Find the Right Sourcing Agent to Strike Gold with China Manufacturing
Anyone considering outsourcing manufacturing to China soon encounters the term “China sourcing agent” –-at least they should. Sourcing agents are important in parts of the world where cultural norms typically do not follow the Rule of Law or respect the sanctity of contracts—which are concepts many people elsewhere take for granted.
In the United States, these concepts are written into the Constitution and are largely responsible for it being considered an ideal place to do business. If a problem arises, you find a find a lawyer and work things out in court. In China, personal relationships provide the discipline for much of the business community. Before attempting to buy from China, an American should either invest time and resources nurturing relationships or find an agent with those relationships and competent sourcing services.
A sourcing agent is not merely a middleman connecting buyers of China manufacturing with sellers. A China sourcing company like Avela Corp works on behalf of its clients to identify and match up the best providers of manufacturing and transportation taking into consideration such as quality, price and timing.
This system of doing business may seem complicated, but it really isn’t. It’s just different, and dealing with differences is fundamental in doing business. People adapt to prosper. American history provides a great example where the court system was absent for a period of time and people simply adapted. The situation has parallels with buying from China today.
The famous California Gold Rush began just as the Mexican-American War was ending in 1848. Mexico vacated California, but the United States was not yet equipped to govern it. For all intents and purposes, there was no law except what was minimally available in a couple coastal cities. Gold miners were considered trespassers on newly federal property, but there were only about 600 army troops stationed in the entire territory to enforce the law, and many of those deserted to search for gold. Meanwhile, as news of gold discoveries spread, thousands, then tens of thousands and ultimately over 200 thousand fortune seekers from around the world poured into the area before it became a state in 1860.
With virtually no official law enforcement and no courts, you would expect the mining fields to be pretty rough and tumble, often violent, chaotic places. That wasn’t really the case. The simple reason for this is that people soon realized that even on the frontier, some sort of order is necessary in order to conduct business and prosper. (Also, with most miners armed with guns, violence wasn’t really much of an option.)
Miners within a random geographic area, such as a ravine or riverbank, created their own system of rules by popular consent and enforced them as ad hoc communities. Disputes were typically settled by mutual agreement, often determined by an arbiter selected by the all parties involved. As conditions changed—for instance, if more miners moved into a ravine or deserted it for richer fields, the community revised its rules by mutual consent. Such a response was quicker than any centrally planned system. The people adapted and business kept rolling.
Returning to doing business in 21st century China, a similar phenomenon developed as a result of the nation’s economic reforms. Large swaths of the economy were suddenly opened through privatization and many regulatory and investment barriers were quickly dropped. China experienced unparalleled economic growth with an influx of foreign trade and investment. This growth has outpaced infrastructure change, which brings us to the courts and the Rule of Law.
Chinese courts do not provide Western-like recourse for business disputes, so, like the California gold miners, the Chinese suppliers relied on their own system when reforms quickly swelled foreign trade. Like the California miners’ rules, the Chinese sourcing service system fills a need. This system provides order within the community of China manufacturing companies and its interaction with the world beyond its borders. Also like the miners, China continues to adapt as it goes. For instance, China is working to improve patent, trademark and copyright laws to be competitive in this area. Similarly, the role of the sourcing agent has developed to facilitate trade with the outside.
Headquartered in Houston, Texas, Avela Corp has maintained a fully staffed, permanent office in Shanghai, China since 2002. We have the Chinese sourcing experience, relationships and expertise to guide business leaders through sourcing products from China successfully and profitably.
Of course, business today is more complicated than digging and hoping to strike gold was in 1850 California, but the goal is basically the same.