Recently, a majority of business owners have revealed their opinion about sourcing from destinations outside of China. A core reason behind this, as considered by sourcing experts, is the heated-up situation due to the US-China war. The war has turned down business relations that has resulted in a proliferated hike in the import tariffs, causing sellers to rethink about sourcing products from China. Despite of the fact that Chinese manufacturers have years of experience with a complete supply of raw materials, and fluent logistics, there have been several reasons why sourcing leaders are trying to turn down their idea of sourcing from China.
In this context, you will gain insight into the factors fueling sourcing leaders to search for other sourcing destinations despite of all the positives in China, all while learning about the disadvantages of sourcing away from China.
A recent hike in tariffs excised on goods importing and exporting from China is of course a reason. But, besides this, the Chinese business owners focus on rising the cost to do business with them. This directly results in an increased cost for material pieces, labors, and environmental factors, thereby making it more expensive for organizations to maintain their business relation with Chinese suppliers. So, here are some of the reasons behind worldwide organizations are looking forward to breaking their relationship with China.
Most of the sourcing organizations, including China, promise their customers an ease of communication, which is generally not provided by Chinese suppliers. The second language of China is English, which makes it even more difficult for buyers to understand what their suppliers are trying to convey.
Buyers are usually recommended to bring a translator with them who can translate the discussions for the sake of easier communication. Although this can be a way out, still it cannot be the permanent solution. This can lead to huge misunderstandings between the Chinese suppliers and the buyers.
Decreased Order Sizes
This is a great advantage for anybody who is willing to source products outside of China. The order size is an important issue whenever it comes to sourcing products. Many business owners are offended with sourcing products from China as Chinese suppliers refuse from taking small orders. But, buyers from most countries tend to purchase in small quantities. This gives the sellers an opportunity to initiate the sourcing process with minimum order requirements, as low as 500 pieces. This is also beneficial for buyers as they get to make lower investment in the initial stage. Furthermore, this enhances the competitive benefit of the seller, thereby allowing them to test the new products before utilizing them.
China Does Not Provide Every Product That You Require
For business owners willing to source outside of China, this can be a good chance as Chinese product sourcing strategies do come with certain limitations when it comes to proving you the required products. Manufacturers form across the world can source products from places where they are manufactured. Product customization is another advantage that comes with sourcing products outside of China. When you have a unique service to serve your customers, you ultimately add value to your organization by driving sales and satisfying customers with exceptional services.
Now you will learn about the disadvantages faced by sourcing experts for sourcing their products away from China.
A major setback that business owners face when sourcing products from low-cost countries India and Vietnam is the reduced productivity as compared to the production pace of Chinese manufacturers. The labors of these low-cost countries not only work for shorter schedules, but also are less skilled and experienced as compared to the Indian manufacturers.
The reduced working schedule directly impacts the speed at which products are manufactured. Longer the production time, greater will be the potentiality of quality-related problems, and greater unexpected delays.
Sourcing At Higher Rates
Sourcing various services is the best way known to check the perceived value. Several organizations are experiencing a rough time producing products according to the constantly changing preferences of customers. While agreeing to the service’s standards, manufacturing those services is undoubtedly considered a hectic job by most of the manufacturers. When considering sourcing services, organizations mainly look for high-quality services at affordable rates. China is the only foreign location that can provide this to various business owners. And, this is only possible when companies opt for reputed consultancies who have experienced sourcing with good experience about sourcing to the Chinese economy.
You can effortlessly rely on the Indian factories to certify several raw materials, testing and retesting them. The Indian factory owners are aware of the standard of materials they use and never compromise on the quality of raw materials. If you want to manufacture several metallic goods, then your primary target must be India. This country has large deposits of metal ore, and therefore a large variety of metal is found in this country. You can ask your procurement agent to source India’s products, as they will assist you with valuable procurement strategies that can prove beneficial for your company.
Another disadvantage of shifting one’s product sourcing destination is that the supply chain of the alternative destinations is not as developed as those of Chinese manufacturing plants.
When sourcing products, supply chain management is an essential factor to look for. For instance, if the basic requirement of a particular buyer is raw cotton. If the raw material is not available in, for example India, the factory would have to source the material from elsewhere. This will again call for an additional transportation cost required to ship the material in order to proceed with the manufacturing process and finish the product. This will further lead to delay in production coupled with chances of delay and failure.
As importation cost of products continue to rise when sourcing from China, the savings may not be as huge as you might expect. These are the factors you need to consider sourcing product from China. To be on the safer side, try sourcing less time-sensitive products when sourcing away from China.