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China Sourcing Service

China Sourcing Service – Challenges and Solutions for Importers

Low cost country sourcing is the centerpiece in most discussions surrounding procurement cost reduction strategies. With the right procurement service provider and plan, companies that use China sourcing service can have their cake and eat it too as long as they ensure that they are dining with the right China sourcing consultant. China has emerged as a major sourcing hub and has been supplying corporations worldwide with products across all industrial areas. For businesses interested in setting up a supply base in China to buy products at competitive prices, opening a fully-owned buying office locally is a potential option. Buyers may also choose to work with traders or work with a Procurement Service Provider specialized in providing a high quality outsourced China sourcing service or finally they can attempt to directly source from their home base in high cost countries.

The table below outlines the pros and cons of operating a fully owned buying office vs using an outsourced procurement service provider (PSP).

 

Your Own Buying Office

Outsourced PSP

Pros

Cons

Pros

Cons

Total advantage of suppliers market prices High costs to open and operate (especially if you have not achieved critical mass) Limited investments to get started and low fixed costs to operate need to cover PSP’s margins
Complete control over the supply chain Can suffer from high HR turnover Ability to leverage knowledge and scale of PSP
Hinders flexibility if you want to search for suppliers in other countries Possibility to exit the country at lower costs

 

 

The Right Sourcing Agent in China for Your Business

A third party procurement service provider is a good option because they provide you direct access to suppliers in China, the top destination market for low cost products. More importantly, this option lets you investigate various China sourcing services when compared to operating your own buying office. You can be rid of worries related to investments and fixed costs with a China sourcing company as well because you don’t have to set up offices and hire staff. On the other hand, if critical mass in spend value to be managed from China has been reached; you can always consider reinsourcing the buying office internally.

It is also crucial to realize that hiring a China sourcing consultant is not just a means to save money through one-time cost reduction. Although the near-term cost savings are an attractive draw, the ability to operate globally brings with it its share of benefits to most Western companies. Over time, these might even exceed cost savings and help the organization develop new sales channels and encourage overseas sales without much effort. For most companies, these aspects are unthinkable prior to using sourcing services in China. Take for instance the case of the American auto giant, Ford. China was initially a market they sought to reduce purchasing costs. Today, they are selling their cars in this rapidly growing economy as well.

Deploying the Right China Sourcing Service

It is definitely not an easy task to select the right product, qualify overseas suppliers, and manage logistics without incurring high costs. Apart from that you also need to maintain intellectual property rights, ensure social responsibility standards are complied to and finally ensure that the suppliers produce and ship products which meet the quality standards. However, as a western company seeking products in China, you can use the services of a China sourcing consultant for their strategic and tactical expertise. They facilitate introductions to the best suppliers in the country and also minimize international travel and related expenses. Hence, the key to a successful low cost country sourcing strategy is to choose a partner with experience, one who provides a range of services including efficient purchasing techniques and knowledge of the culture, business practices and language in the local country. Enjoy cost savings from a move to the global economic stage and find opportunities that complement your business vision.

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