Sourcing and Procurement in 2021 – Why China? Reasons to Source from China

Since 2009 China has been the biggest manufacturer of goods in the World, and the leading supplier of product to the global economy. Gone are the days when China had a reputation for poor quality. Today, there are very few technically complex products that China does not produce to a level of quality the equal of anything found elsewhere. How is it that China has grown so rapidly to such manufacturing prominence, in what has been a matter of a few decades?

How did it happen?

Only a short time ago China was considered a backward country, with poor infrastructure – roads, trains and other transportation facilities. It’s workforce consisted mainly of peasants toiling in the fields, and what manufacturing took place could be considered basic and often of poor quality destined for consumption in the home market. In the last forty years this has all changed and changed at a startling pace. Huge investment has gone into the infrastructure. Everywhere there are modern, fast motorways; bullet trains linking major cities and airports servicing almost every city. China had major advantages in building this infrastructure.

The fundation of China’s success

Firstly, it started from almost a blank canvas and could copy the best designs and development techniques from the developed World. Secondly, it had unlimited labour at its disposal, workers only to happy to leave the fields to earn more building the highways and other facilities required of a modern society. Finally, unlike the Western World where structural changes are often preceded by red tape and delay due to the need to obtain planning consent, China’s Governmental planning system generally ignored and overrode local objections to change and often communities in the way of development were uprooted and resettled elsewhere. As Chinese entrepreneurs saw the opportunities presented by the opening up of their country and the relaxation of restrictions on individuals owning their own businesses, more and more manufacturing facilities opened up to provide for the growing demand of their own market and subsequently the export market. It soon became obvious to overseas buyers that the prices available for bulk purchases were dramatically better than could be obtained anywhere outside of China. This was both due to the abundance of raw materials available in China as well as cheap labour, which quickly made China the place of choice for volume orders.

The Chinese who as a nation are noted for being hard working soon latched on to the need to develop the logistical skills required to support the demand for exports. A whole range of interfaces are today available, of which TCNR is but one, to reduce the complexity of finding the right manufacturer for your needs. In addition, lead-times from order to delivery to the customer have been greatly reduced both in manufacturing and shipping thanks to greater all round efficiencies.

Current Situation

We are quickly seeing China resume its role as the largest exporter of goods in the World, with GDP growth expected to hit 8.5% for 2021. Currently the main problem effecting trade with China is unprecedented high freight prices due to some ships being mothballed and a shortage of containers in China.  While importing from China is resuming successfully for many U.K. traders it is not without some challenges.

Freight prices, already mentioned, are an ongoing issue. Currently, the finger is being pointed at “greedy” shipping lines as evidenced by the fact that the 11 top shipping lines made more money in Q1 2021 than in the previous 6 months. The best guess is that freight prices will remain high until the end of 2021.

Product prices have also increased since the COVID-19 pandemic struck. This has been caused by both currency and material price increases. Manufacturers are successfully remaining competitive by controlling costs and we are generally not seeing significant price increases.

Importers faced with these increased costs have generally found that in looking for alternative cheaper sources they are often non-existent. 

Sourcing products from China renders many challenges. At TCNR we are dealing daily with these challenges to ensure that our customers continue to achieve the most competitive prices possible.

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