All countries have manufacturing units or companies that produce goods or deliver services, but the costs of these products or services is still the biggest worries for the end consumer. There are many aspects to manufacturing that need to be considered before manufacturing a product. One of the most important aspects is the cost of raw materials. If the cost of raw material is higher, the costs of the manufactured products also will be higher.
So, sourcing raw materials from a cheaper source becomes very important. Buying cheap raw materials does not mean that the quality will be low as well. Most people who are not aware of the reasons for the cheap nature of the raw materials will always feel that the raw material is inferior. Raw material can be cheap if it is sourced from the right entities and from the right place.
Let’s take an example of a product A and the material B – Scenario 1. To make the finished product A, you need to buy the raw material B from a local supplier who is charging you 10 pounds per unit. The reason for this price is that the local supplier is the sole supplier for the raw material and has the advantage over the price of the materials. The manufacturer has to increase the cost of the product A to get a suitable profit, but in the bargain, the manufacture is losing to the competition.
In Scenario 2, the manufacturer has found out that sourcing from China is relatively very cheap. The same raw material costs 2 pounds, but there is a time delay that needs to be considered. Thus, as a wise business decision, the scenario 2 is the most preferred choice-even though there is a lag phase. Most manufacturing and import businesses in the USA are sourcing cheap materials and products from China and rebranding them for the USA market.
There is a myth that Chinese raw materials and goods are of inferior quality-which is not quite true these days. If you see the statistics, major companies are outsourcing materials from China. If you are a business owner in the USA, it is important that you choose the right sourcing agent in China. A good China agent will have its branches in China and the USA as well. So, make sure that you do a background check of the China suppliers before you select any one of them. You can also have multiple China suppliers so that if one fails, the others can stand as backup.
China suppliers who have a strong network in the USA are the most preferred suppliers of goods, materials and services. There is a legal aspect that you need to be aware of when you are selecting a supplier or vendor from China. Leading suppliers or vendors from China are highly experienced in compliance and never use third-party inspection companies. You can do great business if you have the right China vendor or supplier with you.