business goals, it is possible. You can find many suppliers and firms that will allow you to have high-quality products and customized items through the use of prototyping. 
As noted above, China factories have years of experience and materials to create products. It is why it’s no surprise that they are competent in many areas like 3D printing, which helps improve the speed, quality, and time of making the products. 
However, you have to keep in mind that not every factory offers a prototyping process. So, it is best to utilize a china agent for import and china product sourcing agent when sourcing suppliers in China. It will ensure that you can find the top suppliers that will prepare a top-notch sample for you to weigh your option. 

Cons

1. Language Barrier

The language barrier is amongst the most typical problems when purchasing from China. Even though most Chinese suppliers know basic English, they still struggle to communicate. So it is best to engage with a china import agent or china agent for import fluent in Chinese and English. In this way, you can reduce the case of scams, unreliable, and pairing with the wrong supplier. 

2. Diverse Rules

When you import to any part of the world, you must know their import and export rules. It prevents you from doing illegal things and making sure that you follow all the rules and regulations in their country. Significantly, China is strict when it comes to your documents—if not, your cargo will be seized in customs and will not arrive at you. 
You should also set up your own rules and regulations for your supplier and manufacturer must meet. Or you may opt to order a sample product first to weigh your options if they are best in their job and follow your demands. 

3. Caught up with the wrong supplier

China has a large and diverse industry, so you can expect that you can find the best manufacturers and poor ones. If it’s your first time sourcing products from China, it’s possible to meet the wrong ones. 
When looking for a supplier, there are considerations you must make, such as:

  • Don’t be swayed by low costs alone. 
  • How proper are their quality control and production capabilities?
  • Request for certification.
  • How long does it take them to supply their products?
  • Supplier’s financial strength.
  • Skim for suppliers that have been in the business for how many years.
  • If the product passed the international norms. 

Chapter #3 Where to find goods and China product sourcing agent

Trade shows

3.china product sourcing agent

There are numerous trade shows that you can go to in China. By attending trade shows, you can face and talk to various suppliers, and manufacturers face to face. You can ask about their company, know their products, their production power, supply chain, and other necessary details you need all at once. 
Here are some of the trade shows that you should consider going to:

  • Canton Fair
  • Yiwu Trade Fair
  • Beijing Auto Show
  • The Bauma Fair
  • The Shanghai Import and Export Commodity Fair

China product sourcing websites

4.China product sourcing websites

Many suppliers and manufacturers put up their websites and services on different online platforms. You can explore specific keywords you need on Google, Yahoo, or Bing like “electronic manufacturers,” and all the list results will show up. From there, you can gather details, and see their products and what you need. 
It is the best place to start china factory sourcing since everything is in one place, and you can contact them directly at one place. You can also check out Alibaba, Global Sources, and Made in China since these vendors also put up their services. 

Trading company

You have to remember that trading companies are different from manufacturing companies. In fact, 90% of what you see is a trading company, so you should expect to encounter them. Nonetheless, you can still find good and reliable ones. 
Here are the best B2B Trading Platforms for you to find vendors:

  • Alibaba
  • Global Sources
  • DHgate
  • Made in China
  • Ofweek
  • Hong Kong Trade Development Council
  • Hifactory
  • Kompass
  • Tradekey
  • ECVV

Chinese sourcing company

If you want someone to assist you from the start to the end, then a Chinese sourcing company like JustChinait is best. This sourcing company provides services, not only for products and suppliers but also for the following:

  • supplier identification
  • Price negotiation
  • Supply management
  • Quality control management
  • Logistics and shipment control
  • Other sourcing issues

Social media

You can also find products and suppliers on different social media platforms. The problem is the list will not be as much and not accurate. But you can still use their platforms as references for reviews and feedback.

Chapter #4 China product sourcing strategy list

5.China product sourcing

Know which China source products you want

Knowing what products you want is the first step before sourcing products from China. It may come off easy at first, but it’s pretty challenging in reality. When choosing a product, don’t go over the hype. Instead, select the ones that will gradually improve and stick with them. 
You must also determine the rules, regulations, components, and features that come in that product. You can also start your sourcing on profitable products from China. In this way, you have a higher stake in the market.

Specify and validate the source products China 

Manufacturers and suppliers are not magicians who can give you exactly the product you want without guides and specifications. It is why you need to have a list of all the product requirements you need before you contact any suppliers. You can have product specification sheets that include detailed data of your product expectations and request to the factory. 
In addition, creating a cost analysis and verifying your product as early as now can help you save expenses and effort. This validation process helped better grasp the costs and profitability of a particular product. And it makes sure that the products comply with the law and certifications. 

