Well, the primary benefit that can usually be achieved is reducing costs. Many Irish businesses today are struggling with rising costs, only last week we heard about a 5% hike in electricity charges coming down the tracks in October 2010. Increases like this, allied to the fact that businesses are finding it increasingly difficult if not impossible to access credit, will surely ring the death knell for some small businesses. So, what then of turning to China?
China a low cost economy
It’s widely accepted at this stage that China is a low cost economy, and despite the exchange rate fluctuations and the increased freight costs, there is still good value to be got there. If you think about it, there must be, the Chinese economy is thriving, only recently, it was announced that China’s economy has overtaken that of Japan to become the world’s second largest economy after the US.
Well with confirmation that there is a possibility to reduce material costs, be that raw materials or sub assemblies, or products for resale, the next step will be to answer the question ‘How does one access the Chinese Market?’
The internet has been absolutely brilliant in opening up the global market and with email, instant messaging and VoIP solutions such as Skype etc. the world has become a very small place indeed. Additionally with exchange websites such as Alibaba.com and Made-In-China.com it becomes easy to browse Chinese suppliers and advise of your requirements and let suppliers contact you with their proposals.
Opportunities to reduce costs
So why then isn’t everyone taking advantage of these opportunities to reduce costs? Is the story too good to be true? Well from my experience there are a few things at play here. Like in all walks of life, there are scam artists and cheats who will try to take advantage of unsuspecting people. For instance I heard only yesterday that there are scam emails circulating from people pretending to be charities and trying to extract money from people under the guise of helping the people of Pakistan who have suffered hugely in the aftermath of the flooding. China is no different, and while there are many many bona fide Chinese businesses offering quality products which would yield excellent cost improvements for Irish businesses, there are also duplicitous people more than happy to build a nice website, register it on Alibaba etc and spin a good yarn to convince you that they will supply you with all your requirements.
They will even go to such lengths as shipping you a sample to further convince you to part with your deposit. However once they have your deposit you will find it increasingly difficult to contact them. One way to address this issue is to use Letters of Credit issued from the banks whereby the money only passes to the supplier once the goods are in your possession. This gives the supplier a guarantee that he will get paid, and will definitely help to eliminate some of the issues.
The kernel of the issue really lies in being assured that the supplier is reputable, can supply good quality products consistently, and is willing to work with the customer for a lasting business relationship. If an Irish customer could somehow be assured of this, it would take away the uncertainties and then the cost reduction benefits could be achieved without the fear element looming constantly.
Having personnel on the ground
Another approach is to use the services of a sourcing company that has personnel on the ground in China, who will audit suppliers to ensure they are reputable and real, and who will inspect the products prior to shipment, look after the shipping and customs clearance, and deliver the products to your door. The benefits of this are clear. The uncertainties are removed, you know the supplier is real, because someone has visited them on your behalf. You know that the products will meet your requirements because they have been inspected to your criteria. The shipping and delivery is managed by the sourcing company so the product is delivered to your door. In the meantime, you can continue to focus on keeping your customers happy which is your number one priority.
Where’s the catch I hear you ask? And there is an added cost here, because sourcing companies are not charity organisations. Sourcing companies take two different approaches to charges, some charge you a one-off fee for finding the supplier and checking their credentials and then leave you deal directly with the supplier, the other type remain involved in the process dealing with the supplier directly and conducting inspections and managing the shipping etc. These companies typically buy the products from the supplier add a margin to cover their costs, and sell the products to you. There are advantages and disadvantages to dealing with both types, but that is a discussion for another day.
Soileire Business Solutions
Soileire Business Solutions Ltd. is an Irish Company based in Ballinacurra, Co. Cork. Soileire partners with Asiaway Trading Ltd. based in Shenzhen, owned and managed by Tom O’Halloran and Irish expat. Soileire offers a full turnkey sourcing and importing service from China to Ireland. If you want more information on how you can benefit from Chinese imports, all our details are available on the contact us page of our website – http://www.soileire.com
We are an Irish Company based in Cork, Ireland. We source and import a wide range of commodities for customers in Ireland. In addition, we can provide a range of service to customers who wish to export or outsource to China. We work closely with Asiaway Trading Ltd, based in Shenzhen, China, owned and operated by an Irish citizen who employs local Chinese staff.
Soileire Business Solutions Ltd. – www.soileire.com