China Sourcing: The Setbacks We Learn From
December 3, 2021
“In the middle of difficulty, lies opportunity.” – Albert Einstein
In last week’s Thanksgiving blog, we discussed how thankful we are for the last 43 years in business, which have been rich in lessons, and opportunities to turn those lessons into wins for our clients. While there are always endless setbacks to learn from, over the past year we’ve found the following challenges to be most pressing for our clients.
– Supplier overwhelm/shortage: We’ve heard from many clients their existing suppliers can no longer support them, have disappeared, or the quality of their service has declined, leaving importers with few options. This is due to a confluence of many factors, most notably:
– China is providing goods to the entire world, now more than ever due to COVID, resulting in backlogged suppliers.
– The rising cost of raw materials has caused suppliers to increase their own prices, and to be more picky about which companies they are willing to do business with (i.e., Chinese suppliers have more leverage).
– Suppliers have been forced to close intermittently due to environmental regulations.
– Unemployment/work disruption: There are global labor shortages, while at the same time, numerous individuals have lost their jobs. People around the world have had to adjust to a new work environment, which has often meant remote work.
– Travel restrictions: The inability to travel amidst the COVID-19 pandemic has affected everyone, but is a dire problem for businesses that import from overseas, particularly from China. Critical rapport-building meetings between business owners and suppliers, in-person supplier audits, and attending international trade shows have all been put on hold indefinitely.
– Delivery: The ongoing shipping crisis has caused delays for importers around the world.
Despite the above challenges, each one provided CPG with the opportunity to provide tailored solutions for our clients. Ways we have helped include:
– Supplier overwhelm/shortage: Identification of alternative solutions and suppliers. There are hundreds of suppliers in every industry in China, and CPG has worked with many of them. Our broad network of suppliers and vendors, many pre-qualified, enabled our clients to build relationships with new suppliers that can meet their needs, thus creating more leverage.
– Unemployment/work disruption: With more and more people around the world working from home, this has given rise to a new crop of entrepreneurs who are starting their own online businesses. CPG has worked with an increasing number of entrepreneurs and small businesses during the pandemic by assisting with product development, sourcing, and identifying solutions to bring new products to the market. This experience has demonstrated that even very small companies can benefit from our model.
– Travel restrictions: As our clients have not been able to travel, we have been their eyes and ears on the ground. Our fully staffed Beijing office has not only assisted in making necessary travel arrangements in accordance with local policy, but has also been able to provide solutions in lieu of travel, such as visiting suppliers, conducting in-person factory audits and inspections, or managing third-party inspections. CPG’s ability to do this work has obviated the need for our clients to travel to China, perhaps forever. We recently wrote about this in China Travel Restrictions: What Can You Do?
– Delivery: Despite the obvious challenges outside of our control, our team’s constant work with logistics companies on behalf of our clients provides valuable intel, and enables them to take the pulse of the industry at any time. Our China team can provide shipping and logistics quotes to our clients quickly, which is very important today since freight costs are so volatile, and are only valid for a few days. Read more in Shipping Crisis: Gaining Control of Ocean Freight Costs.
We are thankful for the lessons learned and opportunities afforded us and want to share this expertise. We would like you to experience the advantages and the peace of mind of a CPG sourcing team.
*Contact us to find out more about how CPG can help.
For more answers to questions about the China supply chain and what we do, visit our FAQ page.