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Is Sourcing In China Worth It? - Articles Surfing
Amber McCrocklin, a small scale business owner began Paws abroad that created a line of gear for pet owners who took their dogs on boats and ships. By handcrafting life jackets and water leak proof leashes, she started in a small scale. But, when orders began pouring in she decided to relocate her operations to China. She knew China Sourcing would cut costs by half and give her ample spare time to design more products to increase Paws Aboard -pawsaboard.com. On the suggestion of another Indianapolis trade owner, she appointed an engineer in Shenzhen to do over and redesign the products for mass manufacturing and found a factory to do the work. The production increased five fold and her profit margins were doubled.
But problems started. The grips on her life jackets were breaking, to add up shipments were delayed, and her contact in China was not at all responsive. Doubts aroused whether China Sourcing was not all that productive for her. McCrocklin's endurance finally hit the sky when she came upon 3000 defective pieces of leashes. The tables turned completely and logos were all upside down. The orders were rejected. McCrocklin didn't want her patrons, retailers and online business people to see the shoddy work.
A bad batch of leashes may seem trivial compared with the potentially deadly output of Chinese suppliers that caught the media glare across the International trade arena worldwide for 1.5 million toy trains layered with lead paint and 60 million contaminated toxic pet food. In July the Food and Drug Department banned shrimp and four varieties of contaminated farm-made fish from China.
All of a sudden China Sourcing standard procedure for thousands of entrepreneurs looked bleak and difficult. Now business industries must feature in the true cost of obtaining their products at the International trade beating the China price. Andrew Bartolini, an expert on China Sourcing, at a top research firm in Boston said that low costs come always came with risks.
Big companies also had problems dealing with the negative consequences from defective products and unsaleable goods and bad publicity and lawsuits. Menu Foods, a $303-million-a-year giant firm had to spend $38 million recalling melamine-tainted pet food. Foreign Tire Sales nearly went bankrupt when faced with a $90 million price tag for its recall. The company, which sold only 700,000 tires last year, had to replace 450,000 manufactured by Hangzhou Rubber Co. having dangerous defects. Thus China Sourcing also means inviting risks and large losses in business.
The dark cloud over Chinese suppliers does have a hope of silver lining. Some Business entrepreneurs imitate the ways in which multinationals control supply chains. Some companies take care of everything from inspecting quality control to assuming liability for a factory's output. With China sourcing partners, the quality of middlemen is very important. Checking with other importers and trade associates are a solution to find reliable middlemen. So, the final doubt is that is China Sourcing worth all these risks and upheavals? The debate goes on.
Copyright © 1995 - Photius Coutsoukis (All Rights Reserved).
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