I have put together 10 tips to help you on your next sourcing project in China. I have spent several years sourcing in China, including setting up and running representative offices for my employers in the UK. This is not a fully exhaustive list (I did have more than 30 tips, and a more detailed look at purchasing from the country will appear in an upcoming edition of SM
) but they are the ones I thought most helpful to act as a checklist.
- Make sure your requirements or specifications are spot on, clear, concise, understandable and agreed upon. This includes product specifications right down to packaging and shipping specifications.
- If sourcing from various suppliers, try and cluster your supply chain together. China is a big place, you don’t want to be travelling to Qingdao and then on to Shenzhen every day.
- Make sure your suppliers already export to your country. They should know the language, quality, customs regulations and logistics requirements.
- Get references from their customers in your country. How much do they buy? Are they reliable? How is their customer service? What learning curves can they help you avoid?
- Visit the supplier yourself. It is important to see where and how the products will be manufactured. Do they have goods-in, online and
end-of-line quality control? Can you physically see this process working? Make sure you see the production in full flow - there is no point walking around an empty production line.
- How important would your new business be to this supplier? Would they drop your requirements when a bigger customer takes up their production capacity?
- How are you going to deal with the inevitable quality fade and cost creep? Do you have an office or employees based near the factory to complete regular inspections? If you can afford the expense, this will pay for itself long term.
- How are you going to manage the relationship? Regular visits, video conferences, weekly reports, key performance indicators help. Make it clear upfront what your expectations are and stick to them. The actual relationship side of the business is very important to the owners of companies in China. An arms-length relationship will fail.
- Get everything in writing and agreed upon from contracts to service-level agreements to meeting minutes. Remember the old “yes” doesn’t mean “yes, I agree” analogy.
- When meeting with suppliers, ensure you speak the language or have somebody with you (employed by your company or someone independent) that does. There is nothing more frustrating than spending hours travelling to meet a supplier and then neither party understands the other.
☛ James Williams is a partner at Optimus Business Solutions