Build a China Sourcing Strategy Checklist in 16 Steps

In order to truly allow for the safest possible solution when importing from China, having a solid sourcing strategy is indispensable. A unique, tailored sourcing checklist is a quick way of turning an amateur importer into an experienced one.

Every importer has their own unique approach as to how they navigate the chaos of international trade. Below, we’ve highlighted the basic sourcing strategy all importers should use as a guideline.

1. Identify a Product

This is the step in a sourcing strategy that often gives sellers the most trouble. Paralysis by analysis is common when choosing a product. Don’t get caught in this trap; just pick a good product that you can improve slightly and go with it. If it’s your first one, use it as a learning experience.

In conjunction with deciding which product you’d like to have manufactured, an additional step must be taken to identify all necessary components and specifications.

2. Produce a Product Specification Sheet

Factories could most similarly be related to a construction worker. While it is easy to find a construction team who has the know-how to build a house, they still need direction from an architect to tell them exactly what needs to be built.

Be sure to have a very detailed list of product requirements put together prior to identifying suppliers. A product specification sheet, or more accurately a lack thereof, is the #1 reason that sellers encounter delays when manufacturing.

Another factor that contributes to manufacturing delays is changing your product details AFTER you’ve started the manufacturing process. Even a small change in a product requires that the process start from the beginning.

3. Product Validation

Why waste weeks sourcing suppliers when you’re still unsure of the potential manufacturing costs? Putting together a manufacturing cost analysis and validating your product can save you time and money very early on. Also, during the validation phase, be sure to research any compliance and/or certification requirements for your product.

4. Identify 50 – 100 Potential Suppliers

By using the Funnel Sourcing guide, you should make a long list of potential suppliers. Include anyone you think has the slightest potential of producing your products. The greater your sample size, the greater your chances of finding the perfect supplier.

5. Narrow Your Suppliers Down to 5

Look for any reason to rule a supplier out (except price, focus on that last!). As it begins getting more and more difficult to rule suppliers out, start getting increasingly strict with what requirements a supplier must have in order for you to work with them.

Remember not to settle for whatever is left, if you’re unhappy with your selection, add an additional 20 – 50 potential suppliers to your list and start the sourcing process over again.

6. Place Sample Orders

With five qualified suppliers, it is now time to compare their quality output. Order samples from all five, have them shipped to you and begin comparing the key differences.

It’s important, if at all possible, to order more than just one sample from each factory. This helps ensure they don’t send you the best sample they have sitting around. Tell them you need 5-10 samples for your sales reps or other locations.

You can recover the sample costs by specifying that sample costs are deducted from your final order cost, or by selling your samples on eBay or Amazon.

7. Negotiate

Begin negotiating with your suppliers. First, determine what factors are important to you, and then communicate with your supplier to work towards those goals. Remember, if low price is the most important factor, your product quality will almost always suffer.

Instead of price on your first order, focus on payment terms, additional units to cover defects, special labeling, packaging and prep.

8. Identify Your Key Supplier

Now is the time in your sourcing strategy to take all of your suppliers and determine which one demonstrates the most qualifying capabilities. Go back to your product specification sheet and make sure they can meet your requirements.

9. Produce Production Requirements & Purchase Agreements

Whether you prefer a Proforma Invoice or a Production Manual, get your documentation together and go over it with your supplier to ensure everyone is in agreement. Production and purchasing documents should always be written in both Chinese and English and signed by both parties.

10. Utilize Multi-level Security Check on Supplier Bank Account Details

After your supplier sends you their bank account details, make sure they match the exact name on your contract and on their website. Ask them to confirm via Skype and then again over the phone. Scammers are known to hack supplier emails and change the bank account information.

11. Make Initial Payment

Once you’ve verified everything, go ahead and pay. Avoid PayPal – Chinese suppliers despise PayPal because of the fees and it signals you are not a serious buyer.

12. Maintain Weekly Production Updates

Be sure to not only check in, but request detailed production progress reports on a weekly basis. Make it a constant reminder to inform the supplier if there are any issues.

13. Organize Freight Forwarder Collection

Send your shipment details to your freight forwarder, as well as your supplier information so they can arrange collection once the production is complete.

14. FBA Prep and Organization

Make sure your sourcing strategy has a solid plan to have your goods labeled and prepped to Amazon’s requirements. Setup this before the products have finished production.

15. Quality Control

Always, always, always have your goods inspected. There are a variety of different types of inspections, use the one that suits your order best.

16. Shipment

Be sure your goods make it into the hands of your forwarder and all documentation prepared for them to be delivered to their final destination. This includes all customs information, duties, and fees.

Conclusion

The items explained above are absolutely necessary when formulating a sourcing strategy to find suppliers from China on your own. It can never hurt to add additional steps to the above checklist, as these are what we at Guided Imports consider to be the bare minimum.

To give you an example of our internal sourcing plan, our purchasing agents add an additional 15 – 25 steps to the above list in order to ensure our clients have the safest possible outcome when importing from China.

Sourcing is time consuming and requires the maintenance of a lot of moving pieces. At an incredibly affordable rate, the Guided Imports team can handle all aspects of your operations in China.