Top 10 sourcing mistakes you should avoid in China
1. Not having a supplier checklist
Before embarking on this journey, it is important to have a list (even if small) for what you expect from a supplier. Key things to identify might include factory location, production capacity, quality control methods,
and communication time. Evaluate your suppliers against these criteria to find a good fit and shortlist other ones as backup.
2. Not asking for samples
Vetting vendors beforehand is integral, even if you are in a time crunch. Product samples are one of the better ways to do this since it allows you to physically see the product in question and get a better idea of what you are selling...as well as getting an idea of delivery capabilities and speed.
3. Forecast profits accurately
You have a supplier, you have a product that’s ready to go and didn’t cost much. Is that the end of your investment? Unfortunately not. There’s a lot more to consider that can hit your bottom line so include these in your overall costs such as platform seller fees, courier costs, photography, or even random customs charges or returns.
4. Create realistic targets
You want to operate as cheaply as possible and keep your profits high, but doing it at the expense of the factories will lead to issues. Each party is a business and they need to maintain their profits. Drive too hard of a bargain, or set up unrealistic targets and you will either end up losing key vendors or receiving bad-quality products.
5. Balancing details
There needs to be a balance between overloading them with details and not providing enough input. This ranges from smaller details such as barcode size and outer packaging to larger concept issues. To overcome this, assume there is no initiative from the factory. Be clear about what is needed and take the time to directly communicate rather than assuming they know what to do.
6. Not acknowledging the communication barrier
It’s dangerous to assume that vendors will know exactly what you are talking about. Bear in mind that Chinese is a second language for many sales representatives. Coupled with the fact that they may not feel comfortable directly clarifying things they are unsure about, this may lead to issues. Simplify your requests and double-check details to ensure they are clear.
7. Pay attention to packaging
Check with suppliers before having any products shipped to understand how they package it, what method they will send by, and how they deal with fragile items to ensure that everything reaches you undamaged.
8. How are you paying them?
Payment can often be a tricky part of working with suppliers. Instead of using credit cards and wire transfer, opt for safer options such as escrow or a bank credit line. This will give you better payment protection and you will have options for recovering money in case of disputes.
9. Insurance is important
9/10 times, your product will arrive in time and undamaged. However, what about that one time when it does not? Is your business ready to take that kind of loss? Although the chances of cargo damage are slim, having insurance provides extra security in term of damage and loss if accidents do occur.
10. Get everything in writing
Although most suppliers will be professional, courteous, and provide high-quality work...there will be instances when that is not the case. Having written contracts is important. Include clauses for important aspects such as quality control and manufacturing time. Talk through the contract in detail with the supplier beforehand before placing an order to ensure everyone is on the same page.
There are so many other aspects to look at be it cultural, linguistic, product quality and its control, however, I`ll talk about them in my future articles, stay tuned, and if you are seeking for professional assistance and sourcing services in China, feel free to reach out.