The paradox of China sourcing

When people who want to source in China come to me I always have to give them some contradictory advice.

1.) When starting out with a new vendor, make your orders as small as possible. China production is so tricky and you can easily run your business into the ground on one bad order so you need to test vendors before you give them a substantial part of your business. Think of the process of first time sourcing in China as dating. You start out small, say, a pizza and then maybe a little nicer, say, three star restaurant on the second date and finally if all is looking positive you can set your sights on a Michelin restaurant ( if you can afford one. I can’t ). Nothing but pure common sense here.

2.) Make your orders attractive for your vendors so they want to do them. I always tell people that they should not do business with vendors who do not show enthusiasm for their customer’s business. The first thing a vendor will look at is your order QTYs. So you need to look at your business and make the order as large as possible to satisfy vendors while not assuming substantial and unnecessary risk on your side. And this is the paradox: You have to think small and large at the same time.

So how can you think big and small at the same time ? Here are some useful hints:

1.) To make up for what might be perceived as small QTYs from your vendor you should limit your QC points to only the most critical ones. Vendors do not want small QTY, low-margin orders with a lot of QC points. Orders like this are a headache for vendors. Think of yourself as selling your business to your prospective vendors and not just approaching them, as some overseas buyers are wont to do, with the mindset that China vendors always want your business.

2.) If you meet face-to-face with your prospective vendors they will be more inclined to accept a small order from you and work to deliver it to your satisfaction. This involves going to a trade show in China or putting together a list of several vendors you have met online and going to visit them in one fell swoop. Once again you need to understand that China sourcing in 2013 is unlike China sourcing 20 or 30 years ago. Vendors nowadays will turn away as many orders as they accept. If you make an effort to meet with vendors, and tell them that you have a growing business and want to start out small with them they will probably react in a positive way. After all your visit in itself is as good an indication as any of your seriousness of purpose. Compare this method of courtship ( that is really how you have to see China sourcing nowadays) with that of someone who simply sends a vendor an email inquiry about a small order. One of you will get a date while the other will not.

3.)As best as you can try to avoid a scenario where you have to give an untested vendor an important order. Your important orders should be given to vendors who have already been tested so to speak. Try and have several vendors in place before your business gets too big.

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