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Sourcing in China – How to Reduce the Risks

By Jesus David Cano Romano
May 25, 2016
Risks are found in-between profit and loss


Sourcing to China works wonders on your budget. Everyone is doing it and why not? With its cheaper costs and expertise in the manufacturing industry it’s a great reactive business strategy. Unfortunately though, like most business decisions it has its risks, so it’s best to have conducted thorough research to prevent any mishaps. From background checks to onsite inspections you need to have it all down to a T.

Visit Potential Candidates

Once potential manufacturers have been chosen its best to visit them in person. This allows you to see if reality matches what you’ve been sold over the phone. If they don’t allow visits then it’s usually a sign that they aren’t very reputable.

Ask Around

If they are good at what they do then positive word of mouth shouldn’t be a problem. Ask current customers who have contracts with them their opinions. Be careful of bias; try asking someone who has nothing to gain by selling you a fake dream.

Visit Trade Fairs

If Chinese manufacturers are serious about gaining western custom then finding them at western trade fairs shouldn’t be a problem. Ask questions and put a name to a face, establishing these relationships will definitely help later on.

Quality Standards

When conducting your research pay particular attention to the quality standards or certifications the manufacturers have. If they have quality standards like ISO which is recognised in the west then you can guarantee less risks in terms of quality.

Thorough Research

Spend time researching other western customers who have contracts with the manufacturer you want. Choosing a manufacturer with a larger western customer base will reduce potential risks. Although the time to market may be prolonged due to bigger workloads but it’s up to you to weigh out the pros and cons.

Time to Market

From design to shipping you want a shorter time to market as possible without hindering the quality. Research into how long it took other products similar to yours to be made and shipped. High quality manufacturers are all well and good until you find out their distribution strategies are unreliable.

Honesty

If the manufacturer is legit then all the information you need to make a decision should be easily accessible. If they deny you access to documents such as quality certifications, references and business licences or even a visit to the factory then move on. Honesty is the best policy.

Don’t sign the dotted line until all avenues have been exhausted. It will take a lot of time and money to choose the right manufacturer but the benefits reaped from a reduced risked venture make it worth it.