Electronic Retailer - August 2012 - 43

GUEST VIEWPOINT

BY STEVEN FEINBERG

Finding the Right China Sourcing Partner is Complicated Business

For companies with durable goods, the lure of manufacturing in China is irresistible owing to two primary reasons: price and quality. However, for those unfamiliar with the Chinese landscape, it is not as simple as finding a supplier and negotiating a price. Navigating what can sometimes be complicated, choppy waters, teeming with significant nuances, requires knowledge, experience and savvy acumen.

Wired To Say ‘Yes’
The Chinese system of government subsidies and entrepreneurialism fosters a kind of Darwinism, whereby the government sets up businesses and then observes to see which ones thrive and which ones don’t. Consequently, business people in China are wired to say, ‘Yes’ because the livelihood of their near-term economic vitality depends upon it. But beyond that, the Chinese generally love to do business and no foreign market can match the United States for the pure opportunity it represents to them. However, it is vital that you understand what you are asking for, because along with that ‘Yes’ comes qualifiers that must be understood. For example, when negotiating price, you can darn near command any price within reason, but the gap between the quality of the end product you desire and what actually gets delivered may leave you wanting. For that reason, it is vital that you clearly outline product material and performance specifications. Even then, that is not enough. Adequate time must be factored in to allow for the product development cycle that will likely include multiple sample runs, accompanied by a thorough and unhurried review process, to ensure that the quality you seek is dialed in with precision prior to mass production. In many parts of the country, the infrastructure is still crude – essential product components might be getting delivered by bicycle, for example – so it is important that you be realistic about the time required to get it right. Working with an experienced sourcing partner who has done business with the factory can help accelerate the process, but one must still be realistic about the fact that this is a process that can take months versus weeks. Another important consideration is the actual facility you use. China is capable of making everything from the highest regarded consumer electronics to plush toys, but you wouldn’t pick a factory that produces iPads to make the cheapest possible

MP3 player. Therefore, it is critical that you select a factory that manufacturers at the level of quality you are seeking. The only way to ensure this is to do a site visit; send a sourcing agent in your stead, or visit the factory together to inspect the operations and get a feel for their particular areas of specialty and the degree to which they are capable of manufacturing at the level of quality you require.

Copy That?
Such site visits foster goodwill and personal equity with manufacturing partners that ideally help your business affairs migrate from a mere transaction to an actual relationship. Obviously, the frequency and degree of volume you do are other variables that help strengthen a partnership. Marketers who rely on a China sourcing partner that is brokering multiple deals enjoy the advantage of being able to draft off of the consolidated dollar volume such relationships represent. There are a multitude of other factors that weigh on pricing in addition to the maturity of a relationship, as well as the number of deals and sheer volume being brought forth, that may include whether you speak Chinese to having an agent capable of monitoring manufacturing activity on a regular, and sometimes, unexpected basis. But relationships and choosing the proper Chinese manufacturing partners are crucial for other reasons: the prevalence of “back door” and counterfeit products. This can manifest itself in a host of ways. For example, your so-called “trusted partner” may “back door” your product, meaning they are 43

August 2012 | electronicRETAILER

Electronic Retailer - August 2012

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