How to buy direct in China
Posted by: Omnitech (IP Logged)
Date: July 07, 2012 12:35AM
1. Come with the right expectations
There will be lots of hidden costs. Don’t focus only on the supplier’s FOB price. You should know how to calculate your landed cost (i.e. the fully-burdened cost of your goods after shipment, duties…).
2. Spend the time to find the right suppliers
This is the single most critical success factor. The right supplier already produces for an export market that is similar to yours in terms of quality requirements. The right supplier is also not too small and not too big. They are properly organized for their size. And the top managers are excited to start working for you.
3. Start small with a new supplier
Do not give a large deposit to an untested supplier, and don’t expect their products to be shipped on time. A good practice is to open a letter of credit for the first order, and to add 3 weeks of safety padding to the promised schedule.
4. Good quality management is essential
You will need a quality department for defining specifications, approving development and production samples, and taking decisions after QC inspections. You need at least one person who knows the products you are buying (technically speaking) and your market’s expectations (what you can deliver and what won’t be accepted).
5. Don’t jump right away in China
Start placing one order, then another one, and so on until you feel confident you have nailed it.