Companies tend to view global sourcing as a one-way street, whereby multinational manufacturers from developed countries purchase low-cost materials and products from developing countries.

Undoubtedly, one of the most common sources for products is China because of its abundant resources and cheap labour. That is why China is aptly called the “Global Factory.” Businesses commonly seek the materials and products they want without considering all the upsides and downsides of the sourcing process.

Highlighted below are just a few of the considerations needed when embarking on a global sourcing strategy:

1. Is this the final price? On the face of any quote, the price can look very attractive. We have often intervened in discussions between buyer and seller in respect of the final price. The next 5 points, when addressed correctly will ensure that you have the right and final price for the product to reach you as you wanted it, when you wanted it and in the right place.
2. Are you really buying from the factory that makes it? We often see buyers finding the product they want from the “factory” – but in reality they are just a front or reseller. This means should any faults occur, you rarely get a satisfactory resolution. Also tracking down the real factory often requires local expertise, the benefit of dealing directly with the factory is cutting out the “middle man”.
3. Have you understood the buying terms? The world of payment and shipping terms can be a minefield. Buyers can come unstuck when ordering products and being faced with terms that are at worst large deposit requests and also confusion between FOB, CIF and door to door.
4. Have you a signed a specification and bill of materials? Nobody wants the scenario of thinking you have ordered a blue widget and the container arrives and they are green – this is a basic error that thankfully we are all wise to nowadays. It’s imperative that not only the external “looks” of your product are specified but also what’s inside and that both parties have agreed the products ingredients.
5. Certification, approvals, testing and safety? I’m sure it never happens, but the power of photographic editing now means that documents relating to approvals, safety and certification (e.g. ISO, TUV etc.) can be manipulated. There is no substitute for face to face factory visits, but these aren’t often practical – so double checking suppliers with the appropriate governing bodies is a must.
6. What is your plan B? You have expertly navigated the price, terms, specification and approvals – however, the current economic climate means businesses in Asia are also at risk of financial failure. Have you considered what would happen if you came to place an order and the factory had gone?

If you are reading this and you can comfortably sit and say you have all these aspects are covered, then you will no doubt have a long and prosperous relationship with Asia. If however, this isn’t the case and you need that additional expertise, then why not contact us for a free initial consultation.