China has long been a global hub for manufacturing and product sourcing, making it a popular destination for businesses looking to import products at competitive prices. For many businesses, sourcing products from China can be a great way to access high-quality products at competitive prices.
However, navigating China’s complex manufacturing landscape can be challenging, particularly for those who are new to the process. To succeed in China product sourcing, it’s essential to have a deep understanding of the industry, as well as a solid strategy and effective communication with suppliers.
In this blog post, We’ll share our expert tips and strategies for successfully sourcing products from China, based on our years of experience in the industry. From identifying reliable suppliers to negotiating favorable terms, these insights will equip you with the knowledge and skills you need to master China product sourcing and boost your importing success.
So, let’s get started!
Table of Contents
Chapter 1. Overview of China Product Sourcing
China is one of the world’s largest manufacturing hubs and a popular destination for product sourcing due to its low labor costs and vast manufacturing capabilities. Product sourcing in China involves finding suppliers and manufacturers capable of producing the desired quality products at competitive rates.
Here we will summarize China’s product sourcing and its key advantages. We will also highlight the importance of hiring a sourcing agency for importing products from China.
So, let’s get started.
1) What is China Product Sourcing?
China product sourcing refers to finding and procuring products from Chinese manufacturers, suppliers, or wholesalers.
It is helpful as it allows worldwide importers to access and source excellent-quality products at affordable rates. Traders and importers can benefit from the low manufacturing cost and higher scalability of Chinese products.
China has become a significant player in global manufacturing and is known for producing a wide range of goods at economical prices.
China product sourcing is suitable for businesses looking to source products in large quantities. Moreover, it allows importers to access a wide range of products and manufacturers who sell a variety of electronics, clothing, and home goods at wholesale rates.
2) Why Should You Consider China Product Sourcing over Others?
There are several reasons why businesses and individuals consider China product sourcing over other options. Let’s discuss some of them!
a) Cost Effectiveness
China is known for its competitive pricing and cost-effective manufacturing, making it an attractive option for businesses looking to source products at a lower cost.
b) Multiple Supplier and Product Options
China is known to be the World’s Factory for having many manufacturing units and factories in its different cities. The availability of several factories and industries in China allows the importers to search out their favorite product-manufacturing team amongst the numerous other factories.
Moreover, China produces a wide range of products, from electronics to textiles, making it possible for wholesale buyers to source various products from one location.
c) Low Labor Cost
China is known for having a lower labor cost than many other countries. The low labor cost is due to several factors, such as the country’s large population, developing economy, and highly competitive labor market. In China, many people are willing to work long hours for low wages, which allows manufacturers to keep their production costs down.
d) Established Supply Chain
China has an established supply chain infrastructure, which includes ports, logistics companies, and freight forwarders, making it easier to move products from China to other parts of the world.
e) High-Quality Products
China has made significant efforts to improve the quality of its products over the past few decades. The country’s focus on manufacturing and exports has led to a greater emphasis on producing high-quality products that adhere to international standards and customers’ specifications. Therefore, China is a reliable option for importing quality products.
3) Is it a Good Idea to Use a Sourcing Agent?
Using a sourcing agent can be a good idea when sourcing products from China, especially if you are unfamiliar with the Chinese market or the language.
A sourcing agent can help you find suitable suppliers, negotiate prices, and manage quality control and logistics. They can also help you handle cultural differences and overcome communication barriers.
However, choosing the right sourcing agent is essential, as there are many fraud agents and scams in the industry. You should conduct due diligence before hiring any sourcing agency. And, you can examine their reliability by studying their reviews and testimonials based on past experience.
You might not find a better sourcing agency than EJET. It is an excellent China Sourcing Agent Company with more than 15 years of experience. It serves you with the best product solutions and connects you to renowned suppliers offering high-quality and profitable products to grow your business.
Chapter 2. 8 Best Strategies for Successfully Sourcing Products from China
China’s product sourcing has grown immensely over the years, and businesses, whether well-grown or starters, select China as their sourcing partner. The leverage in China over other countries is that businesses get high-quality products at low prices.
If you’re a business owner or purchasing manager looking to get variety, quality, and budget-friendly options all in one, then sourcing from China is a viable option for you.
However, sourcing from China looks cool and fun, but trading thousands of dollars with some non-native supplier you met online is tricky and risky. While sourcing products from China is not easy, it doesn’t have to be tough either.
There are some strategies for successful China product sourcing that we will discuss further to get you to help with best practices.
