I was recently interviewed on camera by CNN at the Global Sources trade show on the topic of what buyers need to know about China sourcing. They put me in the hot seat by asking “give our viewers the 5 most important tips for successful China sourcing” and do it in 30 seconds or less! I wrote a 300 page book on that very topic, so I have plenty of tips, but picking the top 5 and explaining them in just 30 seconds with no chance to prepare was a little intimidating. I must have said something right as CNN aired it right away!
Here are my 5 tips as given to CNN:
Selecting the right supplier upfront is the single most important step in the sourcing process. Starting a relationship with the wrong supplier can be catastrophic. So do your due diligence and verify your supplier BEFORE you place the purchase order.
Use your research skills not your negotiation skills to get a good price/ quality/lead-time. If you know what the fair price in China is for a given widget, you can use that leverage to get a good price from your verified supplier.
Link payments to supplier performance. You may have to give a deposit, but subsequent payments should only be made once the seller achieves pre-agreed targets for ship dates and quality standards. For example, final payment could take place AFTER the final inspection is done by the buyer’s representative.
Make sure the name on the contract matches the name on the bank account and the business license at the production site. If you send money to one account and sign a contract with a different legal entity, good luck getting your money back if things go wrong. Many buyers don’t pay attention to the details and end up sending money to a private account or to a holding company rather than direct to the factory.
Be more than a PO# in the eyes of the supplier. Sell them on why you are a good partner worth of respect. If the supplier can grow with you and likes you as a person, you will find advantage when it comes to lead times, payment terms and quality.
What 5 tips would you suggest to CNN?