Sourcing Outside of China
With the recent US-China trade war and the latest coronavirus outbreak it may seem reasonable to consider other sourcing options, such as India or Taiwan.
Sourcing in India
Key product categories
- Home décor and home products (textiles, kitchenware, ceramic, cotton)
- Fashion (Jewelry, bags, scarves)
- Apparel (knitted and woven cotton products, silk)
- Leather (shoes, wallets, belts)
Advantages of sourcing in India
- Ease of communication
English is one of the official languages of India, making the country much more international in terms of doing business.
- Unique, differentiated products
India specializes in producing unique and handcrafted products not found in other countries.
- No import tariffs
India is not in a trade war with the US, so there will be no impact on e-Commerce sellers importing from this country.
- Place small orders
Since a lot of the products are handmade, India suppliers are usually willing to cater to small orders.
While minimum order quantities typically range from 200-500 units, suppliers cater to orders as low as 20-50 pieces (with the exception of apparel and textiles).
Disadvantages to sourcing in India
Infrastructure development is greatly lacking in India as it ranks well below China in terms of the World Bank’s Logistics Performance Index. It also ranks lower than Thailand, Vietnam, and Malaysia in terms of infrastructure.
- Government system
Another concern for India is its large geographic size and relatively decentralized governance system, which can complicate business dealings. Sourcing from different regions in India could bring very different concerns, legal requirements and challenges.
Sourcing in Taiwan
According to data from the International Monetary Fund, Taiwan is almost three times as productive as mainland China. In terms of electronics, plastics and household goods Taiwan is an attractive alternative to China.
Key product categories
- Electrical machinery, including computers.
- Plastics, plastic articles.
- Optical, technical, medical apparatus.
- Knit or crochet fabric.
- Cutlery, household products
Advantages to sourcing in Taiwan
Taiwan has been a true “shining star” of the technology sphere for the past few decades. Domestic companies produce a vast range of items, from desktop computers, tablets, flat screens and phones, to motherboards, graphic cards and servers.
- Logistics network
Taiwan has well established shipping ports both in the north and south of the island. These serve as hubs for many international shipments, and almost all reputable logistics companies have a branch office in close vicinity.
- Ease of doing business
Taiwan is far ahead of China in this regard: only Singapore and Hong Kong rank higher overall than Taiwan on ease of doing business in East Asia.
Disadvantages to sourcing in Taiwan
Expect to be paying nearly 30% more than what you would be paying in China for factory man-hours, tooling & molding and per-unit costs.
To be continued