Also read on:Best China Import Agent: We Help You Import From China
1) Do Market Research
Conducting market research in China is crucial before sourcing products. The overall impression of importing from China is enticing; however, businesses must be careful as the market is full of fraudsters.
Here’s the way to conduct market research
- Look out for suppliers through online business directories such as Alibaba, a renowned name.
- Look out for your niche products in the search bar and shortlist your concerned sellers.
- Check out their business website for verification.
- Visit the seller’s social media account, like LinkedIn, to see reviews
- Connect and communicate with a few suppliers through WeChat, a famous among Chinese suppliers
Following these strategies will help the business conduct market research efficiently.
2) Land on the Right Supplier
Alibaba counts as one of the top online business directories in China, but unfortunately, there are some fake suppliers too.
And this is dangerous for businesses without experience trading with Chinese suppliers. After conducting market research, it’s the step to land the right supplier among the shortlisted.
Here is the way to do so
- The objective is to ensure whether your ideal seller is a supplier or a middleman.
- Read reviews of former clients on his LinkedIn profile
- Ask if he has product manufacturing, processing, and technical expertise or not.
- Check out the floor price of your niche and see what the seller is offering.
- If the price is below the floor price, it means he’ll bypass the dangerous product quality.
Evaluating these formulas will help you know the credibility of a seller and decide whether to buy from him or not.
3) Negotiating with the Supplier
Negotiating is an important stage when sourcing products from China. The purpose of negotiation is not to get the decided prices to reduce further, but there is more to add to it. This comes with quality, material, and delivery time, so businesses need to know the real value of negotiation.
Here’s the way to negotiate with your supplier,
- Ask for the price floor, which is the minimum price of products below which no supplier can source products.
- Then ask for the gross price for the order and see if it is within the price floor.
- The goal is to establish a long-term relationship with a supplier, so keep the prices within his limit, which may annoy him.
- Pay a little higher on the first order and increase the volume on the second order to discount.
4) Business Cultural Information
It’s a basic rule to know Chinese business culture before sourcing products. Unlike other countries, Chinese work ethics are different, and coping with a successful business venture is important.
Businesses with no experience importing products from China must research Chinese business culture, and here are the following ways to do so.
- Be brief about your demand.
- Unlike America, the Chinese don’t consider a contract a final agreement term.
- Be respectful
- Chinese are raised in a way never to say “No” as it sounds offending
- Therefore keep checking on them pro-actively
- It is the responsibility of the business owner to clarify confusion
Why is it important to know Chinese business culture? Because your competitors may have already made connections by learning about their culture. Therefore it is crucial to learn about it.
5) Monitoring Quality Inspection
No doubt China offers quality and low prices simultaneously; however, it is not favorable to not keep a check during the manufacturing phase. The reason to keep a check on Chinese manufacturers is the possibility of a sudden crisis. Chinese suppliers don’t like to break bad news to buyers that could affect business costs.
Therefore monitoring quality inspection during the work-in-process can help businesses prevent unseen losses. Here’s how to do it,
- Hire quality inspectors to keep you updated.
- Check out the packaging standards to avoid damage during shipment
- Stay in touch with your supplier and provide him with the objective criteria to avoid conflictions
- Fix the errors at an earlier stage to save cost, energy, and time
- Make sure the correct documents are in hand to avoid the problem at customs
6) Prepare for Unexpected Situations
The next thing to keep in mind is to prepare yourself for unexpected situations. This is very common in sourcing products from China to face an unseen crisis, and businesses can only suffer a lot if it has backup plans. In China, business culture is beyond the terms agreed on in a contract; you spend days finalizing the contract only to hear changes in the next week.
Hence businesses need to expect problems. Here are the following unexpected situations you may face,
- Prices may escalate unexpectedly, which can reduce your profit margins
- Trade policies and tax duties can change, which could cost businesses
- Production delays, order cancellations, and shipping delays may happen in the course of business
7) Hire Sourcing Agents
Hiring a sourcing agent is one of the best practices for sourcing products from China. Hiring sourcing agents comes with tons of benefits, among which low risk is quite favorable.
Imagine ordering products worth thousands of dollars from a Chinese supplier that turns out to be fake. This is a nightmare for businesses getting scammed online just because of inadequate experience in sourcing products from China.
To not make that happen, businesses should hire sourcing agents for the following reasons,
- Sourcing agents have years of experience in Chinese wholesale markets
- They can find the right supplier according to your business objectives
- Sourcing agents are aware of Chinese business culture and can negotiate efficiently
- They are responsible for meeting quality standards
- Packaging, shipping, and clearing consignment from customs, they do everything.
