1. Lack of Clear Procurement Strategy:

Regardless, developing a clear procurement strategy is a critical step in China sourcing. This strategy can be likened to a “map” with detailed information for reference. Using this “map” can help you find the most suitable suppliers for your Amazon seller or business. Conversely, without a relevant strategy, it can lead to suboptimal conditions in terms of quality, price, timely delivery, or product functionality.

 Factors to consider when formulating a procurement strategy include:

– Geographic location: China is a vast country, and you should consider how a supplier’s location might impact cost, labor, and transportation expenses.

– Quality expectations: Define the quality standards you expect from suppliers.

– Market conditions: Monitor market conditions closely if you’re working with a single supplier to ensure their competitiveness.

– Production capacity: Determine if the chosen supplier can meet current and future production requirements.

2. Insufficient Supplier Visibility:

Gaining a deep understanding of the actual practices, background, and processes of Chinese suppliers is crucial to effectively mitigate potential risks. Blindly partnering with Chinese suppliers without conducting background checks can result in misaligned goals, limiting profit growth opportunities. Several measures can be taken in this regard, such as checking online reviews, verifying business licenses, and ideally engaging in face-to-face communication with suppliers. If physical visits are not feasible, consider utilizing a China sourcing company to audit factories, ensuring reliable sourcing.

Indicators of insufficient supplier visibility may include:

– Unresponsiveness to inquiries, which can signal potential issues.

– Excessive focus on payment terms, potentially leading to subpar quality or fraud.

– Ambiguity in delivery timelines, posing potential risks.

3. Negotiation Errors:

Effective negotiation is crucial to secure favorable terms in China sourcing. Avoid unrealistic haggling, which may cause you to miss out on opportunities for higher quality. Ensure you negotiate with decision-makers, not individuals lacking authority, to save time and effort. Additionally, consider negotiating beyond just price, discussing aspects like product quality, payment methods, lead times, warranty periods, invoice types, auxiliary facilities, and contract durations.

To prevent negotiation errors, prepare thoroughly by conducting market research, understanding current price trends, and verifying if Chinese suppliers can offer high-quality products at reasonable market prices.

4. Attempting to Handle Everything Independently:

China sourcing essentially involves international trade with potential legal, financial, and business risks. Attempting to manage all aspects independently can be impractical and may reduce the chances of finding both cost-effective and high-quality suppliers. Instead, develop a robust procurement strategy, conduct a thorough review of suppliers, evaluate product samples, negotiate skillfully, and consider collaborating with procurement partners to maximize the benefits of China sourcing while minimizing risks.

 

If you are interested, please contact Jeef Llee, who is the manager of sourcing yuan.