Sourcing is simply another way of saying you want to have your product manufactured in China. There are a wide range of possible alternatives. These range from purchasing your product from a factory in China, to a joint venture, or to a Wholly Owned Foreign Enterprise. While we can be of assistance in selecting the one best suited for your business, let’s begin by examining the option most often selected by the small to medium sized company – purchasing product from a factory in China.
As Chinese companies and trading companies have become more sophisticated in marketing in the United States and contacting foreign firms via e mail, the internet and trade shows, one should be extremely wary of selecting to do business with any of these companies without substantial investigation. Price must never be the sole or even primary determinant in your decision making process.
The key to successful sourcing is developing a relationship with a factory and trading company that will lead to your receiving quality product, on time delivery and flexibility in meeting your changing needs. Most foreign companies source their product via a Chinese trading company that they may have met on line, at a major trade show such as the Guangzhou (Canton) Fair, or in the early days, whomever they happened to meet while sitting in the lobby of a Five Star Hotel. This is not the way to approach sourcing.
We introduce clients to factories and trading companies with whom we either have a relationship, or one that has been carefully selected after visiting different factories in this product area. We carefully check for their management style, the willingness and desire of the factory to engage in international business, their quality control systems, their computer software, and their willingness to stand behind the products they produce. None of these must ever be taken for granted. Most important for our clients is that unlike trading companies, we take our clients directly to the factory, onto the factory floor, and make certain that the factory is willing and able to work with our clients to constantly improve the quality and be willing to work together to produce new products. Not only are senior executives welcome, but we insure that our client’s engineers and technicians will always be welcome to visit the factory to insure complete cooperation.
It is the establishment of the close working relationship amongst all three parties, the factory, the trading company selected to handle the exports and shipping arrangements, and the client – all three working together which is the key to success. Problems and emergencies will occur – it is the nature of doing business. Your success will depend upon your partners in China willingness to work with you to solve these problems and these emergency situations which are most critical. It is absolutely essential that you develop this relationship with your suppliers and that it is not an amorphous trading company whose manufacturing sources are unknown to you. It is essential that you know the factory where your products are manufactured.