Mistakes to Avoid When Outsourcing Products from China

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Consumers are increasingly turning to online retailers to meet their purchasing needs, creating an avenue for online sellers to make money. Many sellers rely on Chinese manufacturing, and if you can find a great Chinese supplier to easily gain a competitive edge.

Mistakes to Avoid When Outsourcing Products from China

Successful entrepreneurs of today have learned to work with China to make money, rather than repelling a culture that offers cheap products. Though China presents incredible business opportunities to take advantage of, it is not a perfect paradise. There are risks that come with the territory, which should be managed and reduced when embracing a methodical approach to good sourcing.

This article will discuss common mistakes made by individuals sourcing goods from China, with a particular focus on small businesses. From this, you can learn pitfalls to avoid before beginning your quest to good sourcing and embrace a strategy to approach with confidence.

No Well-Defined Standards

It is important to have well-defined standards, so when you encounter a sourcing agent like Lazpanda, you can accurately determine how successful they are. A common mistake is to purchase a small quantity of electronic parts, be happy, but later learn the delivery of a large follow-up order is delayed due to limited production capacity. You consequently run the risk of losing profits if you need to receive products within a certain time frame, for example, to meet a holiday sales rush. Remember to always eliminate suppliers that have a limited production capacity. Once supplier expectations have been identified, you can make an informed decision on whether the supplier is worthwhile, and save headaches later on.

Lack of a Well-Defined Strategy

Mistakes to Avoid When Outsourcing Products from China

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Many fail to implement an effective strategy or ‘road map’, which can generate value and help you choose a supplier that suits your individual needs and requirements. If you fall into the trap of failing to do due diligence when sourcing goods, you can end up not getting the best deal regarding quality, price, functionality, and timely delivery. The best way to avoid this pitfall is with a methodical sourcing strategy, including the following considerations:

  • Identify your supplier through the internet, trade shows, and social media
  • Verify and vet suppliers
  • Manage quality control and insure payment
  • Decide on a sourcing method which best suits your needs

Poor Due Diligence Performed on Suppliers

This is arguably the most important step when selecting the right sourcing agent for you. Often individuals fail to perform adequate due diligence, and this can result in you getting exploited. Here is a list of things to consider when performing due diligence on suppliers:

  • Check online reviews: If you’ve discovered a sourcing platform online, be certain to check the feedback left by other users. If previous customers have left complaints, this should raise concern that deters you from purchasing with them. On an Internet sourcing platform, you should be able to read reviews from past customers to see if there are any complaints.
  • Follow up by Telephone: Having reviewed the supplier website, if it seems appropriate you should contact the company by telephone. Here you can ask for additional information, and pose questions that give an indication of the company’s proficiency. If a company doesn’t have a website, that shouldn’t necessarily be a deal breaker, so keep an open mind, but keep your eyes open. You should verify their certification and registration, and take care with online background checks. For further clarification on a company’s credentials, you can ask for a copy of their business license, which will contain the company’s name, legal representative, address, registered capital, and other information.

Insufficient Protection for Quality Issues and Payment

Mistakes to Avoid When Outsourcing Products from China

Because you’ll be involved in an international transaction, it’s important you’re protected. Before initiating a transaction, think about how you’ll get your money back if you’re involved in a dispute over quality or delivery. You don’t want to be at risk of losing money, so consider the following points:

  • Choose a safe payment method like bank line of credit or escrow service. Avoid risky payments, and when using escrow insure you understand the inner workings of the service, including time limits and other conditions related to getting your money back.
  • Set a clear definition of quality in your contract, including exact delivery terms and standard of product quality. Once expectations have been set, you’ll be in better stead if anything goes wrong.
  • Consider initially placing a small order, and if you’re happy with your sample batch, you can later place a series of increasingly larger orders. Once you’ve established rapport with your sourcing agent, you can safely place larger orders with peace of mind.

Thank you for reading this article. I hope you appreciate us bringing your attention to these mistakes, and if you have any questions or would simply like to become part of the conversation, please comment below and kick-start the discussion.

These are few Mistakes to Avoid When Outsourcing Products from China.

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Last updated: January 26, 2018

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Tracy is a word-savvy writer with a sarcastic sense of humor. You’ll see her writing mainly about web communication, online marketing, social media and small business. Tracy has a wide, practical knowledge of internet marketing and managing startups. Connect with Tracy on Twitter and G+.

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