Frequently Asked Questions
Q1. What products should I source from China?
Q2. Is there a minimum quantity requirement?
Q3. Can I trust the Chinese supplier?
Q4. What is the standard practise with payment?
Q5. How do the products get delivered to me in Australia?
Q6. What are the options of freight?
Q7. What is the process involved in sourcing from China?
Q8. What are the pitfalls in sourcing from China?
Q1. What products should I source from China?
Refer to the TBC Enterprises sourcing criteria / rationale table. Start with products that will give your business the most financial impact; a product that will have least strategic and operational impact on your business. Start with items that will give you a win first, to prove to yourself that your firm has the competency to do this!
You main rationale for China sourcing should be to make cost savings. However, if direct sourcing from China is part of a strategic plan, then the above thinking still applies.
Q2. Is there a minimum quantity requirement?
In general, there are minimum order quantities, however nothing is impossible from China . If you wish to source from China, economy of scale is the key. Our recommendation is usually for order sizes to be large. Otherwise, when you consider the sea freight costs, the Landed Unit Cost in Australia may be equal or higher than buying from China . Add to that the man-power involved in managing the sourcing you will want to get 'bang for your buck'.
Q3. Can I trust the Chinese supplier?
As with any international trade, there is an element of risk and a great deal of trust. However, by partnering with TBC Enterprises we help you reduce that risk and provide you with the self efficacy to make it work. Our Western business ethic and appreciation of Chinese business culture will provide you with the confidence in dealing with Chinese suppliers.
There are also risks for Chinese companies as well. In 2003, 25% of China's export revenue ended in bad debt!
Q4. What is the standard practise with payment?
Our recommendation is to use a Letter of Credit (LC) from your bank. This is the safest means of paying for your goods. It is also the safest option for the supplier, because the money is guaranteed by the your bank. The suppliers bank would deal with your bank to get payment. Although, in some instances payment cannot be 100% LC as the supplier would demand a deposit of up to 40% for purchase of raw materials. In this instance a Telegraphic Transfer (TT) from your bank to the suppliers bank would be the most efficient method.
Another point to note here, most international trades are conducted in USD. For large organisations that hedge or have a treasury department, this should not represent an issue. However, for smaller firms the transactional costs involved in converting currencies will need to be factored into the purchase.
Q5. How do the products get delivered to me in Australia?
Once you've placed your order, TBC Enterprises can and manage the logistics to get products safely to your delivery location. With our partners and suppliers, TBC Enterprises is able to source the products for you, organise freight (sea or air), insurance (if applicable), and customs clearance in China. When the products arrive in Australia, the freight forwarder in will notify you and handle all documentation for you. All you need to do is unpack your parcel when it is delivered.
Q6. What are the options of freight?
Freight is usually by sea. Another option is of course by air. Obviously there are some cost and time differences between the two. As an indicative example, for a 40kg parcel, air freight from Shanghai , China to Sydney , Australia would be about $200USD and sea freight $100USD.
However, air freight will take about 3 days, where sea freight up to 15 days to get to Australia .
Q7. What is the process involved in sourcing from China?
Refer to our China Sourcing Process guide on this website. Alternately contact us.
Q8. What are the pitfalls in sourcing from China?
The caveats of sourcing from China are:
- quality of goods needs to be stringently monitored
- plan for longer supply lead-time
- terms and conditions of payment need to be established
- intellectual property monitoring need to be setup
- finding good reliable Chinese suppliers
- finding the right China sourcing partner who is value adding.
Contact us with your request and we will guide you through the process of sourcing directly from China.
