Chinese manufacturing companies have been making products for the rest of the world for over two decades, earning China the title of the “world’s factory”. Manufacturing in China was first attractive because of lower wage costs, which gave its factories a competitiveness that few factories in developed countries could match even if one accounted for the additional expenses of shipping and managing production remotely that a buyer needed to bear.
Today, despite trade tensions between Beijing and Washington and the fact that the wages of Chinese factory workers have steadily risen over the years, China is likely to continue to be the world’s manufacturing hub for some time to come, according to experts.
Those in the business say that one of the reasons for this is that even as global companies consider moving US-bound manufacturing out of China because of President Donald Trump’s imposition of crippling tariffs on Chinese imports, others are likely to seize the opportunity to manufacture for non-US countries in China because Chinese factories hit by the trade war are attempting to woo such buyers by offering them attractive terms.
In addition, there has been a growing trend for dropshipping style businesses. Using wholesale market places like AliExpress, dropshippers market products which are then despatched directly from the manufacturer in China to customers in Europe or the United States. In most cases the dropshipper has no direct contact with the product.
Manufacturing in China has clear advantages, especially for entrepreneurs. For one, the lower costs help entrepreneurs price their products competitively, resulting in better sales, and more profits. When they manufacture in China, businesses keep capital costs and overhead costs down, allowing them to focus on growing their business instead.
Besides cost competitiveness, manufacturing in China brings other benefits for entrepreneurs. Chinese factories, for one, are the world leaders in terms of production capacity.
This means that Chinese factories are more likely to be able to accept orders of any size. No order is too small or too big for them. In contrast, domestic manufacturers in the UK or US may be reluctant to take on certain orders because they are too small or they do not have the production capacity for them (in the case of large orders).
The fact that Chinese factories can manufacture in volumes that factories in few countries (if any) can match means they can also deliver orders in less time than a factory in the West. Their ability to manufacture to scale is also what allows them to offer very competitive prices to foreign buyers (as the price per unit of any manufactured product reduces if the order is large).
Chinese factories are also very good at duplicating products. There is a fine line between inspiration and counterfeiting though, so be careful if you are going down this route.
Is there an antique wardrobe handle from your grandmother’s home that you want to replicate and sell on Etsy? Or a woven tote bag from the 1970s that all your friends love that you think will sell well online? A Chinese factory will usually be able to manufacture these products for you, down to the last groove or design.
How sourcing agents help your growing business
The obvious question readers might ask here is this: How can entrepreneurs, who are already spread thin in terms of human and financial resources, manage the complexities of manufacturing in a facility thousands of miles away from their home country? After all, while bigger companies have the resources to set up overseas teams to manage their China manufacturing projects, entrepreneurs do not.
This is where sourcing agents come in. These are companies who help small and medium enterprises (or even larger companies who are not inclined to set up a China team for their manufacturing needs) source products and components from China.
When entrepreneurs use sourcing agents to help them with their China sourcing, they can focus on growing their business without getting derailed by the demands of running or supervising a factory.
The so called China sourcing agents take care of all the steps of manufacturing – from finding a suitable manufacturer, hiring in China, requesting for quotes, evaluating quotes, requesting samples, supervising factory production, conducting quality control inspections and pre-shipping checks before the goods are shipped to you.
Sourcing agents save costs compared to the traditional way of doing things because the buyers do not have to set up an office in a country where a different language is spoken, and which lies in a different time zone. Most reliable sourcing agents have teams based in China whose members can speak the language, have a fair idea of reliable suppliers, and are also acquainted with the finer details of Chinese business culture.
Example – How would a sourcing process normally work with an agent?
Let’s say you are an entrepreneur with the design for a new stylish retro plastic bedside lamp that you want mass-produced.
Lamp casings are usually manufactured using the plastic injection manufacturing process in which molten plastic granules are injected into a mold cavity, where it takes the shape of the cavity as it cools.
You will have detailed drawings for your product that you want the factory to follow so that it meets the exact specifications and quality standards that you envision for your product.
But asking manufacturers in China for injection molding quotes is a long drawn-out process. The process of shortlisting potential suppliers in China itself is like looking for a needle in a haystack, and few businesses – let alone entrepreneurs – have the time for this.
This is when sourcing agents come in.
Reliable sourcing agents act as your eyes on the ground. To start with, they will help you cut down the time you will spend in looking for a trusted manufacturer. The agent will typically shortlist a number of suppliers for you, and ask them for quotes. In consultation with you, the sourcing agent will then finalise a supplier and coordinate with them throughout the manufacturing process to ensure that the product is made to your desired specifications.
Overall, a sourcing agent is will reduce the risk of costly mistakes, ensuring that your manufacturing venture doesn’t only succeed but flies.