When I first started sourcing products from China...the idea was pretty scary. I remember thinking “how do I even do this?” Communicating with someone halfway around the world from a different culture is challenging enough. Try to get a specific product outcome with a list of changes, tweaks, and specifications. Sounds super simple right? Anything but.
Here are the top pain points in the sourcing process:
1. Uncertainty/Unfamiliarity -We fear what we don’t understand - stepping into the unfamiliar.
So you need a product from China or India? Where do you start? Well, most people start on Alibaba.com. In a short time you can comb through a ton of suppliers, vet them to some degree, and then contact them with an RFQ (Request for quotation). This is the easy part. It’s what lies behind all of the product images and supplier information on your laptop screen that gets a little more complicated.
2. Communicating/negotiating with suppliers overseas (not getting questions answered, difficulty negotiating, language barriers)
Ok, you’ve got your first responses back from some suppliers. Some haven’t answered your questions at all. Some have answered them selectively. You’ve got a few quotes. So you follow up with them. But you quickly realize that there are some challenges with your communication.
For me, I realized that although I was messaging back and forth with a few suppliers, I had no idea what these companies were like. Yes, I could look at a few pictures and read a few words about their factories but how did I know if they were honest, full of integrity, or produced quality products? The truth is...I had no idea. So I ordered a few samples to see and feel for myself what they could produce. When the samples finally arrived...everything was poor quality and not what I was looking to pass on to my future customers. I asked for improved samples. Those were not up to my standards either. So I moved on to other suppliers and repeated the process. That went on for several weeks. Finally I got something I was happy with but it was going to cost more than we had agreed upon. Which brings me to my next point.
3. Difficulty with price/quality (sometimes lower price brings lower quality because suppliers will use lower quality materials to meet your price point)
Sometimes negotiating down to a lower price brings lower quality because suppliers often will use lower quality materials to meet your price point. Usually, suppliers have a desire to please you. Which means they will do whatever they can to make it fit what you are asking. I realized that if I wanted a product that met my quality standards, I was going to have to pay a little more for it. This isn’t always the case however. Several years ago a friend of mine happened to find a “diamond in the rough” supplier on Alibaba. This supplier was willing to do literally everything he wanted in terms of price and quality. They have had a long term partnership ever since. But finding these “diamonds” is the challenge.
4. Quality control
Another time I needed to source a fitness product that had a metal bar covered with soft foam. There were several versions of this product on the market but most of them were low quality. But there was a high-end version that I wanted. I received a sample from a supplier that was exactly what I was looking for. So I went ahead and placed a trial order of 100 units to test my market and also to see how the quality was when multiplied by 100. When they arrived I personally inspected all 100 units. The first thing I noticed was that they hadn’t even sent the bar that we agreed upon based on the sample! All 100 were the lower quality version! Not to mention some were missing pieces and there was poor consistency from one to the next! What a nightmare! I am glad that I only ordered a small amount! What if i had ordered 20,000 units?!
It is so important to have someone on the ground who can physically go to the factory and do a quality inspection of your products. Any problems they find can be communicated to you and you have a chance to cancel or dispute the order BEFORE it leaves the manufacturer. If you wait until it arrives on your doorstep in the US or wherever you live...it’s too late. You’re stuck with a product that you don’t want.
5. Copyright infringement/IP theft
According to a recent MSNBC CFO survey: 1 in 5 corporations say China has stolen their IP (Intellectual Property) within the last year. It is also estimated that the U.S. economy loses $58 billion per year to copyright infringement. This is a serious problem. Unique products are creative ideas that are particularly susceptible to this. What can you do to protect yourself when dealing with Chinese suppliers or other overseas manufacturers?
Well, first of all have specific contracts written up. Purchase agreements. Non-disclosure agreements (NDA). The more detailed and specific the better. You could hire an attorney to help you or you could take advantage of online legal document companies like Rocket Lawyer to get you started.
Then, examine the trade assurance policy for the trading platform you are using. Alibaba and others offer some protection in their policies but in the event of a dispute, your contracts need to really outline the expectations and agreements you’ve made to be of any real help.
Lastly, make sure that your suppliers have a US bank account. This can be a real point of legal leverage if international trade laws are broken. All of this can be quite time consuming and challenging. Want to simplify the process? Check out Ally Sourcing. We’d love to help you navigate your sourcing journey by handling the things you don’t want to... so you can focus on what you’re good at -- building your business.
At Ally Sourcing We have:
-a network of vetted and trusted suppliers
-a team of lawyers to help with legal contracts
-a quality control team on the ground in China
-a proven history of getting high quality products at great prices for our customers!
Interested in learning more? Click Here and fill out the form at the bottom of the page.