Outsourcing product procurement has become a common practice in American business over the past few decades due to the immense benefits it provides. Chinese and Vietnamese vendors tend to be cheaper and therefore more practical than domestic sources, especially for small businesses. Outsourcing product production can also free domestic work resources for companies of all sizes. In fact, a study by microsourcing.com reports that over half of businesses surveyed claim that outsourcing enables their company to better focus on their core business.
There are plenty of ways to find great outsourcing opportunities such as online platforms, trade shows, trading companies, and procurement service providers. Websites such as Alibaba showcase product sourcing options throughout China and Vietnam, making these sites ideal for comparing results against each other in a comprehensive way. Relying on such sites however, can become tricky as the vendors can be hard to verify as a functioning company or even just for quality. Therefore many companies wishing to outsource their products rely on trade shows which are held locally and abroad. The benefit of a trade show is that while outsourcing options may be more limited, businesses can be sure that they are working with a reputable company. Another option is to source via a trading company, which are wonderful for smaller product procurement. However, trading companies tend to have higher prices than working with the vendors directly. The last option is to hire a PSP, or procurement services provider. PSPs are a third party organizations which help companies find proper sourcing options abroad as well as deal with all of the negotiations and quality control needed throughout the process.
When choosing to outsource production there are many things to be aware of. First, it may be difficult to verify suppliers or to maintain quality control if the production is happening further away. For this reason, many companies who choose to product source abroad hire specialized quality control companies to oversee the production process in their absence. There are also cultural and language barriers which must be considered when interacting with eastern vendors. It may be a good idea to hire a translator and to learn about Chinese and Vietnamese culture in order to optimize business interactions and ensure clear communication for both parties. Furthermore, the Chinese and Vietnamese economies are considered to be emerging markets that face many issues with business practices.
Recently, some companies looking to outsource production to the far east opt for Vietnamese sources because of the rising cost of Chinese production due to higher labor costs and new tariffs. China is still considered to be the top choice for product sourcing by American companies though because the Chinese have more established production infrastructure and factories. Vietnamese factories also tend to be more specialized in what the will produce. Often telling you know when a project is out of scope. This can be frustrating but does help to ensure experience.