Q: Why should I work with Chinatown Sourcing when I can find factories in China on the Internet or at a trade show and go direct?
A: Because Chinatown Sourcing is in the business of ensuring that the right product is produced at the right factory at the right price and is delivered when and where it’s needed. Making that happen is a full-time job that requires a dedicated staff of production, quality inspection and administrative support personnel. Time and resources you expend looking for factories, negotiating prices, managing suppliers, making logistics arrangements and trying to control quality is time diverted from your core business of selling your product and serving your customers.
Q: Is working with Chinatown Sourcing transparent?
A: Yes. After our client signs a non-circumvent agreement we provide complete transparency. Our clients know the identity of the manufacturer, the FOB China price, and the actual, real-time circumstances and progress of their order or quote.
Q: What does it cost to work with Chinatown Sourcing?
A: We typically charge a 10-20% management fee based on the purchase price. Our fee is determined based on factors such as services performed, job complexity, order quantity, and time-sensitivity.
Q: Do you offer payment terms?
A: Yes. Our standard terms on production orders are a 30% deposit with 30 days to pay from the ship date, but we are willing to work with you depending on your history with us, the size of your orders, and your needs as a client.
Q: What is “guanxi” and why is it important to the China sourcing process?
A: Guanxi is loosely defined as “relationships” and connotes a degree of mutual trust and obligation between parties. Guanxi can be developed through personal interaction and adherence to customary behavioral formalities. Guanxi can serve buyers and importers as leverage in the sourcing process. Suppliers will go the extra mile for customers with whom they have good guanxi. Buyers with little guanxi often find themselves sidelined when their suppliers become busy with other customers’ jobs.
Q: Besides guanxi, what single factor is most critical to sourcing successfully from China?
A: Communication. Each party in the supply chain needs to have the right information at the right time in order to make effective business decisions. Chinatown Sourcing personnel are Mandarin-speaking Americans and English-speaking Chinese who are experts in the China sourcing process. We are not constrained by language, cultural, or other barriers that commonly delay or derail the sourcing process.
Q: What about price negotiation? After all, isn’t sourcing from China all about price?
A: A company should realize substantial cost savings by sourcing from China. However, this does not mean searching for the supplier that will quote the lowest price, or negotiating to push a supplier’s price ever lower. There is almost always a supplier somewhere that will quote a lower price. The question is whether the supplier can actually meet the specs and delivery date for the agreed price. Suppliers in China commonly quote lowball prices in order to win a purchase order, then cut corners in materials or during production or raise the price after the customer is locked in. Part of Chinatown Sourcing’s job is to calculate the China price based on our knowledge of prevailing input costs, and audit and assess a given vendor to confirm they have the capability to produce the product on time and to spec for that price. Then we work closely with the vendor to ensure the job gets done right.
Q: There are so many sourcing companies out there. How do I know who I should work with?
A: Call multiple companies and speak to the people you will be working with. Meet with several companies if possible. Explain your needs. Ask for price quotes, but don’t base your decision on who to work with solely on a quotation. At the end of the day you should like your China sourcing provider and feel that they are a good match for your needs. Chinatown Sourcing is not right for everyone, but we should certainly be one of the companies you talk to.
