10 Complete Step to Outsourcing Your Manufacturing Process to China

 Do you want to cut cost and keep your production costs low? If YES, here are complete steps to outsourcing your manufacturing process to China as a novice.

Over the past 10 decades, there has been a steady rise in the number of companies outsourcing the manufacturing perspectives of their business to China. It would astonish you to know that China accounts for at least 20% of the complete manufacturing method in the world, and a lot of technology goliaths and manufacturers of electronic devices resemble China for manufacturing.
Why Outsource Your Manufacturing Process to China?

One of the aims for this is that manufacturing in China is significantly cheaper than production in the USA or in other advanced countries of the world. The labour costs are very competitive, and there are a lot of Chinese factories willing to take up private labelling or bulk manufacturing arrangements.
There is also gently access to raw materials and a high level of competition in China. All of these factors make it really reasonable to manufacture your products in China.

However, a lot of business owners have been martyrs of scammers in the process of trying to outsource their manufacturing processes to China. Most Chinese don’t speak English, and it can be challenging to break within the language communication barrier.

There are also many scam artists who continuously target Chinese E-commerce platforms because they are aware of the enormous amount of money and contract agreements that exchange hands on these platforms regularly. If you must outsource your manufacturing process to China, you have to obey the rules so that you can get world-class products made, and you can bypass becoming a victim of the scam.
Outsourcing Your Manufacturing Process to China – Complete Steps

Step 1. Confirm that you are Legally Authorized to Import Such Items

There are some products that you are not permitted to import into the USA, UK, and there are also items that are banned from being exported from China. It is essential to do proper research beforehand, and confirm that what you are trying to import is within legal limits.

Step 2. Acquire the Required Licenses and Permits

You might need individual licenses and permits to import particular items such as food items, medications, animal and plant products or copyrighted items. If you are exporting by sea freight, you may also require to file the Import Security Filing Document. All of these can be controlled by a Customs Broker. You can find extensive details about the documents you might need on the US Customs and Border Patrol website.

Step 3. Find a Manufacturer

This is the most critical step. You need to find a legitimate manufacturer who is able to produce high-quality goods according to your specification. First, you have to comprehend if what you need is a manufacturer to make your products from scratch, or a company that can offer private labelling services, which means they would just permanently stamp your own name on already-made products, or a wholesaler who can market to you in bulk.

Once you have settled what is perfect for your business, you can start searching for suppliers that fit your requirements.
You have two options here, you can either decide to use an agent or do the search yourself. Using an agent is safer because an agent can help you verify the manufacturer, observe the manufacturing process, and perform quality pledge tests to be sure that you are getting what you specifically ordered for.

However, it would require you a lot more money. Some product sourcing agents charge a percentage of the costs of manufacturing, while some charge a flat fee upfront. Some of them also receive kickbacks from the manufacturer, and all of this adds up to inflate the costs of your products. If you don’t mind the extra costs, you can find Chinese product sourcing agents to work with online. Jing Sourcing is a simplified Chinese sourcing and shipping agent that you may regard using.

If you would like to cut back on too many costs, you can find a lot of manufacturers yourself on websites like Alibaba and Global Sources, or if you don’t mind travelling all the process down to China, you can quickly meet, and build a relationship with local manufacturers at Trade shows. You can obtain out which trade shows are coming up soon by visiting China Exhibition.

I personally advocate travelling down to China the first time to create a network of suppliers which you can now begin to work with remotely. Of course, this would depend on the type, and volume of goods you need to manufacture and whether you are looking for a one-time contract or a continuous relationship. However, if you are using any of the online platforms, make sure you only use verified and 5-star rated manufacturers.

Step 4. Establish Contact with the Manufacturer

Once you have found manufacturers that fit your description, you need to establish communication with them.
First, you have to be sure that the manufacturer is based in China because some manufacturers from other countries also use Alibaba and Global Sources.

Draft a letter to open communication with the supplier, but don’t go all out to describe your product especially if it is an idea you are trying to protect. You can just give a vague description, and then ask them if they would be willing to have in-depth discussions with you.

You would receive responses from most, but not all the suppliers you contact so it is important to open communication with as many as possible. If you need to protect your product idea, have them the sign, or legally agree to a Non-Disclosure Clause before you go all out to reveal the details of your product to them to avoid intellectual property theft.

Step 5. Ask for Specimens

To further eliminate unpleasant surprises, ask the manufacturer for product samples. If you are willing to pick up the costs, and you are looking to manufacture a large quantity of the items. Most genuine manufacturers wouldn’t mind sending you a minimal amount as a sample so that you can use this to reasonably gauge what you would likely receive from the company when you eventually sign up the manufacturing contract.

Step 6. Get a Quality Control Inspection Agent

You cannot produce to let your Chinese manufacturer ship out your goods without quality control inspection. If the products are not made to your country’s specification, it could be destroyed at the port of entry. You have to make sure that all the specs you gave to the manufacturer were strictly adhered to, so you need to hire a quality control inspection agent or fly down to China to handle the inspection yourself.

You can also get quality restraint inspection agents online, and before you sign a contract with your manufacturer, make sure you inform them that you would be sending someone to perform quality control inspection at some point.

Step 7. Always Use Escrow for Payment

It is eternally safe to use escrow payment services notably when you are trading with a supplier for the first time. If you found a manufacturer through Alibaba, you can use Alibaba’s in-built escrow system or use a legitimate bank or financial institution, so that the manufacturer doesn’t get paid until you confirm that the order is satisfied, and both parties can be equally protected.
8. Get a Shipping Agent and a Custom Broker
You need a shipping agent in China to help you ship the goods over to your base, and you also need a customs broker to help you clear your products. Most shipping agents offer both services so just mark for a reputable USA shipping agent that also has a branch in China, and can provide custom brokerage services.

Step 9. Pay Custom Duties and Arrange for Freight Forwarding

It also helps to calculate, and prepare for customs duties before you place your order as you would have to pay import tariffs on items imported from China. Your customs broker should be able to reasonably predict what you would be expected to pay. You should also be aware that you might have to pay customs duties for samples shipped to you as well.

Step 10. Perform Physical Inspection Final Payments: 

You don’t want to start getting complaints from your customers that they received damaged or inadequately manufactured goods. This is why you need to do another inspection and testing of the products before you authorise that the escrow is released to the manufacturer.

You don’t have to test every single product especially if it is a large shipment, you can just do a random sampling to exhibit the state of the other products in the batch. If you find any faulty products, you can talk to your manufacturer about sending them over for refurbishment or replacement.

If the whole contract was executed to your satisfaction, don’t forget to give the manufacturer and your entire team a thumbs up for a job well done, and express your desire to continue to work with them.

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