Some tips for China outsourcing

1. Find suppliers on internet

Now that most factories show their information on their website, it is not difficult to find factories of interests. It is easier than visiting tradeshows in China. But the problem is that you do not know the real situation at these factors. When you visit China, you might find that the factories are not what you were looking for, so you wasted your time and money. It’s better to ask the factory to provide you some photos or related information before you head to China.

2. Visit the factories personally

In the past, a lot of importers were going through brokers or trading companies because they did not know the factories in China, and they did not have the ability to manage quality. One of the big pushes these days is to go direct. One reason is that some brokers were charging a 10–15% fee, which substantially reduced the profit potential of sourcing in China. Another reason is that you will have a much better understanding of the company after a face-to-face visit.

3. Use supplier evaluation

The most critical step is to select the right suppliers You need to check references and verify that the suppliers have adequate capital, quality systems, and capacity. Then you need to find out what the priorities are for the suppliers’ factory. For example, some are focused more on quality, some on price, and some on fast production.

4. Manage your suppliers

If you think, after you place an order, that you can receive a good shipment, you are wrong. New problems are likely to arise. If you are not in the factory, you do not know the production conditions. It is better if you have an agent who can follow up on your orders and keep close communication with the factory. You may also need to help the suppliers solve their problems because many factories are not proactive due to poor management.

At any point in time, you ought to keep a few good suppliers as alternative providers of your products. One reason is that you should not be held hostage to only one factory. The other reason is that your suppliers need to compete with each other.

Once you select suppliers, you have to treat them as though they are next door to you, and you need to have your own people over there to make sure they are doing what you need.

5. Build relationships with the factories

It is known that building and maintaining a strong relationship with suppliers is more important in China than most anywhere else in the world. The reason being that in China, business is based more on relationships than in most countries.

For example, in the US you can call almost any supplier and ask for a quotation. This tends to be a straightforward business activity. In China, you first have to establish a relationship. Only when the factories know you are likely to become a serious customer, will they offer you their best quotes.