Many businesses see Chinese businesses as the key to their online business. Its manufacturing sector is booming and year after year produces more and more products in a huge range of sectors which is then distributed across the world.
With low-priced unit costs, purchasing your stock directly from a Chinese manufacturer is a smart business move and for sure you will be surprised at the low prices. You might even ask yourself… Why isn’t everyone doing this? Well, you can find a few problems when trying to source your products in China.
Problems you may face when sourcing products in China
Finding the right Factory
The first challenge you will face is finding the right factory that is willing to manufacture your products. Then once you find a factory that is willing to make your products, you then ensure they are trustworthy, reliable and will make your product to the specification you expect. This will involve long conversations, contracts, and agreements which leads smoothly into the next issue you may face.
China has massively opened itself up to international trading, but that does not mean that everyone is proficient in English. This can be a recipe for disaster because you need to have clear open communication to ensure both parties are aware of what is required. A translator would be a necessity if your factory did not speak English proficiently but this is a cost that will eat into your profit margin.
Shipping can be one of the biggest headaches you will face when dealing with a Chinese manufacturer. Shipping from China will mean having your products packed up and then put on cargo ships, which then sail around the world. This leads to long delay times and high shipping costs.
And if you are looking at starting a dropshipping business this can be even more problematic as manufacturers are not used to sending single quantity items. In fact as they tend to send stock in bulk it can be that single orders are missed or sent out incorrectly and that added to long shipping time can give your business a bad reputation.
The stigma: “Made in China” Versus “Made in the XXX”
There is most definitely a stigma attached to the ‘Made in China’ label when seen on goods, and a prestige that’s is attached to products that carry a ‘Made in the XXX’ (Usually the buyers home country) Whatever you might think personally about this mentality, the reality is that some consumers will value domestically manufactured products and may be willing to pay a higher price for them.
The Quality of Work
We’ve all seen the Instagram fails and those copycat purses and shoes that are made in China out of low-quality materials that are quick to fall apart or look nothing like they say they will in the photo. However, it should be noted that manufacturing in China is not a death sentence for your product.
In actual fact, Chinese manufacturers produce good quality products much more than they do bad ones.
Very High Minimum Order Quantities
It is known that Chinese workers typically work for a lower salary meaning they have lower profit margins. The factories maximize on this by making products at a low price that other countries cannot compete with. But, having such a low price means they require very high minimum orders in order to make a profit. This means you might have to purchase a much higher quantity of stock.
The law: Intellectual Property (IP) Risks
One of the biggest legal concerns associated with manufacturing in China is the risk to intellectual property (IP). It is important for companies to not only be aware of the level of IP protection that is needed but to then also to develop corporate protection strategies to minimize and mitigate against these risks.
So, with all these risks combined you may be asking yourself, is it worth sourcing my product in China? Let’s have look at the positives:
Low Production Cost
It is the huge benefit of working with a facility in China; It means you can reduce your production cost, without needing to reduce your volume output. Which then means…
High Output in Less Time
In many countries, some domestic factories are limited in capacity and time. This is not the case with their Chinese counterparts. You do need to consider that cheap labor costs are crucial in this aspect and you may want to do some research into your business partners to ensure that you are sourcing goods from an ethically responsible factory as this is not always a guarantee.
Chinese Market Expansion Opportunities
When you have products that are made in China, the chances are that you can also market and sell your goods and products to the local market. Companies that out-source production do more than just oversee the manufacturing process. They will follow up by establishing a good supply chain and local marketing efforts. This gives you the opportunity to sell your good on the Chinese market.
As you can see there is most definitely a balance when it comes to using a manufacturing company in China. The pros and cons can even themselves out if you find a good reputable company to work with. However, this is not easy and that is where a fulfillment company can help you. They can be the bridge between yourself and the manufacturer because they understand what both sides need. They will be fluent in English and know what you are looking for, but will also know the business model of the manufacturers they work with and will be able to create a seamless working environment.
This is why it is so important you work with a team you can trust so why not Contact Us at E-commerce Express and let us help you with all your fulfillment needs. Our staff is here and ready to help you with any questions or queries about our services and what we can do for your business.