Know the sourcing China manufacturers base

Looking into China’s largest manufacturing and supplier base can be tricky, mainly for importers with no experience. However, many China product sourcing websites can help you, such as Alibaba, Global Sourcing, and Made in China. These platforms allow you to view suppliers in multiple locations with the products you want. 
You also need to understand that every region in China has expertise. Based on the data given by the Berkely Sourcing Group, here are some of the products and their related provinces:

  • Furniture
  • Guangdong, Hebei province, Jiangsu, Zhejiang, Shanghai, Chengdu and Beijing.
  • Electronic 
  • Guangdong, Yangtze River delta, Sichuan, and Shaanxi Provinces.
  • Textile  
  • Zhejiang, Jiangsu, Fujian, Guangdong, and Shandong Provinces.
  • Glass
  • Hebei, Jiangsu, Shandong and Guangdong provinces. 
  • Household Appliance
  • Guangdong, Zhejiang, and Shandong provinces.

Narrow down the suppliers and manufacturers 

Before you narrow down the list of suppliers, you need to have a list of suppliers, which you can get in many ways. One is to look into various china product sourcing websites mentioned above. Two is to get a list from a Chinese sourcing company or china agent for import. 
We recommend the latter since you will have the most accurate suppliers and trustworthy ones. After obtaining the list, narrow it down to find the best supplier. Make sure to start with 100-50 narrows, down to 5. 

Reach out to them

Contacting suppliers is possible anytime and anywhere since we have internet. When you find suppliers online—for instance, on their website, you can directly contact or quote them or use their email and WhatsApp. You can also go to various trade shows which we noted above. 
Trade shows are a great way to connect to numerous suppliers at one. One of the largest trade shows in China is the Canton Fair in Guangzhou. Nevertheless, you can use these pointers when contacting them:

  • The quote should be direct, concise, and straightforward. 
  • You should avoid long intro and redundant information.
  • Be ambiguous about what you want. 
  • Use simple words that the supplier can accurately translate to Mandarin. 

Know China’s rules and law 

The regulation restriction varies on the country and the product you’re importing or exporting. But no matter what or where it is, meeting the laws and rules is a must to avoid any legal complications. If not, the customs may halt your shipment at the customs. 
Based on International Trade Administration, here are some of the documents you need when you import China source products:

  • Bill of lading
  • Invoice
  • Shipping list
  • Customs declaration
  • Insurance policy
  • Sales contract
  • Import quota certificate for general commodities (where applicable)
  • Import license
  • Inspection certificate
  • Other safety or quality licenses.

Use incoterms and the landing cost

Incoterms, also known as shipping terms, specify who is liable for shipment. These incoterms define the risk, freight cost, and duties included in the sourcing agreement. Included too are liabilities of seller and buyer, the one manages shipping at to what point, and who will handle the risk. 
There are many types of incoterms that you can choose; however, Ex Works (EXW) and Free on Board (FOB) are the most used for overseas shipping:

  • Free on Board (FOB) – the seller bears all delivery costs until your order is placed on a designated port vessel. From there, the seller takes responsibility for all risks or costs associated with damage to/loss of items during further transportation. 
  • Ex Works (EXW) – holds you responsible for all shipping charges. 

Landed costs will also impact your profits, so as much as possible, calculate them. If it is more significant than anticipated, look into reducing it. 

Order sample products

Sample products are also essential since they ensure that before you fully work with a supplier, you will know if they can deliver the product at the said time. At most, the sample products should be done in 3-7 days and ready to ship to your location. Let the supplier or manufacturer know that you obtain different samples from others. It will inform you that they have other competitions you are looking into. 

Negotiate with your Chinese sourcing supplier

Before negotiating with a supplier, identify the most crucial thing to you. However, if the lowest price is the most important to you, then the quality of your goods will nearly always decrease. Instead of focusing on the payment, consider this:

  • Cost of your initial order
  • Payment terms
  • Additional units to cover defects
  • Customized labeling
  • Packaging and preparation.

