Home » Business Advice » How to reduce company costs by sourcing from China

How to reduce company costs by sourcing from China

If you’re a manufacturer, you must know the importance of managing costs in the supply chain in such an efficient manner that it lets you maintain a reasonable margin. With this reasonable margin, you will have the chance to make the maximum amount of profits.

One way of achieving this is by sourcing for the best and most cost-effective suppliers. For this reason, many businesses have now started sourcing from China which is no surprise since it is the leading exporter and manufacturer of goods.

However, you alone cannot effectively source from China and run your business in your homeland at the same time. Thus, what you need are the services of a  China sourcing agent, who can help you with their experience, network and insights.

How does a sourcing agent help you reduce costs?

To maximize your profits, you must cut down your cost as much as you can, and sourcing agents help you do just that. The agent does all the work for you, saving your money and time! Here’s how:

Helps you find the cheapest manufacturers

Of course, with the help of a sourcing agent, you can easily be introduced to affordable manufacturers in China.

Not to forget, since sourcing agents are based in China, they know the requirements of conducting business there and are accustomed to the country’s business culture.

Moreover, sourcing agents can ensure you get the best price for the product you’re looking for since they know about factories and agents other than those present on Chinese e-commerce sites such as 1688.com, Alibaba, etc.

Takes away the hassle of frequently flying to China

Another way a sourcing agent can help you save money is by saving you the cost of visits to China for errands like identifying the suppliers, conducting the background checks, and commissioning the samples.

Instead, a sourcing agent can charge you a relatively lesser fee and do all the work for you, which even includes conducting pre-shipping checks and supervising production. So, in the long run, you save both money and time.

They know the right time and method of placing the order

Businesses that opt for importing from China can also indirectly save money by taking the help of sourcing agents. For instance, since they’re already familiar with the work culture and business practices, they can help you start your outsourcing project right away.

In contrast, without their help, it’ll take you a considerable amount of time to get started.

For instance, it might take you many days to just find a good supplier. Moreover, their local knowledge comes in handy as well. For instance, they know not to commission an order right before the holidays. This way, sourcing agents can help you avoid possible losses.

You won’t need to pay for a translator 

One of the very first problems you’ll face when trying to source from China is difficulty in communication. Since you and the supplier both come from different countries with different languages and cultures, you’ll find it difficult to strike up a deal with the suppliers.

Similarly, the chances of you getting a lower price with all the communication problems will be pretty low. However, Chinese sourcing agents adopt a different approach. Not only do they speak Chinese, but they also are familiar with the negotiating strategies of those suppliers. Therefore, they can guarantee you a better price, and reduce the chances of miscommunication.

How does sourcing from China work?

The process of sourcing from China a fairly simple with not a lot of steps, but they need to be performed in the correct order to assure quality. If you’re still wondering how to find a manufacturer in China, check the detailed step-by-step description below and learn what the sourcing agents do for you:

Get to know your requirements 

Before the sourcing agents start anything, they first get to know your requirements.

To make sure they fully understand, the sourcing agents ask you questions, which may include:

  • What kind of item do you want to produce?
  • Do you need it in a big, bulk amount or a small quantity?
  • How do you intend to use the sourced product?
  • What kind of quality are you looking for?
  • Are there any issues that you’ve faced in the past with production?

Only once both of you are clear about the product you’re looking for, the sourcing agents move onto the next step.

Analyze product drawings 

To better understand the kind of product you want, the agent will ask you to provide a drawing of it which lets them know exactly what you’re looking for. Their production experts will analyze the figure in detail and identify possible problem areas.

Along with that, they also provide you suggestions about the modifications and improvements you can make. With the help of a drawing, they aim to decrease costs while improving production efficiency and quality.

Get bids from different suppliers 

As a next step, the sourcing agents make detailed specifications of your requirements and then send those out to several suppliers. After that, they review the responses and bids to make sure you only get the most reasonable prices for the raw materials and processes, if any.

Then they pick out the best manufacturer judging its price, quality, performance, and their prior experience with the supplier, if any.

Receive a quote 

Mentioned in the quote are also potential risks and issues. Along with that, the agent talks about any discrepancies such as domestic material equivalent alternative, finish limitations, etc.

They audit factories 

Once you accept the quote, the sourcing agents then conduct a factory audit to ensure quality and safety. They look at different factors including attitude, revenue, the machines, safety of workers, working conditions, documentation, and management.

In other words, the sourcing agents handle all factors so that you only get the best results.

A sample test is done

After the approval of the factors comes a sample test. They go over the different key points with the supplier like the dimensions, color, etc. Not only do they inspect the sample piece, but we also confirm that the material is the same as expected when it’s time for mass production. After that, the agents send you a detail report along with the sample.

The production starts 

The review process is repeated for the last time along with the improvements to be made, if any, before production starts. Once production starts, the sourcing agents make sure to conduct in-process inspections such as process stages and raw material acquisition. Their inspection doesn’t stop there. They also conduct inspections after production is finished, such as shipping marks and secure transit.

They ship you the products 

The sourcing agents communicate with the freight forwarder and arrange a convenient pickup and delivery. For further ease, they also manage all the customs documentation, including HS tariffs. Their work doesn’t stop once the order is picked up. Instead, they monitor customs clearance as well as schedule delivery to you.