Common Challenges of China Sourcing – Part One
December 23, 2016
It goes without saying, China sourcing is hard, especially for westerners who do not have a sourcing office in China. As China sourcing veterans, we meet with a lot of companies that are concerned about these sourcing challenges.
The following is a brief summary of the main issues we encountered and typical suggestions we provide:
Language Barrier – Unless you speak Mandarin, communicating with factories and suppliers will be difficult. Not only will you have to work through an interpreter, but the customs and body language are very different as well. The solution? Common sense is to keep your sentences short and patiently wait for each segment to be clear before engaging deeper into conversation. The best is if you can find a translator in your China sourcing team that can translate not only the language but also the circumstances. You’ll want someone who understands your interests, your vision and objectives.
Quality – This is probably the most talked about challenges in the China sourcing community. Everyone negotiates hard on pricing but expects quality to conform to their need no matter what. If there is too much focus on pricing, quality may suffer. And if quality turns out to be bad, importers will most likely be confronted with a big loss. Veterans in China sourcing know that quality assurance is a process that begins before you even place the order. Details of your precise requirements must be made clear in advance. You should seek bids based on clear and painstakingly detailed specification sheets. Then you can negotiate the price and terms.
Logistics & Customs Clearance – Now-a-days, you can have things sent and received via major carriers like UPS or DHL for smaller shipments, which makes things easier for the small importer who’s starting his China sourcing journey. For some, however, when it comes to customs clearance, that’s when things get foggy. The definition of customs clearance is the act of passing goods through so they can enter or leave the country. Simple, right? Not when you get into the nitty-gritty of all the export/import documents you’ll need; Purchase orders, sales invoices, bill of lading, Certificates or origin, etc. Not to mention the penalties of missing any documents or not paying your taxes and duties in a timely manner. That shipment will very quickly be on its way back to China. And then you have a whole other issue on your hands – how do you get it back? Our advice – do your research, hire a customs clearance agent for your China Sourcing team, they know this process well and they will make sure all the proper documentation is in place and all taxes and duties are paid ahead of time.
I hope you found this interesting and useful, and I am already working on an additional blog that will cover more complex issues than the ones I mention here (such as legal and financial) – look for it next week!
In the meantime, please tell us about your China sourcing challenges – what problems have you been faced with? And how did you conquer them?
By Jocelyn Trigueros