For more information and updates, you can contact EJET right away!
Also read on; China Sourcing Agent: Guide to Find the Best One For You
8) Profit Margin Calculations
Are you sure the products you’re sourcing are profitable? The ultimate goal of doing business is to get handsome profit, and that’s why China is the viable option for sourcing wholesale products.
However, the manufacturing cost is not the only thing you should consider while calculating profit margins. Businesses make mistakes by underestimating the shipping cost and other fees that eat their gross profit.
That’s why calculating profit margin is imperative before placing an order, and here is how to do that,
- Include the cost of goods.
- Check the shipping cost and other fees accumulate along
- What are the shipping modes? As the transportation cost varies accordingly
- Determine your selling price
Chapter 3. How to Pass Customs when Sourcing Products from China?
When sourcing products from China, passing customs can be a challenging process. It requires knowledge of the regulations and procedures for importing goods to the destination country.
However, you can pass customs by following the below-given mandatory steps when sourcing goods from China;
1) Acknowledge Import Duties and Regulations in your Country
The first step in importing products from China is researching the regulations and taxes that apply to the destination country. It involves reviewing the customs requirements, import taxes, and fees. Each country has its own set of regulations and taxes for imported goods, and it’s essential to understand these requirements to avoid delays and penalties at the border.
The World Trade Organization (WTO) provides various countries’ import regulations database. This resource can help determine the requirements for specific products, including the product’s tariff code, the rate of duty, and the documentation needed to clear customs.
2) Consider Your HTS Code Before Shipping the Goods
HTS code stands for Harmonized Tariff Schedule code, a standardized system of names and numbers used to classify traded products. Customs authorities use HTS codes to assess tariffs, quotas, and other trade-related measures.
The HTS code is based on the internationally agreed Harmonized System (HS) of product classification. It is a ten-digit code specific to each product and determines the amount of duty you must pay when importing goods. It is an essential element for customs clearance.
3) Confirm Your Port of Discharge
The port of discharge is where your goods will be unloaded from the shipping vessel or aircraft and cleared through customs. Confirming the port of discharge is another crucial step in sourcing products from China.
It is essential as it allows the importer to make necessary arrangements for the shipment to pass customs and ensure the delivery of goods to the correct address.
Moreover, the port of discharge determines which customs regulations and treatments apply to your shipment. Knowing the correct discharge port would eventually lead to the delivery of goods to the wrong address causing delays and additional costs.
Therefore, it is crucial to confirm the port of discharge to avoid potential issues and ensure that the shipment is delivered to the correct destination on time.
4) Acquire the Essential Documents
Businesses must provide the necessary documentation to pass customs when importing products from China. It includes the commercial invoice, packing list, and bill of lading or air waybill. These documents provide the shipment details, the product value, and their origin.
So, you must obtain the following crucial documents to pass customs clearance;
a) Commercial Invoice
The commercial invoice is an essential document in the import process. It works as proof that you have purchased the products from the Chinese seller in a legal way.
Above all, it provides details of the products being imported which includes the following information;
- Information about the seller and buyer
- The products’ description which including the quantity, unit price, and total price.
- The date of the invoice
- Sale terms, such as payment terms and delivery terms
- The currency used for the transaction
- Any applicable trade agreements
- Any additional charges, such as freight, insurance, or handling fee
This is vital to ensure that the commercial invoice is accurate and complete to avoid delays in customs clearance and potential penalties. The invoice should be signed by the exporter and may require certification by a third party, such as a notary public.
b) Bill of Lading
The bill of lading, also known as an airway bill, is a document that confirms the carrier has received the goods and has agreed to transport them to the destination. It includes details of the following things;
- product origin
- Name of the destination country
- Source of the product and destination
- Date and day of the transaction
- Prof of product ownership
You are only eligible to import products and pass customs if you have the bill of lading.
c) Importer Security Filing (ISF)
ISF is another required document that indicates whether your products are safe and harmless. It is a requirement by the U.S. Customs and Border Protection (CBP) that requires importers or their agents to provide information about cargo entering the United States by sea.
You must do the ISF filing electronically and provide detailed information about the cargo, including the shipper, consignee, and other parties involved in the shipment. Moreover, it must be filed at least 24 hours before the cargo is loaded on the vessel departing from the foreign port.
d) Packing List
The packing list provides details of the products on the cargo for shipping. This document lists each box’s contents, including each package’s weight and dimensions.
