Are you planning to collaborate with a certain Chinese company to manufacture your products in that country? China is a manufacturing hub of the world where it is possible to manufacture any kind of industrial or consumer product at an unbelievable cost.
Due to this reason, many industries in the western countries are looking for certain China sourcing companies so that they can increase their profitability and production as well.
What is contract manufacturing?
About 20 years back, the term “contract manufacturer” was created verbally, and the term “global manufacturing” began to gain traction. Many instances flourished, mostly mentioning multinational brands that moved chains of manufacturing.
The name ‘Job Shop’ came into existence from richly -mix fabrication activity and images of a low-volume that is often low-value and domestic. In a continual ask–bid–quote cycle with larger OEM companies who are often looking for the lowest price, the owners can compete with many other similar firms.
It is difficult to grow a company or add any value to any customer who regards your services as nearly a commodity.
Any contract manufacturing traditionally was described as a certain factory producing any product for others. Produce it, transport it, and that is all there is to it. For a pretty long time, that kind of strategy really worked well, however, now the objective is to turn any contract manufacturers into valued suppliers. Outsourcing is often used conversely with contract manufacturing, which may not necessarily be accurate.
Contract manufacturing can be a method of establishing a working relationship between two businesses. One company manufactures unique parts or some other materials on-demand from its client as part of your arrangement.
In the majority of cases, the manufacturer may also take care of the ordering and shipping for the client. Therefore, the client is relieved of the responsibility of purchasing raw materials, maintaining manufacturing facilities, and hiring workers to make the finished goods.
‘Local contract manufacturers,’ as they are known, create complicated critical-to-function components, sub-assemblies, electronics, and finished goods everywhere in the world. It takes quite a lot more inventiveness to manage any supply chain from almost 12,000 miles away than it does to manage one just across the street.
Longer lead times, vendor-managed inventory, warehousing, logistics, cross-docking, taking advantage of port-specific tax benefits, and blanket release procurement orders are just some of the differentiations between genuinely global manufacturing partner and any local contract manufacturer.
What is the scenario in China?
As far as China sourcing companies are concerned you have got the following few options that we will discuss in this post.
No doubt, you can also find a certain Chinese company at any trade show or by doing research through an online directory after ensuring their background and checking their technical capabilities and start doing business directly.
If you can very well manage that with your own organizational support then you need not go through the other options that we are discussing here.
In the above option is not feasible, which in most cases, it is true then you can make your choice among the following there options to find your China sourcing companies.
If you can manage to find some agent whom you are able to trust, and also the person has got plenty of experience in the kind of product line that you may be interested in, then this will be a quite good option.
You can negotiate with the agent for a certain commission that can be anything between 5 to 10% of your FOB price for your order that the agent executes.
However, the flaw in this arrangement is that as an importer, you can hardly judge whether the agent is really trustworthy or he is getting kickbacks from any Chinese company and will always defend the manufacturer whenever anything ever goes wrong down the line.
Another option for China sourcing companies can be a trading company in China. If your requirement is in low quantity and you are not interested to handle every detail about how the manufacturing is being done in China, then you may prefer to deal with a certain trading company.
The trading company will simply mark up the price whatever the actual manufacturer demands. However, as far as the quality of the product is concerned, either you arrange a certain quality checking system of your own, or you can hire any famous third-party agency in China.
However, in this process, you will be totally unaware of the supply chain.
THIRD-PARTY SERVICE PROVIDER
Many manufacturers may take their time to react to any third-party service company’s inquiries unless you place substantial orders. In addition, the service charges will most likely be little in comparison to the entire purchase value. As a result, this option is suitable for large orders.
This is a terrific approach to finding new things provided you are able to justify the initial purchase. You will gain access to a professional identification and screening process, as well as complete visibility into your supply chain.
“Project management,” “procurement,” and “supply chain management” are all terms used by some of these businesses to describe their services. They frequently adjust their pricing structure based on the needs of each customer.
A few of them take on the role of a trader and claim ownership of the products. Not every one of them is completely clear about all of their sub-suppliers.
Whichever way you want to find any China sourcing companies, you need to hire a certain sourcing agent, particularly in China because for the following few reasons:
- You can save your time
- Sourcing agents can bridge the gap in the language barrier
- During the negotiation they can play a very useful role
- You may avoid getting scammed
- They have a good network and also plenty of experience
If you can establish your business with a certain reliable Chinese company then in the long run, you can reap very high benefits.
However, you must remember to establish a personal relationship with your Chinese sourcing agent, as the personal relationship is much more effective in China than simply a professional relationship.