Buying from China: Challenges & Opportunities
Choosing the right supplier is, arguably, the most important decision e-commerce brands have to make. Balancing product costs with quality and ensuring quick delivery is essential for winning lifelong customers.
China is the top player in the global sourcing industry, accounting for 40.7% of US imports in 2022. Sourcing from China offers a vast amount of product choice and a reliable supplier network to partner with for life.
However, some US sellers may be concerned about recent US/China geopolitical tensions and navigating the logistical complexities of importing goods.
This article will explore US sellers’ opportunities and challenges in buying from China. It will also provide advice on how to bolster relationships with Chinese suppliers to ensure the long-term success of your e-commerce brand.
Choosing suppliers: Advantages of sourcing from China
This may be due to the fact that the US economy avoided going into recession during the first half of 2023 as consumer spending has risen (albeit slowly) and wage growth has increased over the past year.
Within this economic landscape, US-based e-commerce sellers have many compelling reasons to partner with businesses in China, including:
Huge range of products to choose from
China accounts for 28.7% of global manufacturing output compared to 16.8% in the US. The Chinese government also invests heavily in entrepreneurship, encouraging innovation through programs like Robotics +, which aims to put China at the forefront of robotics development across a wide range of industries, including manufacturing and logistics.
The country’s expansive network of manufacturing companies and its commitment to being at the cutting edge of production expertise make it an excellent option for online sellers looking to bring new, exciting offerings to market. The staggering amount of supplier choice enables you to continually innovate and offer new and exciting products from your e-commerce storefront, helping you retain interest from returning customers.
Increased speed to market
At the beginning of this year, China’s manufacturing activity expanded at the fastest pace in over a decade, demonstrating that the country has fully recovered from the setbacks caused by COVID-19 restrictions.
China’s recent increase in productivity highlights how businesses worldwide can rely on the Chinese manufacturing industry to increase their speed to market with new product offerings.
There have been substantial improvements to the quality of Chinese-made goods in recent years. To illustrate, China’s innovation capabilities are now 75% of the US’s on a proportional basis, meaning they are rapidly catching up to American manufacturing expertise.
Furthermore, in a 2023 survey of US consumers, 29% held favorable views of products made in China. These findings show that China’s plethora of high-quality offerings is helping to boost the country’s reputation with online buyers worldwide.
Overcoming challenges in your China business search
To maximize the advantages of sourcing from China, e-commerce sellers must be mindful of the following challenges in maintaining positive trading relationships with suppliers:
Sourcing reputable suppliers
US importers may find it difficult to find trustworthy Chinese suppliers due to the intricacies of product development, exclusivity issues, and intellectual property disputes.
To overcome these obstacles, research the distinctions between Original Design Manufacturers (ODMs) and Original Equipment Manufacturers (OEMs), and determine which method suits your needs best.
In summary, an OEM will tailor-make your products to meet your exact specifications, minimizing potential issues surrounding product exclusivity. In contrast, an ODM can help you design the perfect product to meet your customer’s needs, meaning less investment in Research and Development may be required. However, careful inspection of ODM supplier contracts may be needed to clarify any Intellectual Property issues. In both cases, checking supplier reviews and requesting product samples is vital.
Platforms like Alibaba and AliExpress can help you optimize your China business search through their comprehensive search filters. They also offer Trade Assurance programs to protect e-commerce sellers from fraud and ensure that you receive the products you order.
Checking export licenses
Having an export license is essential for overseas vendors since, without one, Chinese customs may stop payments and delay items at the border.
While many Chinese businesses now manage export licenses internally, certain suppliers, especially those who make components, may not have the correct documentation.
E-commerce businesses can use reputable marketplaces, like Alibaba, to request copies of export licenses before buying from China. Similarly, speaking to a sourcing agent can help you find a compliant manufacturer.
Controlling importing costs
US sellers can encounter substantial difficulties when importing items from China due to numerous logistical obstacles and legal requirements. Therefore, it’s crucial to research procedures beforehand and be mindful of costs such as import duties and currency exchange fees to prevent delays and guarantee compliance.
Firstly, you must ensure that shipments are properly documented with commercial invoices, packing lists, bills of lading, and inspection certificates. Investing in cargo insurance can also help you protect against loss or damage to products in transit, and many coverage levels are available.
Finally, researching the Internationally recognized Incoterms will help you clarify requirements and terms within export sales contracts.
Zyla can help you make the most of the opportunities China has to offer
Opening a free Zyla Account can help you bolster relationships with suppliers in China. We can help you control FX costs by making fast and secure payments in dollars or Chinese (CNH). This allows you access to additional benefits like early supplier payment discounts.
With Zyla, there’s no minimum deposit or account subscription fee. Plus, you don’t need to register with an overseas bank to get started with international payments. You can hold multiple currencies in your account and pay suppliers worldwide when the exchange rate is most favorable for you.
Moreover, if you want to set up a Forward Exchange Contract with your supplier to lock in exchange rates for up to 24 months, our customer support team can help you every step of the way.
So, if you want to learn more about streamlining payments to China, click here or call us on (855) 797-3366.