Firms have realized that “low wage” does not essentially mean “low skill” now. Several firms established in Western Europe and the USA bound themselves with Chinese partners years ago. A lucrative blend of low costs, highly-developed capabilities, investor-friendly policies, and a large domestic market have signaled the entry of firms from various corners of the world into LCC markets, primarily China. But, even in the present times, they have to deal with the final barrier of putting into practice a procurement strategy.
Investing in low cost country capabilities, prioritization of migration activities, and retention of local resources is challenging to most firms. Contrarily, there are many firms that intend to source directly from China manufacturers, but are averse to setting up a completely owned international procurement office to run the operations internally. In such cases, a sourcing agent in China will work in close collaboration with your company to search, identify, negotiate and handle suppliers in China. They can also assist with market research, quality control, pre-shipment assessment, custom clearance and supplier growth.
China Sourcing – Choose the Right Path
As Benjamin Franklin put it, “The bitterness of poor quality remains long after the sweetness of low price is forgotten”. When international buyers think about choosing a sourcing agent in China, they encounter diverse problems such as the ideal balance between price and quality. The massive pool of suppliers in China makes the task challenging. The differences in language and culture are other issues. But a China service or product sourcing agent can assist in negotiating the best costs and business conditions for you. They can oversee the entire procedure and aid you with supply chain insight as well.
You need to look for the following capabilities when you are looking to identify a sourcing agent:
- Fluency in Mandarin and Cantonese
- Thorough knowledge of the Chinese business culture
- Experience in managing Chinese suppliers
- Category and sourcing process experience
- Quality Control experience
- Audit experience
- Logistics experience
China boasts a huge production base. For most of the Western European and USA firms, sourcing from China with the help of a China sourcing agent has become a strategic imperative. The potential for cost reduction is significant and companies can make the most of it without opting for a quality-cost trade-off. It is important to recognize the major success factors of a sourcing initiative in China and utilizing the best practices of the most established corporations in this domain. With patience and extensive research, you are bound to find the perfect combination of service and quality at a price suitable to your budget and finalize a China sourcing agent that can add value to your supply chain.
Sourcing Agent in China – The Advantage Grid
The hype related to shifting spend volumes to LCC does not exist anymore. Currently, firms are starting to consider the advantages and disadvantages of opting for a sourcing agency for their business requirements. Several savvy consulting companies have led to an enhanced interest among firms that are searching for procurement options. However, it is crucial to evaluate criteria like logistic risks, quality, intellectual property, and more. The vital initial steps to shift volumes will decide the procurement strategy’s success. The emphasis has now moved to the best cost country sourcing from low cost country procurement, through a reliable sourcing agency in China.
Necessary Standards for Considering Efficient Sourcing Agency
- More than 5 years of experience in procurement operations
- Staff of over 20 employees to reduce the risk of service failure because of employee attrition
- Prior experience with your company’s industry and categories
- Well-trained employees in Audits, QC and Negotiation
- A written procurement process and training regime
- Integrate with your business segment
- Management and language skills
- Credentials of clients