Quixotic China
Like a lot of people, the first time I saw products we use that were being made in China, I was bowled over by their prices. Many of these items were 40% of the cost we have been paying and certainly when we looked at these at tradeshows, they looked good, worked well and were not poorly made. So following the herd (I never said I was an original thinker!), we have been trying to import directly and have found the original promise to be less than we thought although still an option for certian items.
First of all, our costs rapidly rose. As a small company, we found that on our purchases of less than $10K, shipping, duty and clearance fees were approaching 25%. Plus what we found was that with the time to get products here being 45 to 60 days from when we ordered (and paid), we had to have 2 orders going at a time (staged 30 days apart) to have product arriving every month because we didn’t have the space to hold 4 months inventory. And finally, we inspected every unit and for those that had any damage or needed rework, the Chinese are good at sending parts but the rework and repackaging is all on us. Not including the management time to control the importing, the landed costs rose and the savings became about 30% instead of the 60% originally thought.
The ongoing support for imported goods, tech support and alike, is all on us. Not that that’s a problem, but we do have some challenges with component changes from lot to lot and communication always takes a couple of days and is sometimes problematic. So when you factor everything in, importing is a an opportunity, but not the ‘no brainer’ the herd makes it out to be.
What this means is that YOU NEED SCALE and you need to to provide all of the resources to make it work. Not only economically, but also to get the Chinese’ attention to correct issues on a timely basis. This requires working directly with the Chinese For certain items, we have stayed with our US sources and what we have done to bridge the gap with other items is partner with others to combine bringing these items in, have additional people we can network with on Technical issues, and make it so we can maintain sevice levels. This has diminished some of the financial luster these originally had, but gives us a sustainable position which we can service and grow our business.