Most of the businesses across the globe have come to realize the advantages of sourcing from China. Nowadays, most of the manufacturing activities take place in this country. No wonder China is termed as the manufacturing hub of the world. In this post, we are giving you five tips to make your sourcing process better.
Do your math
Do not finalize a deal based on the display price alone. Calculate all the possible ancillary costs associated with your item viz. shipping, insurance, handling, packaging, inspection, customs & bank fees. Each component may seem smaller at first but they become huge when added together.
Note down the prevailing selling price of products in your country, prices offered by local vendors and the price of procurement from China. Proceed with import only if the savings are high enough. It is of no use to procure goods from outside your country if there is no margin left for you.
Know the Jargon
Educate yourself on the jargon (e.g. INCO terms) commonly used in the international trading business. You should know the significance of terms like FOB, CIF, transit insurance, LOC, customs duty, etc. Talking to vendors in a language they understand will help you negotiate better with them.
There is inherent risk involved in international transactions. Therefore, it is in your best interest to perform due diligence when dealing with vendors. It is crucial that you understand the risks and opportunities associated with trading activities. Once you have zeroed-in upon a particular vendor, check their financial history & market credibility. Select a vendor with sizable experience in manufacturing for exports from China. You can also get a business performance and credit report from agencies like Dun & Bradstreet for background verification of your supplier.
Hire a Sourcing Agent for Importing From China
It is not possible to know each and every aspect of Chinese trade and commerce especially if you are a foreigner. There are nuances of sourcing that only a local person will know. There are practical barriers like language, jargon and government issues that a local individual can easily overcome. Hence, it is best if you hire a local sourcing company from China to procure goods for you.
Agencies usually know suppliers and manufacturers very well and may even get a very good deal on pricing for your sourcing needs. They will also advice you on the quality and customer service aspects of each manufacturer. Thus there are numerous advantages of hiring a sourcing agent versus entering the market by yourself.
Check If You Need Special Clearance
If your transaction involves restricted goods, it is better to check with your local customs office if you need any special license or clearance for importing the goods. This list varies a lot depending on the country of residence. All your efforts may be in vain if your goods are held up at the port. Hence, it is always better to check before you go forward.