Sign a deal with your chosen supplier

One of the crucial things you should have is a contract. When things don’t go according to plan, the contract you sign with your supplier serves as a safety net. You should include in your contract the following:

  • Damaged products
  • Missing specifications
  • Late delivery

Check the payment account 

Pay once you’ve double-checked everything. Look into the supplier’s account bank account information and double-check that it matches the exact name on your contract and their website. Also, if they sent it through emails, then confirm it through skype or over the phone. 
Furthermore, we don’t recommend Paypal since most Chinese suppliers don’t use that. Instead, opt for these payment methods. 

  • Alipay.
  • UnionPay.
  • WeChat Pay.
  • Visa.
  • Mastercard.

Make an initial payment

Initial payment is vital for suppliers to proceed in making your products. Don’t pay in full; instead, calculate the amount by multiplying the portion of the current quarter’s purchases.

Production updates

Make it a habit to check-in and seek planned order progress reports every week. Remind the factory to update you if there is a problem as soon as possible to resolve it. 

Quality control

Concerning production updates, always ensure that your stuff is checked. Remember not to neglect this one to avoid problems. You may choose to use many inspection types, mainly if you use a Chinese sourcing company’s services. 

Shipping 

Ensure that your items reach your forwarder and that all documentation is ready to transport to your end location. You need to ensure that you hold the proper documents we mentioned. Or, if you work with a shipping company, make sure they include customs information, tariffs, and fees. 

Chapter #5 Mistakes to avoid when sourcing goods from China

6.sourcing goods from china

Did not order any sample products

Sample products are crucial before you order a large number of products. Even though you specified your product’s needs and expectations to your supplier, it will not be enough. You must request that the factory deliver sample products and be ready for changes. 

Not checking suppliers review

Before you engage or contact a supplier, you must check their previous work and client feedback. However, an onsite meeting at the facility is the most effective approach to assess a vendor’s ability. It will give you an apparent view of their work ethics, materials, and machines.  

Unclear criteria

Most of the time, buyers make two mistakes when sourcing products from China. One does not have precise requirements and needs, and two has many specifics on the products. Your goal should be—to provide reliable data enough to meet your demands. 

Having no contracts

Having a solid contract protects you as a buyer from any errors made by a supplier during the product creation process. In the same way, it shields suppliers from any requests made by a merchant that go beyond the terms of the deal. Before starting with anything, make sure the contract is final, reviewed, and signed. 

Relying on pricing

Price should not be the sole thing you need to consider when choosing a product or supplier. Keeping a good relationship yet focusing on pricing and undercutting suppliers is not a good strategy. They might divert their attention away from creating products, leaving you with a low grade of products. 

Doesn’t have a solid China product sourcing strategy

A sourcing strategy acts as a guide for locating china source products. And besides, dealing with suppliers and giving vast sums of money to other countries might be problematic. So it is best to have a strategy with goals and requirements for each transaction.

Choosing not to hire a China sourcing agent

Working with suppliers is more complicated than it appears to be. Chinese sourcing agents have the skills and experience. They also have many supplier contacts that their clients can use to get the greatest deals. Choosing not to use their services is okay, but it can make your process risky and expensive. 

Chapter #6 Benefits of working with a Chinese sourcing agency

7.Chinese sourcing agency

Lower the risk

When sourcing products from China, there is always a risk. The suppliers are far, you can meet them face-to-face, yet you have to pay a large sum if you want to work with them. What’s worse is you can get scammed. 
However, working with Chinese sourcing companies or a china import agent can minimize that risk. They will source trusted suppliers and go through the legal process.

Source products china made of high grade

China product sourcing agent has the skills and experience who work with many overseas firms. Thus, they know how to meet their clients’ demands and wants. They understand the facts and structure needed to sign a sourcing contract and be happy with the result. It is why they make sure that all the products they will provide come with top quality.

Save time, money, and effort

You can risk losing money, the same way with your time and effort. So working with a Chinese sourcing company or agent, they can obtain you the best price possible and high-quality products. All you have to do is stay put for their deliverables and be in awe of their excellent performance.

Verify suppliers

A china import agent can give you a list of verified suppliers. They can also inspect and verify the supplier you provided, especially since they are in China or have a base in China. They can also ascertain paperwork and audits to ensure that the supplier you choose fits you. 

Help with culture and language barrier

We mentioned above that language; even culture barrier is a problem many faces when sourcing in China. Since most Chinese sourcing agents can speak English and Chinese, they can communicate with potential producers/factories without translation.
More importantly, these agents and companies know the etiquette of doing business in China. Using their services, you can have the upper hand and benefits, especially in negotiation. 

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