5) Hire a Trustworthy Freight Forwarder
A reliable freight forwarder is an essential partner in sourcing, especially when importing products from China. It manages customs clearance and ensures the safe delivery of goods from China to the destination country.
Besides working on transportation and customs clearance, a reliable freight forwarding company helps businesses navigate the complex logistics of importing products from China.
But, before hiring a freight forwarder, it’s essential to consider their experience and reputation. Search for a company with a positive rating and experience importing products from China. You can also check their references and read online reviews to ensure they have a proven track record of success.
6) Ensure Proper Packaging and Labelling
Proper packaging and labeling are essential for passing customs when importing products from China. Appropriately pack your products to protect them during transportation. Make sure the product packaging complies with the destination country’s packaging requirements.
Moreover, products must be labeled correctly. The labeling requirements vary depending on the product and the destination country’s needs. So, it is crucial to understand the labeling requirements of your country.
7) Arrange your Products Systematically
Customs uses the Harmonized System (HS) code to classify products to assess duties and taxes. So, it’s crucial to correctly categorize your products, as this can affect the duties and taxes you’ll need to pay.
You can find the correct HS code for your product by consulting the Harmonized Tariff Schedule, which is available online.
8) Lace-up for Inspection
Complete preparation and arrangement of goods before undergoing customs clearance is the real success for a trader or importer. Customs officials would inspect your shipment to ensure it complies with all regulations and requirements. Therefore, you must gear up yourself for the process to avoid shipment delays and other inconveniences.
The Customs clearance process may include checking your products’ labeling, packaging, and documentation. So, ensuring that your products are appropriately labeled and that the packaging material qualifies the customs requirements is essential. Furthermore, you must also have all the necessary documentation that you may need to provide to customs officials.
9) Work with a Reputed and Reliable Sourcing Agency
Are you scared that your goods may not get trapped during customs clearance?
Do you want to avoid getting into the headache of the customs clearance process?
Don’t be upset. We are all set to help you get out of this trouble.
EJET is an excellent sourcing agency that can help you pass customs when sourcing products from China. Our dedicated experts have experience in the entire supply chain, from finding the right supplier to getting the products to your doorstep.
Above all, our experienced team is updated with the latest rules and policies, providing a stress-free experience for you.
Ejet can help you with the following services;
- Supplier Verification
- Quality Control
- Shipping and Logistics
- Product Compliance
In short, we provide end-to-end support in sourcing products from China, including navigating the customs process. By working with a reputable sourcing agency, you can reduce the risk of customs issues and ensure that your products arrive in good condition without delay.
For more information and guidance, please contact our sourcing consultant Sunny Qiu for a free consultation call!
Chapter 4. 7 Big Mistakes to Avoid while Sourcing Products from China
China is the go-to destination for retailers looking to source wholesale products and sells on profit. China is the only country that showed growth in export despite Covid-19, and one of the reasons behind this is the low manufacturing and labor cost.
China produces 90% products itself, and its import ratio is minimum, which is why it is the leading supply chain source across the world.
While retailers have a great opportunity to sell Chinese products at profitable rates, there are some drawbacks as well that can be solved. Businesses must be skilled in dealing with the Chinese; some big mistakes can turn your business upside down.
Therefore, this chapter will discuss all those mistakes businesses should avoid while sourcing products from China. Check it out below!
1) Lack of Strategy
Dealing with a Chinese supplier with a potential strategy can affect your business effectively. Chinese sellers are one of the toughest to deal with, and they will settle down terms with businesses only to differ in the next week.
So businesses have to play smart and devise a plan before ordering products. They should do market research to know the odds and look for reliable sources accordingly. The process of hunting suppliers must be done efficiently and carve out a roadmap before breaking the ice.
2) Lack of Communication
Communication is the most important ingredient while sourcing products from China and businesses without communication skills suffer to a dangerous extent.
Chinese are raised in a way to show courtesy and speak positively; they won’t ask for clarifications even if they don’t understand your point. They’ll reply with a smile that apparently seems they are understanding, but in reality, they are not.
The best way to avoid this mistake is to ask questions to suppliers and observe their answers carefully. If the answers align with your specifications, you communicated your requirements, and they understood effectively.
3) Undefined Specifications
Undefined specifications mean you cannot exactly explain what you’re looking for. Chinese want to be specific when doing business; they require exact quantity, description, and material about the product.
If they don’t understand what you’re demanding, they won’t ask for clarifications, but instead, they’ll do something that appears suitable to them.
Unless you want to receive products you don’t want, make sure to be specific about your requirements.
