Sourcing from China service

Changes in China

Over the last 60 years, China has built its manufacturing base into one of the most successful in the world.

For many years, you could purchase a Chinese consumer good at a considerable discount (over 75%) in Western countries compared to the price in a shop in China. This was due to;

• Few Chinese chain stores
• Local Stores without the purchasing power
• Exported goods have no sales tax
• Poor transport infrastructure
• Poor distribution within China
• Underdeveloped Chinese consumer market

Government investments followed, and changes followed.

Local Trading Changes in China starting 2010

This all started to change about 15 years ago, with phenomenal growth in China's mobile network, giving 80% of the Chinese population nationwide internet access by 2015. This, combined with government investments in transport infrastructure and a growth in China's disposable income, resulted in;

• Wholesalers and retailers online
• Major online retail e-commerce sites, starting with Taobao (part of Alibaba)
• Many shopping malls have been built in every city and many towns
• Lower and faster transport costs

The growth of the Chinese domestic consumer market has increased imports of high-quality products from overseas. In turn, this has driven up the quality of locally produced products. Today, China is moving toward higher-quality products.

One of the biggest quality improvements was driven by the iPhone's availability in China in 2010. Over the years, the iPhone's feel and look, including its packaging, became the quality standard.

Over the last 15 years, as international travel has increased, Chinese consumers have gained greater knowledge of worldwide products and services. This, combined with more Chinese people educated overseas, is driving Chinese consumers to seek local, higher-quality products and services.

Manufacturing and wholesale

Chinese manufacturing's advantage over many countries is its end-to-end factory supply chain.

Very few Chinese factories make all the parts for a product. For example, a simple battery-powered bedside lamp has over 10 components, most of which come from different factories.

The products we recommend you look for from Chinese factories and suppliers are those that have already been successful in other countries, not just your own markets. This gives you the working marketing, business plan, etc., module to review and adopt if appropriate.

We have used six paths to locate Chinese suppliers.

• Chinese trade fairs
• Trade city markets, e.g.
  • Yiwu – general consumer products
  • Shenzhen - Computer and electronic products
• Chinese export/import agents
• Chinese search engines and B2B e-Commerce, e.g.
  • Baidu
  • Alibaba
• Trade organisation (in China and in your local country)
• Our local trading network

Typical products sourced from China include:

• consumer electronics
• household goods
• packaging products
• manufacturing components
• industrial equipment

Innovation vs “more of the same”

It is not good news from China. You need to separate Chinese businesses that bring new ideas and products to market from those that just copy existing products.

Businesses creating products that already exist are important. It allows China to serve a very large internal market, 1.4 billion people, in a fast-growing economy that consumes products and services faster than anywhere else in the world. No one organisation can meet these demands.

The “more of the same” creates a comfort level that leads Chinese businesses to present the same ideas and products to overseas businesses, even when the technology has changed.

When working with Chinese suppliers, it can take a while to find the right products when you get into the details. Once proven, new technology can last the lifetime of the investment.