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China Sourcing- Pros and Cons
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Author: john cena A large number of companies are gearing up for sourcing products from China. Companies like Carrefour have China sourcing for a large range of their products with a 40% cut in expenditure as compared to buying those products from their respective countries. Products like chemicals, basic commodities, packaging, molding, casting, small machining and many other products or components are an important part of China Sourcing. Intelligent companies source only a fraction of their components where they can get the best results, while others are produced in the country. This can be done after a thorough market analysis. One such company is Ford Motors. It is very important to realize that it is not as easy to relocate all the sourcing strategies in a small period of time. In global sourcing, many companies have failed to meet the requirements due to lack of analysis and planning. This was because evaluating suppliers and managing supply chain operations turned out to be a little more complex then assumed.
Technology intensive processes demand considerable insight if process control is to be sustained. For large MNCs, reliable online technology motivates local operations, and augments the efforts towards maximizing cost effectiveness that China sourcing invariably brings. In addition, last couple of decades has seen huge capital and technology inflows which contributed to the rapid upgrading of Chinese industries; the past decade has witnessed the surging of many capital intensive and technology intensive industries in China.
China being a prime location and a variety of products are imported from this destination. China Sourcing has become a debatable topic these days. But there are certain doubts on the quality of goods manufactured in china, especially in the supply of drugs and food products. Top class quality and safety are an important focus in international trade. Quality issues cannot be taken lightly in view of China Sourcing in the B2B market. Hence, it has become necessary to view China Sourcing in the wake of the quality problems that are happening in the B2B market. But the fact lies that minor problems are an inevitable part of a large trade market.
Manufacturers sourcing from China are in for an increase in China export tariffs or a reduced rebate rate. For the western counterparts, prices will increase and there could be as small as 2% or a great increase of more than 10%. Distributors and wholesalers are wary of these facts and are cautious enough to avoid risk factors.
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