There is a debate raging across the world over trade and whom does it benefit. The election of Donald Trump led to a whole new discussion on trade deficits and protectionism got a big boost in economic thinking.

Since China is the pre-eminent manufacturing and exporting giant, it has been specifically targeted by President Trump and his associates for skewing the trading field in its favor. There is growing talk of ‘economic nationalism’ and a rising cry for addressing the trade imbalance with China in US.

The Facts

But all this hyperventilation is based on a lack of understanding of basic economics and trade. Having a trade deficit is not a position of complete loss. Trade deficit means a country is importing more from another nation than exporting to it. Importing is not a detrimental process for a country. Import results from there being less supply than demand of a product or a commodity. Through imports, the supply is increased to greater levels for those commodities. This results in prices coming down and therefore benefits the ordinary consumer. So, even if there is a trade deficit, it is helpful to the people of that particular country.

However, there is a new emerging trend that is worrying people. It’s the growth of Chinese sellers, especially those involved in online sales. Imported products have to be delivered to the consumers and that creates jobs for retailers but if even that function is taken away by Chinese companies, what will be left?

 

This is indeed a problem worth pondering on. But the solution may lie in the same direction from which the problem is emerging. If you want to compete against Chinese retailers, then the best way forward would be sourcing from China those very products which they are offering and sell them yourself. In other words, learn how to source products from China and put them in the market directly. Recognizing opportunity in adversity has been the key to success for many businesses and you need to do the same.

The Process

So, how to source products from China. well, if you have a trustworthy sourcing agent by your side, then possibilities are endless. Through them, you could import products which are cheap and are without the extra layers of costs which are wrapped around products being sold on Chinese online retail sites.

China’s manufacturing strength isn’t going anywhere and rather than fighting, try to benefit by it. By sourcing from China yourself, you can introduce them in the market at a price which is most convenient for you and make profits.

Options

You can source two kinds of China product: those which are ready to be released in the market and those which need to go through more processes of production or even branding and packaging.

If you are sourcing the former, then you can set their final retail price at a level where you are able to make a net profit. This is where sourcing a product from China is more beneficial than sourcing it from other countries.

Due to the low labor cost, China product are likely to be cheaper than their counterparts from other countries. So, you will have a particular product with a low cost which you can then raise to a level where it is still attractive to the consumer while also ensuring a profit for you.

However, importing products which are yet to undergo some processes before coming into the market for retail provide more opportunities for you. If there are some processes of manufacturing left, you probably won’t have to put the ‘Made in China’ label on product that turns some people off.

This would be a big gain as now the stigma attached to this particular label on product is dealt with while at the same time keeping the low cost of these products. You can brand and package the product as per your requirements and convenience and then choose the price which maximizes your profit.

Solution

One of the best ways to counter the growing clout of the Chinese sellers is by developing your own ingenious designs. Having said that, once you do that, the designs may not remain secret.

A good example of this phenomenon is the fidget spinner. This product has been in the market since 1993 but it was in 2017 that it rose to great popularity across the world. Who invented this device is still doubted and there are various claimants as a patent couldn’t be secured.

On the other hand, WowWee, who created a popular product called fingerlings, were able to obtain a restraining order against counterfeiters and thereby protect their business.

However, if you have a small business and not the resources to easily obtain a patent or a restraining order, then it might be a challenge to protect your creation. Here again, direct sourcing from China may be a great advantage.

Sourcing agents operate at the local level, so they can easily agree to sign a non-disclosure agreement and keep your intellectual property from being discovered and copied. Another big reason why sourcing from China is of great benefit.

Other Positives

• One factor that would work in your favor is that people would feel less conflicted about buying foreign items from a local seller in spite of Chinese label on productas it is they who are getting a part of the profit rather than from Chinese companies who will keep that profit to themselves and thereby keep all of it confined to their country.

This is the best way to counter the threat that you feel is coming from the growth of Chinese sellers.

They may have the monetary resources for advertising and great name recognition along with many other advantages which you don’t. But there is one thing that you possess and they never will. It is the trust which comes from being a local business and knowing the people on a personal basis. This factor could make a tiny corner shop preferable to the biggest multi-national online retailer for an entire neighborhood.

 

• Another way in which direct sourcing from China will give you an edge over online retailers is by allowing you to import products in large quantities and thereby reducing the cost of shipping per item. By sourcing larger quantities of products directly from manufacturers through sourcing agent, you can get substantial reduction in price which will make the final retail price even more attractive. Since the online retailers can’t do that, their retail prices plus the shipping costs would be substantially higher, giving you more advantage.

 

• Last, but certainly not the least, China’s growth as a manufacturing hub of the world hasn’t just been due to low labor costs but also because of the maintenance of quality in the products. Therefore, if you are importing products from China, they are very likely to be of satisfactory quality.

 

• On top of that, by directly sourcing from China, you could establish a relationship with the manufacturers and the sourcing agent which will allow you to negotiate better with them and even convey the views of the final consumers. This the major online retailers can’t do.

So, put aside your concerns regarding how to source products from China and seize the opportunity to make profits.