How location affects your China Supply Chain

 

When you’re looking to set up shop in the US, you’ll hear the same thing from anyone and everyone. Location, location, location. But have you considered that the same is just as important when it comes to your China supply chain? Below are just a few location-related factors that could be affecting your China supply chain:

Raw Materials and components: Depending on the types of products you are manufacturing in China, whether it be silk scarves or iPhone cases, you want to know where the raw materials and supplies are coming from. Costs can add up when you are having your supplies shipped all over China, or imported from another country.  Finding a factory located in the geographical proximity of suppliers of key materials and components will help you save a few dollars and will make it easier to fine-tune details of your product.

Manufacturing/Labor diversity: China often groups its suppliers by industry in specific regions. Depending on the type of products you’re looking to manufacture, most factories specializing in mass production of that specific product will more than likely be clustered in one or more areas. Depending on the product it may makes sense to not only benchmark factories in one cluster but also to broaden your horizons and find other clusters for your China supply chain. Find out where your product is mainly manufactured and, instead of only checking 2-3 factories, do a broader search. Cast the net a little farther. You’d be surprised at how much quotes can vary when you compare several factories from all over China, rather than just focusing on one cluster.

Logistics: China has many major ports on its Easter seaboard, bordering the Pacific. You should consider taking the time to learn about which ports are not only closest to your factories, but also which port suits your China supply chain’s needs the best depending on what you are importing and how you are shipping the goods. Below is a breakdown of the top seven ports in China.

• Shanghai – This is one of the largest and busiest ports in the world, let alone in China. This port is connected to an important river system, the Yangtse river delta, and plays an important role in not only exporting goods all over the world, but also transporting goods to various inland China destinations.
• Hong Kong: This is one of the busiest ports in China (and in the world) because it is strategically placed and is equipped to handle all types of vessels.
• Shenzhen: Like Shanghai, Shenzhen’s port plays an important role in not only exporting goods around the world, but also transporting products to domestic destinations (Southern China). Shenzhen is home to many shipping companies and is the fastest growing port cities due to the fact that many of the factories that produce exports are located here.
• Guangzhou: This old port on the Pearl River may be larger in size to Shenzhen but not in terms in volume. It still processes over 10 million containers per year.
• Ningbo: This river port is made up of several smaller ports and is equipped with a deep water port to handle ships of all sizes and a custom built terminal that can handle sixth generation container vessels.
• Dalian: This is the northern-most ice free port in China also the largest multi-purpose port in Northeast China. It is also the gateway to the Pacific and the second-largest container transshipment hub in mainland China.
• Tianjin: The Port of Tianjin, formerly the Port of Tanggu, is the largest port in Northern China and the main maritime gateway to Beijing. It’s the largest man made port in China and handled million containers in 2013.

When selecting a competitive manufacturer for your product, you should consider not just the quality of the company but also its location. You would want your China supply chain to have the same advantages as your storefront here in the US. Not only will location factors facilitate the management of your supply chain, but it will also save you some money in the long run. What are some tips you would offer other importers? How do you feel location has influenced your China supply chain? Share your thoughts with us in the comments below.

 

By Jocelyn Trigueros