Importing from China:
How to do it the smart way
Here is a simple, yet effective approach to importing from China with minimum risk
Importing from China can make your supply chain very complex and add challenges in many areas.
It poses great risks and at the same time your only chance to get your company to the next level and beyond.
Before you decide that importing from China is going to become a part of your strategy please make sure your organization can cope with all the tasks that importing from China require you to manage.
Importing from China requires from a company to have experience and knowledge in many fields such as suppliers sourcing, working with people from other cultures, multiple vendor management, understanding the local laws and policies including customs regulations and export from China and import to your home country.
Every organization has its own mix of strengths and weaknesses. This mix is closely related to the mix of people and experience in the organization.
Without the right mix of capabilities, you are running a high risk of making mistakes and losing a lot of money.
Generally, there are three layers of tasks you need to deal with, and our advice is to start with the first layer and once you feel comfortable managing that layer, you can start managing by yourself tasks from the next layer.
Layer #1: International Freight and Import process.
Seamless management of a long supply chain
One of the big challenges about importing from China is the length and complexity of the supply chain.
Each link in the supply chain involves many tasks that require a lot of time, different skills and a wide range of experience. Fail in one of those tasks and you risk shipping low-quality goods after the delivery date.
Being located in your home country, the easier tasks to master first are tasks handled close to home – tasks related to shipping and customs. You need to know how long it takes to transport the goods from the factory, to the port, go through Chinese customs procedures, get them across the ocean, by air or sea to your country, pass customs procedures and finally arrive in your warehouse.
Each of the above has their own contingencies, and before you discuss with any supplier shipping date, you must know how long you need to allow from the moment the goods leave the factory until you can receive them in your warehouse.
While getting yourself familiar with these tasks, we suggest you involve a party that can handle everything in China, from supplier sourcing, through vendor management to quality control.
This party can be a trusted supplier, a trading or a service company. For as long as you trust that party to do the job, any of the above will be fine.
While improving the way you handle tasks in this layer, you will also learn about the challenges and difficulties the people who manage the China side of the supply chain face.
This will prepare you for managing tasks included in layer #2
Layer#2: Supplier Audit and Quality control
Learning how things work in China - The smart way
This layer allows you to get yourself familiar with how things work in China.
Finding suppliers is not a part of the tasks in this layer, however, auditing and approving suppliers is.
Allow third parties such as sourcing or buying agents source the suppliers for you, while you take the responsibility of approving new suppliers.
By taking responsibility for this task you will allow you to learn how Chinese factories operate and adjust your expectations with regards to quality vs. price.
By traveling to China to visit your existing and new suppliers you will understand the implication of having suppliers in different locations. This will affect your decision making when you move to layer #3.
When you work with your suppliers on quality management, you will have to learn about their production process and their perception of quality. You will be able to tell your supplier what to pay attention to, how to control the process and get a sense whether your supplier and you are on the same page.
Depending on your availability and other resources, you can decide which part of the audit and the quality management process you do by yourself
Layer #3 – Sourcing and Vendor management
Choose manufacturing partners that will give you a competitive advantage
The last layer is about adding the last parts of the puzzle and trying all the loose ends together.
After learning about what to expect from factories in China in the second layer, you can start sourcing them yourself. Knowing the characteristics of suitable and unsuitable suppliers, you will be able to tell relatively quickly which suppliers have the potential to enter your approved vendor list.
You will not waste your time on suppliers that will fail your audit and focus it on those that won’t.
Managing your vendors directly is not an easy task when your vendors are manufacturers in China.
It requires long-distance communication skills, some knowledge of the Chinese language and business culture. You need to be able to forecast how your makers will react to your different requirements and to understand correctly their messages.
Sounds simple? It will become eventually. But there will be a learning curve and you must reduce your
risk of having a negative impact on your profit and your reputation.