The Problems of China Sourcing, and How to Beat Them

China sourcing provides major cost benefits to overseas companies, but companies that choose to buy from Chinese manufacturers and suppliers should be prepared for an increase in transportation costs, bigger lead times and more complex administrative processes.

-The Journey West: the Hidden Transport Cost of China SourcingSome experts believe that China sourcing may reduce production costs when buying from manufacturers and suppliers, but overall costs may go up due to the supply chain dynamics.Transportation bottlenecks caused by congestion at ports on North America??s West Coast, and in Europe, have also created problems for companies engaged in China sourcing. To deal with these issues, businesses can explore alternatives like air freight, which though expensive may actually lower hidden costs and increase efficiency.Companies can manufacture critical components and products locally and diversify sources of supply. Importers can make arrangements with multiple China suppliers (China is a big country with a huge choice of suppliers and manufacturers) and have many supply points.Companies engaged in China sourcing can also arrange for priority service at a premium, and enhance their capacity to move shipments through routes that are not affected by congestion.

-Sight Unseen: How to Reduce the Risk of Faulty China ProductsOverseas customers find that it takes time to build relationships with Chinese suppliers orManufacturers, due to the different language, culture and business norms. One concern is about the quality and safety of Chinese products. The relentless pressure from overseas companies on Chinese suppliers and manufacturers for the lowest prices may be one of the causes of quality issues. Despite what some say, Chinese manufacturers are open to the quality and safety concerns of Western importers, and are raising standards to meet Western requirements on China sourcing.

- Bottom Line: the Sting can be taken out of China SourcingChina is a developing nation that is transforming itself from a remote, by and large rural, centrally planned economy, into an economic powerhouse. Considering the pace at which the country is changing, it comes as no surprise that China manufacturers and suppliers are facing some problems, but it seems certain that these issues will be resolved in due course.Businesses that source products from China manufacturers and supplier, or from any distant part of the world, may have to maintain higher inventory levels to offset the increased supply risk. China sourcing requires businesses adopt sound logistics chain management practices to maintain the desired product quality.

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