4) Not Demanding Samples
Samples are a must when you’re dealing with Chinese suppliers for the first time. The purpose of demanding a sample is to know whether the supplier is capable of manufacturing the products you’re looking for. It helps realize the quality standards and methods adopted to manufacture the product.
Many businesses don’t consider it important to demand samples even for the first time, which costs them great trouble.
Trusting an anonymous Chinese supplier against thousands of dollars is very risky, so the business owner must demand samples before placing an order.
5) Lack of Understanding of Business Culture
Understanding Chinese business culture is important, and this is where many businesses suffer losses because of a need for more understanding of Chinese work ethics.
Unlike American or European suppliers, Chinese vendors don’t consider contracts the final mode of settling terms.
They can surprise you anytime, even after settling terms; you can do nothing about it. Some of those surprises are price increases, shipment delays, packaging standards, etc. Therefore, businesses have to be prepared for an unseen crisis and proceed accordingly.
6) Lack of Auditing Suppliers
How do you think the supplier you’re dealing with is legitimate and actually owns a factory to manufacture products? Many businesses don’t find it necessary to do auditing of suppliers and end up losing all their money.
Unless you don’t want that to happen, you must do an audit of your supplier. The auditing process is usually done by a third party or yourself on-premises to ensure legitimacy.
It helps check the supplier’s business license, registration certificate, management, and number of staff. Make sure to know everything about the supplier to avoid inconvenience in the future.
7) Sourcing Agents
Sourcing agents act as a great savior for businesses that have yet to experience trading with Chinese suppliers. But inexperienced businesses take the risk of negotiating themselves rather than assigning a job to experts. And ultimately bear losses when unable to cope with market traditions and work ethics.
Businesses require tremendous experience and communication skills to deal with a Chinese supplier, which is challenging for newcomers.
Therefore, a sourcing agent is considered favorable to deal with wholesale suppliers. Sourcing agents like EJET have years of experience in digital marketing and have viable solutions to scale businesses. Therefore business owners should assign the right man for the job rather than taking risks.
Dealing with Chinese suppliers is not easy, but it doesn’t have to be difficult either. If you are new to the industry and unable to understand market trends, then make sure to avoid these big mistakes. I hope this would’ve been proving helpful.
Also read on: Sourcing Agent: Who are They? How Do They Charge? How to Find The Best?
Chapter 5. FAQs about “China Product Sourcing”
1) Why should I consider sourcing products from China?
China is the world’s largest manufacturing hub and has a vast array of suppliers that offer a wide range of products at affordable prices. Sourcing products from China can help businesses reduce manufacturing costs and provide access to multiple product options. Besides high-quality products and comprehensive supplier options, China also offers low shipping costs and convenient customs clearance facilities compared to other countries.
2) Is it safe to source products from China?
Yes, sourcing products from China is entirely safe. However, some potential risks may be when sourcing products from China, including quality issues, cultural and language barriers, and scams. But, you can mitigate these risks by conducting thorough research, reviewing potential suppliers, and having clear contracts and quality control processes in place.
Furthermore, you can encounter possible scam issues and fraud alerts by monitoring the manufacturing process rigorously. You can also ask your supplier to send videos and photos of the entire manufacturing process to ensure quality control.
3) How do I avoid scams and fraud when sourcing products from China?
A thorough research on potential suppliers and quality products can help you cater to the scam risks when sourcing products from China. You must also verify their credentials and business licenses to avoid fraud and double-crossing. Moreover, it is also helpful to work with a reliable third-party agency or a sourcing agent who can help verify the supplier’s reliability.
4) Do I need to register a company in China to source products?
No, you do not need to register a company in China to source products. However, having a local presence or working with a local representative who can help with communication, quality control, and logistics may be beneficial. Knowing the regulations and requirements for importing products into your destination country is also essential.
5) How can I upgrade myself with the ongoing Chinese product trends and regulations?
You can stay updated on Chinese product trends and regulations by going through the industry news, attending trade shows, and visiting conferences or trade meetings. You can also upgrade your knowledge about trading rules and regulations in China by working with a sourcing agent or consultant with an up-to-date understanding of the China market rules and regulations.
Sourcing products from China can be a great way to access high-quality products at competitive prices, but it’s not without its challenges. By following the tips and strategies outlined in this blog post, you can navigate the complex landscape of China’s manufacturing industry and boost your chances of importing success.
Best of luck on your importing journey! If you need more information about sourcing products, feel free to reach out to us anytime.