China Sourcing: The Small Program Paradox
May 16, 2018
As of late, we have been receiving a lot of inquiries from new importers and start-ups. We are finding that they are full of enthusiasm for their products, they are small but passionate and they have big ideas. Much of their success depends on good sourcing, and in China sourcing, not only are they faced with a new challenge—sourcing in China—but also with a unique paradox—the Small Program Paradox.
When one is buying small volume of unique goods (Usually with your own style and your own label), one may think such a small program will not take much effort to manage, after all, there are not too many moving parts. But the paradox, as often demonstrated during our 40 years’ experience in China sourcing, is that small programs are often harder to manage than large ones.This is because there are a number of obstacles facing buyers of smaller sourcing programs. This is what we call the Small Program Paradox. The most common challenges tend to be the following:
Suppliers are more likely to respect and prioritize orders and requests from larger companies who will place large orders. If your company is Wal-Mart, manufacturers will bend over backwards, but smaller importers need to invest more effort to secure supplier enthusiasm and they must follow-up closely and regularly in order to ensure that their orders are processed and conform with their requirements.
- MOQ (Minimum Order Quantity)
All factories have an MOQ, and some of these MOQ may be substantially higher than what a small importer may want to start with. You may need to search far and wide for factories that agree tomeets your target MOQ. Or you may need to be creative – and pay more.
- Timely responses
Communications is very important in sourcing and here again, we have the enthusiasm factor. Most suppliers tend to prioritize larger clients and push their smaller clients to the end of the line, leaving them waiting for responses until they have assisted others. Diligence is key. In these cases, it may be beneficial to work with a smaller, yet still qualified, factory to ensure promptness.
- Timely deliveries
For smaller orders, besides the fact that factories may not prioritize the production of your order – and may push you to the back of the line if more important orders come up (a common occurrence), your goods may also not fill a container. This means stuffing your goods into a container together with other people’s goods. This process often is slower both at loading and upon unloading. In both cases, you need close monitoring and extra vigilance.
- Finding the right size factory
Much of these challenges can be reduced by finding the right size factory. But this too is not an easy process. And then, when you do find the right factory, the risk is that you fall prey to the “captive buyer syndrome” (Meaning a buyer spent so much effort, trial and error, aggravation etc. to find a cooperative factory that they never want to leave. But that is dangerous too: a buyer must always be in control.)
In conclusion, small programs may seem easier to manage than large ones, but the opposite is usually true. This does not mean that you cannot buy small volumes in China. In fact, China has become more and more sophisticated in accommodating small orders efficiently, but you need to be prepared to invest time and effort to get things right and stay in control of all aspects of your sourcing. Having a good China sourcing management team in place can make life much easier.
Do you agree? How have you overcome these types of challenges? Are there any other unique challenges you face as a small importer? Share your experiences with us in the comments below!
By Jocelyn Trigueros