Dhruv Mehta August 13, 2020 Need for Importing Products From China
China’s export of goods is infinitely high at this time. China’s trade surplus reached 422 Billion US dollars in 2019. The export value reached 2.5 trillion US dollars. During this last decade, export has exponentially grown and that shows in their GDP contribution. The export contributed around 17.4% in total GDP.
There are several reasons behind it. First of all, the country is of low-cost labor and raw materials. Generally, the pricing of raw materials is 1/10th there compared to procuring from your own country. There will be a catch regarding quality but small and medium enterprises are happy with these prices as their profit margins will be increasing at the end.
Also, the Chinese are the design masters. They have this incomparable vision of product design and workflow. Apart from that, they are pro in bulk production. They can offer final low-cost products from utilizing different mass production lines. The need to import also arises from the situation around us. The cut-throat competition and globalized market forced us to shift focus to import.
Import Business Models
There are 2 business models for you to consider when you finally decide to import your products.
1. Direct Import of Products
Within direct import, you collaborate directly with china based factories and companies. In this model, you can find ideal manufacturer based on product requirements and negotiate about prices by yourself. More than that, you need to follow certain steps to find out the ideal match for your production needs. This model is for those who want the cost control power on their side and have enough time to handle all other processes like licensing, certifications for import, and managing supply chain operations.
If you believe in the philosophy of “time is money”, then you probably should consider the below mentioned second model.
2. Collaboration with a Sourcing Agent
Within this mode, your only efforts will be to find an ideal sourcing partner who can handle all the processes like finding a Chinese supplier, negotiate prices based on your budget and also decide on the shipping process. The ideal sourcing company can be made up of different units comprised of quality inspection, logistics, warehousing, etc.
Because of the cultural differences and language barrier, this model can help you get things done by avoiding direct communication. The only repercussion can be sourcing the company’s lesser expertise in managing imports of your company’s product category.
Whatever model you choose, in the end, it’s all about importing products at your company’s warehouse! If you don’t invest time and effort in inspecting quality, you will end up getting defected products. Also, once the product arrives at your company warehouse after your confirmation on quality, nobody can help you with returns.
To lower the chances of end up getting low-quality products at the company warehouse, it is necessary to take into account the below-mentioned considerations:
4 Quality Considerations While Importing From China
1. Need To Define The Quality Benchmark
To define the quality benchmark, you need to work on 3 design aspects.
- Work on ideal design and specifications
Your design team needs to prepare specifications of the final product and one prototype for a reference.
- Finalize the flow of work to be carried out on raw materials
The production team can prepare the list of items required while starting the manufacturing process and the operations team can prepare the flow chart of process linkages and directions.
- Decide on benchmark
After carrying out quality relates tests, design and quality control department can finally decide the ideal quality standards and acceptable level of flaws.
2. Communicating Quality Standards To The Supplier
For communication, you need to define protocols and decide on timings. Also, you need to work with suppliers regarding the ideal communication channel. You need to ensure privacy and avoid online communication of sensitive data. It’s advisable if you can handover product dimensions in-person to the supplier.
3. Ensuring Product Quality Criteria Fulfilled By The Supplier
The ideal way to say this is “comparing final quality with benchmark”. Is it easy as it sounds?
You need to conduct quality control audits at different levels of production.
- Pre-production audit
In this audit, you can check raw materials quality, checking workflow setup, and ensuring experienced personnel in the production process.
- In progress audit
In this audit, you can do sample testing after every phase of production. This will guide concerned people on taking preventive measures before going to the next level of production. Also, this will reduce the chances of getting a low-quality product at the end.
- Post-production audit
In the post-production stage, you can do dimension measurement and conduct tests regarding measuring capacity to withstand extreme environmental conditions.
4. Decide On Responsible Authority Behind Quality Control Audit
There are 3 different ways you can hire a responsible authority for conducting a quality control audit.
- You will check while traveling to china
This is not the most convenient mode and requires time and money investment.
- Hire experienced professional
Within this mode of hiring, you can hire and build a quality control team in China. They are the sole responsible for conducting quality control audits and after their green signal, products will be imported to the company warehouse.
- Contract with 3rd party agency
Within contract mode, there will be complexities in following the terms and agreements. You can’t fully control the audits and risk of data leaks will be there while sharing information with them.
Conclusion
Apart from following these considerations, you need to make sure that there is mutual trust between you and the Chinese supplier. Without this basic element, no contract or agreement can work. Also, the final cost is critical while taking importing decisions. There is another side of that too. While ensuring lower cost, remember to emphasize more on quality. Try to convince yourself even if you need to pay higher for maintaining the trust of your loyal fans!
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