Post by jeffolie on Jul 27, 2007 13:37:01 GMT -6
Is sourcing in China worth it?
Businesses weigh the costs and benefits, in the wake of product recalls and bans.
By Mina Kimes,
July 27 2007: 10:44 AM EDT
The cloud over Chinese goods does have a silver lining. Some Americans are shopping harder for goods that say MADE IN THE U.S.A.
Suddenly, outsourcing to China-standard procedure for thousands of entrepreneurs-looks a lot more complicated. Now businesses must factor in the true cost of obtaining their products at the world-beating "China price." After the recalls, says Andrew Bartolini, an expert on global sourcing at Aberdeen Group, a research firm in Boston (aberdeen.com), "there's an understanding that low costs come with risks."
Even big companies have trouble dealing with the fallout from defective products-unsellable goods, bad publicity, recalls, crippling litigation.
Unlike big companies, most entrepreneurs can't afford to put employees on the ground to watch the assembly line. But a growing cottage industry of consultants specializes in managing overseas manufacturing contracts, says Bartolini. Many will help find a sourcing partner. Others can inspect goods at the factory and arrange shipping. Some handle everything, from selecting an industrial designer to overseeing quality control, even assuming liability for a factory's output. Sourcing consultants earn their income by marking up products, but the client can still come out ahead because these sophisticated players have connections to factories that other consultants and brokers don't, says Bartolini.
As with Chinese sourcing partners, the quality of middlemen varies. "There are a lot of cowboys-lone brokers with websites-some of whom have never even been to China," says Christopher Devereaux, managing director of China Savvy (chinasavvy.com), a sourcing company based in Hong Kong. To find reliable middlemen, Devereaux says, check with other importers and trade associations in your industry.
money.cnn.com/2007/07/26/magazines/fsb/china_sourcing.fsb/index.htm?postversion=2007072708
Businesses weigh the costs and benefits, in the wake of product recalls and bans.
By Mina Kimes,
July 27 2007: 10:44 AM EDT
The cloud over Chinese goods does have a silver lining. Some Americans are shopping harder for goods that say MADE IN THE U.S.A.
Suddenly, outsourcing to China-standard procedure for thousands of entrepreneurs-looks a lot more complicated. Now businesses must factor in the true cost of obtaining their products at the world-beating "China price." After the recalls, says Andrew Bartolini, an expert on global sourcing at Aberdeen Group, a research firm in Boston (aberdeen.com), "there's an understanding that low costs come with risks."
Even big companies have trouble dealing with the fallout from defective products-unsellable goods, bad publicity, recalls, crippling litigation.
Unlike big companies, most entrepreneurs can't afford to put employees on the ground to watch the assembly line. But a growing cottage industry of consultants specializes in managing overseas manufacturing contracts, says Bartolini. Many will help find a sourcing partner. Others can inspect goods at the factory and arrange shipping. Some handle everything, from selecting an industrial designer to overseeing quality control, even assuming liability for a factory's output. Sourcing consultants earn their income by marking up products, but the client can still come out ahead because these sophisticated players have connections to factories that other consultants and brokers don't, says Bartolini.
As with Chinese sourcing partners, the quality of middlemen varies. "There are a lot of cowboys-lone brokers with websites-some of whom have never even been to China," says Christopher Devereaux, managing director of China Savvy (chinasavvy.com), a sourcing company based in Hong Kong. To find reliable middlemen, Devereaux says, check with other importers and trade associations in your industry.
money.cnn.com/2007/07/26/magazines/fsb/china_sourcing.fsb/index.htm?postversion=2007072708