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Business Sourcing
Advice for Sourcing in China (December 2008)

China Expats are Experienced Traders Specialising in Sourcing 'Top Quality' Merchandise at Competitive Prices

As a business we focus much of our attention on good communication. We like to work with our clients in partnership, seeking to understand the challenges facing their businesses, and adapting our business to best support their needs. We see ourselves as an extension of our clients businesses - their office in China - providing support to their business and allowing them to focus on other areas. A key element of this relationship is our dedication to maintaining the quality our clients and their customers expect.

Please contact us to discuss where we might be able to help your business. If you would like us to provide you with a product quotation, please send us a detailed specification of the product. We will require a sample or where a sample is not available, detailed diagrams and pictures.

Below we outline the Sourcing Process, supplemented by advice particularly aimed at newcomers. However, experienced Traders may find certain parts to be of interest

The Sourcing Process

How it Begins

Perhaps you have heard that products are cheaper in other countries such as China, Thailand, India or Nepal. Perhaps a competitor has suddenly reduced prices, whilst your costs are rising - you learn they are importing

You spend days searching the internet only to find most listings are from a few large Showcase Traders such as Alibaba. Often these websites require you to join and pay a fee; and when you do, you do not have direct contact with the manufacturer

Eventually you will make direct contact with some factories, and it is our experience that out of every 100 such leads, 10 will reply to you with a reasonable level of English and export knowledge. You think all is well, but out of these 10, and after many encouraging emails and several months, perhaps only 1 will actually make business with you. This is normally due to cultural differences and simple misunderstandings

Seal the Deal

After discussing product specifics, you will receive samples from your new foreign factory, agree alterations as necessary, and complete negotiations with QA and price specifics. Contracts are signed, which may either requires a personal visit to the factory, or the use of a Trading Company with Export Licence. You pay your 30% deposit and wait...

If you are lucky, you will receive exactly what you expected

Common Problems

Usually the financial's are ok, and your terms will normally be TT in China, although India and The Middle East still prefer L/C on Sight

Quality is usually the major problem, in spite of samples - often the colour is wrong or varies, veneers are applied in the wrong order to faces, specifications turn out to be slightly different, or the container loading was miscalculated and some pieces are missing due to lack of space (Very common)

Sometimes different articles are send instead, as the Asian thinking is often to complete the order as best they can, rather than say they cannot give you exactly what you ordered within the time-frame

What China Expats Do

We act as your office in China, for instance:-

China Expats spend time searching for the right supplier for you, and offer you many choices. Price vs Quality always vary

China Expats speak English and understand what you are saying, exactly. We also speak Chinese, and so the manufacturers also understand exactly what you require

China Expats conduct negotiations with the factory, and we guarantee to be lower than any price you can obtain because we understand Chinese business ethics and negotiate accordingly. Negotiations are conducted face-to-face according to traditional Chinese business practices. China Expats employ Chinese Closer's, so you get the very best deal

China Expats put our own QA experts on the factory floor, ensuring that your specifications are met through all stages of the production process. Any problems are dealt with immediately, not after delivery to your home base!

China Expats oversee packaging, and we will load the container for you, thus ensuring that any problems are sorted prior to shipping. By loading ourselves we guarantee to maximise CBM, so you will not receive a container which has many gaps in it + product left behind undelivered!

China Expats understand the Chinese export system, because we do it ourselves! We can save you money by clearing at a different Chinese Port, using alternative Shipping Agents - there are many options here, please ask for details

China Expats can also arrange your visit to China, meeting you at the airport, supplying hotels, transport/private driver, translators, office services, company visits etc. Everything you need when visiting a foreign country to conduct business for the first time

In return we will ask a small commission, but the savings you make by using our services will far outweigh our costs - This is our personal pledge to you

Sourcing & Purchasing

Due to our independent nature, we explore and liaise with as many potential suppliers as possible. Once suitable manufacturers are identified, we then work closely with them to build up trust and establish a good and long term relationship, to ensure that our clients enjoy best quality, quick response, reliable supplies at a competitive price

Quality Control & Technical Support

We know that quality control and technical backup are vital. Therefore, every effort is made to ensure that all the relevant technical information has been exchanged between the suppliers and the clients. Often, we visit the supplier and conduct our own inspection before materials are dispatched. Should a problem occur, we immediately perform troubleshooting and provide an objective analysis and make recommendations for both the suppliers and the clients.

“The Sourcing Process"

1. Supply us with a sample or drawing of product
2. We will then send the sample to our offices in China and other suitable countries
3. Our staff will source a reputable company to obtain a quote.
4. On acceptance of the quote, we will provide a sample of the product.
5. After the sample has been approved, we can arrange shipment to your Country and delivery to the premises of your choice.

We make it happen! We organize production, shipment, export, and arrange door deliveries. Clients are informed about each stage of their order situation.

Sourcing Guidelines

Some general tips to help you:

a. Always first sign a Non Disclosure Agreement (NDA) with your sourcing company. Insist on confidentiality and protection of all information about your company, the product to be sourced and all aspects of the sourcing exercise.

b. Once the NDA is signed, give the sourcing company as complete an understanding as prudent of the project and what you want accomplished.

c. Give or jointly draw up with the company you are considering hiring to do the sourcing a written scope of work stating goals, time table, price, agreed milestone targets and a designated final product (written report or other).

d. Have the sourcing company give you a written letter of offer including a listing of what services are to be performed, the target countries, number of companies to be surveyed, time and cost of study with a clear agreement that production is to be commenced until an agreement is in place.

e. Don’t expect the company you are hiring to do your sourcing to work on auto-pilot. Stay interested and communicate.

f. Expect you will probably be required to pay part of the agreed fee for service up-front. Most sourcing companies incur costs from the start of work and won’t front these costs unless for established clients with long-term contracts.

g. Provide written drawings, specifications and other documents of products to be sourced. Explain to the sourcing company key issues from your company’s perspective that will be used in selection so that you and they are focusing on the same key issues.

h. Realize that sourcing takes time. Don’t expect that the immediate solution is necessarily the best solution.

i. Keep an open mind. Sometimes the solution you are thinking about may not be the best one. Often a full review of options may take you to a company or a country you had at first not considered.

j. Lowest price should not be the sole factor. Do not under value ability to communicate, customer service, protection of intellectual property, access to seaports and other key factors.

k. Once sourcing recommendations are made, expect that generally you (and possibly whoever is helping you) may have to travel to look at factories to finalize selection and ensure that everything is as advertised.

l. On your foreign trip, if you do not speak the language, have never done business in the country and do not know others who have, that you may well need help. Engage an experience professional to assist you. Secure this help early; be open with the individuals as to goals and key factors and listen to recommendations.

m. Consider the effect of inspections, shipping charges, customs fees, etc. they can really affect whether your project is feasible

n. Expect the process to move along briskly but don’t hurry things as mistakes can cost you, plus possibly break relationships that could be valuable in the long-term to you and your company.

Most of the above reminders are common sense guidelines that can and will save you time, aggravation and help to eliminate misunderstandings and the potential for unexpected costs.

Sourcing products overseas is not simple but neither is it so complex as to be beyond any small company

This information is as supplied by the Chinese Embassy in UK, as dated 20th June 2008, and/or other reliable sources. Please check this information yourself as it may alter without notice, and whilst we try our best to ensure it is correct, please do not hold us responsible for any errors - this is intended as a simple guide only
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