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Pros & Cons Of Sourcing Products From China

  • Pros & Cons Of Sourcing Products From China

    Pros & Cons of Sourcing Products From China

    Updated 28/03/2024

    Over the past few decades, China has grown as an economic powerhouse, with many international companies sourcing products from there. However, between the pandemic and rising political tensions, many UK companies are cutting ties with China, according to the Confederation of British Industry (CBI).

    Whether you’re an established company or a new entrant to the market, it’s worth considering whether it’s better business to import from China or whether the outsourcing of products has become too much of a hassle. To help you with this, we’ve listed the pros and cons of sourcing products from China.

    Cons of Sourcing From China

    While many businesses successfully source their products from China, it doesn’t come without its challenges. These should be carefully weighed against the positives to determine whether this would be the best strategic move for your business.

    Finding a Manufacturer is Tough

    Finding and cultivating a relationship with a factory owner requires time and money. Once you’ve found several potential Chinese suppliers, you still need to negotiate to see if they’re willing to produce your products to a standard you find acceptable. Many Chinese manufacturers only focus on million-unit orders, which can make things difficult if you're looking to have smaller volumes produced.

    Logistical Challenges

    When you choose to source products from China, you also need to account for international lead times, as your inventory has to be packed, shipped and brought through customs before being transported to your warehouses or retail stores. This shipping can also involve significant costs, depending on your distribution network. 

    Unforeseen events like natural disasters, geopolitical issues, or global events (like the COVID-19 pandemic) can disrupt supply chains. Working with a courier or freight forwarder can also add logistical challenges to the process, and UK customs need to be considered, too. 

    This can often make local UK suppliers much more attractive as it’s easier to get new stock delivered to you in a shorter period of time. Additionally, you won’t be incurring the costs of international shipping fees.

    At Adventa, we produce a range of products locally in the UK. Our central location, coupled with our fast assembly lines and world-class packaging, make us a supplier of choice for UK-based businesses. However, we can also ship products to every other continent across the globe.

    Unexpected Costs

    When importing from China, you have to consider expenses like import VAT, customs clearance, an import licence, shipping costs and more. Most goods imported from China to the UK will be subject to the full rate of customs duty, which also adds to costs. 

    These complicated and occasionally unexpected costs can add up, and make it trickier to ensure all costs are accounted for from the beginning. 

    Negative Associations of “Made in China”

    It’s a known fact that “Made in China” often brings negative connotations to mind, such as poor quality and low prices. This can sometimes impact your markup, and the customer’s general idea of your products.

    When producing your products locally, you can take advantage of the fact that your products are ‘made in the UK’. This can be used as a unique selling point that indicates quality, and can also potentially allow you to charge a higher price, increasing your profit margin.

    Language Barriers

    The issue with working in a foreign country such as China is the language barrier. Not all Chinese factory owners are proficient in English. And even if you have a translator assisting you, there’s still the possibility of misunderstandings.

    Quality Control Issues

    When importing from another country, ensuring consistent product quality can be a challenge, especially when dealing with unfamiliar suppliers. Quality control may require regular inspections, testing, and communication to maintain product standards.

    Intellectual Property Concerns

    China has faced criticism for intellectual property theft and counterfeiting issues. Businesses must take measures to protect their intellectual property rights, such as patents, trademarks, and copyrights.

    Tariffs and Trade Barriers

    Changes in trade policies, import duty and regulations can impact the cost-effectiveness of importing from China. Businesses must stay informed about import tax, trade policies and potential changes that may affect their operations.

    Environmental and Ethical Concerns

    Some Chinese manufacturers may not adhere to the same environmental and ethical standards as businesses in other countries. As such, ensuring ethical sourcing practices and environmental responsibility can be challenging.

    When working with a UK manufacturer, you can trust that, at the very least, the supplier will abide by the UK's environmental regulations. Some companies, like Adventa, are committed to reducing environmental impact and continually improving environmental performance as an integral part of their business strategy and operating methods. For companies and consumers alike, this is a preferable option.

    Pros of Importing from China

    While there are some significant drawbacks to importing from China, there are advantages that make this a lucrative business option.

    Low Production Costs

    One of the biggest reasons why companies choose to source their products from China is that the production cost versus output is highly favourable. Lower production costs result in lower prices for your business and customers, which could convince them to purchase your products. Lower prices also contribute to higher profit margins, which is an attractive deal for businesses. However, these lower production costs should always be considered alongside quality.

    Opportunities for Market Expansion

    Sourcing products from China opens up the door to international expansion, as you can market your goods to the local market. Once you’re in the country and manufacturing your products there, introducing and supplying your products becomes far easier.

    Wide Range of Products

    China is a global manufacturing hub with a diverse range of products for almost all industries. It offers a vast array of products and components, making it an easy option for sourcing various items. If your business is prepared to import a full container load of each product, this can be very useful.

    Manufacturing Expertise 

    China has developed advanced manufacturing capabilities and expertise in producing a wide range of products. Many Chinese factories are experienced in mass production, offering economies of scale. China also has a well-established and efficient supply chain infrastructure, which can result in quicker production times, streamlined logistics, and faster delivery of goods.

    A Summary: Sourcing Products From China

    For decades, businesses have sought lower costs and higher profits by sourcing their products from China. However, in the wake of the pandemic and rising political tensions, many businesses have started backpedalling, choosing to manufacture locally instead.

    Each business is unique and should carefully weigh the pros and cons. While importing from China can result in expansion and increased profit, it can be challenging regarding costs, finding a supplier or a trustworthy freight forwarding company, and more.

    Here at Adventa, we are a UK-based manufacturer specialising in supplying customisable office and decor products. Our location and extensive experience make us an ideal choice as your supplier. If you’d like to know more, please get in touch with our team.