China Sourcing – Pros and Cons

China Sourcing - Pros and Cons

In the face of economic uncertainties, several companies, including the import export business, are forced to explore new ways to improve profits. In addition to selling the company’s assets, reducing the size of the business or closing it altogether, companies need to find solutions to keep it afloat. They should look for innovative ways to reduce costs to increase profitability and compensate for the reduction in sales or, otherwise, reduce sales prices and increase sales. Personnel reductions, general expense measures, supplier reviews and manufacturing costs are being considered and carried out.

A review of current processes and sources can determine in which particular area costs can be reduced. A viable option would be to subcontract and start sourcing products from China. China has become one of the largest manufacturers in the world today and with its manufacturing capacity doubled, it can manufacture products in a short period of time that will compensate for the transit time it needs to reach the market.

A variety of products is invariably cheaper to obtain from China than anywhere else, such as packaging materials, chemicals, castings and more. Due to labor costs and cheaper indirect costs, it is 40 to 50% cheaper to import products from China than to produce them in highly developed countries. Even with the increase in China’s export tariffs and the reduction of rebates, the import export business in China is booming.

China Sourcing - Pros and Cons

China sourcing involves not only buying finished products, but also buying parts and components that manufacturing facilities in the United Kingdom, USA. UU And Australia need for their production process. Ford Motor Company of Australia obtains many of its components, especially accessories, from China, although the most sensitive components, such as brakes and engines, along with automatic assembly, are found in 3 Australian assembly and manufacturing plants. Reliable technology and quality control is the motivating factor that denies the use of maximum cost benefits and prevents companies from moving from their home base and relocating to China.

The visible drawback of companies that import products from China is geographical distance from headquarters, which makes it difficult to supervise production. This raises many questions about the relative quality of the products that are manufactured in China, especially in the food and pharmaceutical industry. The excellent quality and safety are crucial points for the international distribution of products. The best solution would be to position someone to strictly supervise the manufacturing process or, otherwise, have an independent quality tester to ensure that established standards are met.

In the same note, in order to successfully import from China, an import and export guide must be involved during the negotiation and order process so that the manufacturing information and quality standards are clearly communicated and committed. A successful import business not only involves importing from China, but also ensuring that the goods that are imported comply with the standards established by the country or by international standards.

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