Today, many companies are available to help foreign businesses manufacture products in China. However, the best supply chain option depends on your business and the goods you produce.
This article will discuss the best time to establish an on-the-ground team in China! While this decision involves significant commitment, having a dedicated team can transform your business and prove crucial in certain situations.
Let us explore some critical scenarios where having a team on the ground can be advantageous:
When your supply chain becomes more complicated
Many companies begin their journey with just one supplier and one product. If you are fortunate enough to thrive, consider introducing additional products to complement your existing ones. Additionally, as the demand for your products increases, you may need to work with multiple suppliers to meet growing orders. However, this may come with the challenge of communication barriers with non-English speaking teams within the factory. Even if your sales manager speaks English, there is always a risk that they may need to communicate specific requirements internally effectively. As a result, it is common for businesses to rely on local third parties such as inspection companies, sourcing agents, and freight forwarders to overcome such hurdles.
If you find yourself in this situation, it may be time to consider hiring your first employee in China to work on-site. This individual would communicate with different suppliers, departments within suppliers, and third-party contacts. Ideally, your first hire would be a Supplier Account Manager.
When your supply chain becomes more valuable
As a start-up, it’s essential to keep costs low and offer competitive prices to customers. However, as your company grows, you have more at stake. Customers expect consistent, high-quality products; anything less can harm your brand reputation. Therefore, to maintain a premium service, it’s crucial to consider stakeholder management.
One of the most crucial steps at this stage is to take a closer look at product delays and changes in components that affect your product’s appearance or functionality. This is where supply chain management comes in. Even Elon Musk realised the importance of this not too long ago, but you don’t have to be the owner of a major company to benefit from it!
As you become more dependent on your suppliers, it is time to manage them and each element of the supply chain more efficiently. This could be a procurement manager to analyse BOM costs and lead times, a quality manager to pick up issues in the factory and work with them to resolve them, or a merchandiser to evaluate multiple suppliers on specific criteria such as price, certification, lead times and social compliance.
Spend on third-party hires
Another point when considering an on-the-ground hire is the cost of outsourcing partners. For example, if you order dozens of inspections monthly from a third-party inspection company and find high product defects, you may need to consider a QC team. However, these checks only show the problems; they do not solve them! Therefore, we suggest conducting inspections in-house to save on cost per day. Afterwards, it is best to communicate with the factories regarding root cause analysis and the necessary corrective action plans.
One way to outsource efficiently is by using a sourcing company. However, as your business grows, this option may become costly. In addition, outsourcing your supply chain management to another company means relying on them for the task. So, having your team handle this function may be more effective than outsourcing.
In-depth supplier cooperation
China has some incredible ODMs, particularly for high-tech products. However, cross-cultural collaboration on product development, software and compliance can take time and effort. As a result, we recommended seeking the guidance of a project manager with industry-specific expertise to streamline the process for cross-border projects.
Use The China Desk to hire your team members: If you have decided to hire your own team member, congratulations! The China Desk is here to take you on that journey. Look at our Hiring in China 101 blog, which highlights the key points to consider, and if you have more questions, book an appointment with our team.
Not sure who to hire?
This is the case for many companies, who want a presence in China to cover a range of areas, but may not have full-time requirements in a certain function. If you are not ready for a full-time hire – why not check out The China Desk Streamline Model, where you can hire someone part-time in a flexible manner. Kinyu will then review your operation and advise how and when to build your China team. Get in touch to know more!
