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FAQs - Manufacturing & Sourcing in China

Why there are more and more companies coming to source in China?
What are the benefits to sourcing or manufacturing in China?
What precautions need to be taken when sourcing in China?
What problems you may face when manufacturing in China?
How can a China business service firm help your procurement operation in China?
How much saving can be expected by sourcing or manufacturing in China?
What is the first step for a company to do to minimize risk?

Why there are more and more companies coming to source in China?
In today’s ultra competitive market environment, it drives many companies especially from developed countries to source in China in order to improve competitiveness and help companies’ bottom line.

 

What are the benefits to sourcing or manufacturing in China?
China offers unrivaled cost saving potential as a global sourcing and manufacturing center due to its abundant low cost skilled labor force, low cost raw materials, excellent infrastructure system, and its largest and sophisticated manufacturing base in the world that can make almost any conceivable products.

 

What precautions need to be taken when sourcing in China?
Many companies may fall into the so called “price trap” when sourcing in China. They are falling to consider price mostly the only factor. However, to have a successful sourcing operation in China and be able to utilize all the cost saving opportunities, you also have to assess all the other factors including material costs, transportation, shipping, quality control and assurance, operational risks, logistics, tax, tariff, customs regulations, etc.

 

What problems you may face when manufacturing in China?
Finding the right manufacturers in China and negotiating agreements with them can be a difficult task for many companies and entrepreneurs to face. Difficulties range from lack of information about Chinese manufacturers, intellectual property infringements, poor communications due to culture and language differences, quality control and assurance, logistics and on the ground working with Chinese manufacturers.

 

How can a China business service firm help your procurement operation in China?
Sourcing in China can help companies gaining real competitive advantage, but it doesn’t come automatically. When you start your procurement operation in China, be prepared for initial disappointments and setbacks, as any business dealing in such a varied and complex market can take some time to become familiar with. That is an experienced China business support firm like Jinhong International Ltd. with extensive experience, China knowledge, local networks and connections can provide on-the-ground support, giving direct access to good, established factories and suppliers, able to conduct negotiations with manufacturers on behalf of the companies in either Mandarin or local dialects. This can be a huge advantage; for instance, a Cantonese speaker will probably have much greater success when buying or sourcing in Guangzhou than a native of Shanghai. A good China business service firm can help you reduce and manage risks, manage manufacturers and suppliers, establish effective communication with factories and suppliers, provide quality control and assurance to ensure product quality, perform logistics and assist in import/export customs clearance, etc.

 

How much saving can be expected by sourcing or manufacturing in China?
It all depends on the type of products. From our experience, savings can be ranged between 30 - 70% less than the cost of comparable goods made in developed countries. Some manufacturing parts, components and moulds can only be a fraction of the cost when similar products are made in developed countries due to raw materials, labor and engineering costs are much lower in China.

 

What is the first step for a company to do to minimize risk?
Undertaking as thorough due diligence investigation as possible of suppliers and manufacturers prior to engaging in a trade transaction can minimize risk and avoid troubles. Jinhong International Ltd provides services to conduct background check and supplier and manufacturer authentication.



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