Reasons to do Business in China and the Benefits of Sourcing

The world is unquestionably a global marketplace, and any company or manufacturer that intends to stay competitive in an ever-more competitive world must combine both price and quality in order to survive. This includes such factors as production rates, which can be expensive-depending on which country you live in. Many companies, in order to find the very best possible rates, employ the services of sourcing specialists to help them locate and purchase
the commodities they need in order to ensure that production costs and prices are kept at mutually beneficial rates.

In recent years, Mainland China has become more popular for sourcing offshore components. There are many reasons for this, and there are also a number of potential drawbacks to consider when weighing up whether or not to get involved in manufacturing in China.

There is no question that China has a number of key advantages when it comes to overseas sourcing. The first reason for this is, due to the fact that it is such a populous nation, labor coast are very low in China, and can typically be as low as $150 per month. Local Chinese companies might even pay around $80 per month, depending on the nature of the industry and skills involved. If, however, you hire Chinese workers directly, your rate will jump considerable, with the Chinese worker getting the usual rate whist the government pockets the remainder. This can be a major draw for foreign companies looking to cut costs. China also has abundant raw materials, particularly steel, aluminum and rubber, also at much lower prices than could be expected elsewhere, coupled with a good, developed industrial base, a good communications network and a stable, still-growing economy.

In terms of the products available and likely costs involved, you may well end with just as many questions as answers when looking to address these issue in China. Another factor to remember is that, with technologically-based industries, China is still at least  a  generation behind in any given technology, so sourcing such products may not be worthwhile. In general companies may well enjoy much greater success when dealing in raw materials and lower-skilled, less-specialized labor requirements. Also, products requiring a higher labor content will often reap value-again, due to the costs involve by comparison.

In general, research, employ the services of a good sourcer and make inquiries, as you will often discover the availability of services and products you had never dreamed of-and at highly competitive prices. Be prepared also for initial disappointments and setbacks, as any business dealing in such a varied and complex market can take some time to become accustomed to. It is here that the sourcer can provide on-the-ground knowledge, giving you direct access to good, established factories and suppliers, as well as being able to conduct negotiations in either Mandarin or the local dialect. This can be a huge advantage, as certain provinces-even to this day-are very way of even Chinese businesses coming to buy goods from outside. A Cantonese speaker will probably have much greater success when buying or sourcing in Guangzhou than a native of Shanghai, for example. However, money talks, and as long as you ensure that you have researched thoroughly and prepare yourself for the ups and downs, you can certainly find some excellent opportunities.

Written by Alexander Grimes

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Written by Alexander