Is It Worth Sourcing Your Product Outside of China to Avoid Tariffs?

Feb 16, 2024 | 0 comments

Is it worth sourcing outside of China to avoid tariffs?

The short answer is “maybe.”

But there is still a very strong argument to source most products from China.

Let’s dig into it.

We have clients looking to avoid the additional 25% tariff from China that has been in place since 2018.

For many products, that may mean looking at India, Vietnam or Mexico, among other options.

Can we source great products from outside of China?

For sure.

But oftentimes there are key differences in other countries. 

The Key Differences in Sourcing From Outside China

➤ Many manufacturing processes are still in development.

➤ There can be a lack of uniformity—out of 1,000 produced units, each item looks slightly different. Unless you are going for a certain aesthetic, this is normally not desirable.

➤ You may not be welcomed with open arms, especially if you are not established or are seeking lower MOQs.

➤ There often aren’t websites or directories to easily find potential factory partners.

➤ Many factories may not have key partnerships to also help you with accessories and packaging requirements. So be prepared to possibly run around and find those yourself.

Here’s the Biggest Difference to Look Out For 

But perhaps the biggest reason is higher manufacturing costs.

One of the biggest reasons for lower pricing is that China has built up a robust supply chain, ensuring easy, affordable access to raw materials.

Guess where Vietnam is getting the majority of their raw materials?

Yep, it’s from China. The same is often true for Mexico.

And even though labour costs have risen recently, the Chinese are investing heavily in automation and AI to ensure competitiveness.

Why China Is a Great Choice for New and Experienced Sellers

If you are a newer seller, many Chinese factories are also willing to be flexible on minimum order quantities (MOQs).

Even for a mature seller, it’s an important point if you want to minimize risk while validating new products or markets.

With all of this known, where is the best place to source?

Ultimately, the choice of where to source comes down to the math and fit.

How to Do the Math on Which Country Is Best for Sourcing Your Product

Take some time and research and compare all of the landed cost components:

(1) Product Cost

(2) Shipping and Freight Costs

(3) Customs Duties and Import Taxes

(4) Insurance

(5) Currency Exchange Rates

(6) Quality Control and Inspection Costs

(7) Warehousing and Storage Fees

(8) Logistics and Handling Fees

(9) Regulatory Compliance Costs

(10) Broker Fees

Six Questions Around Fit to Decide Which Country is Best

Importantly, also consider the fit by asking yourself these questions: 

(1) Do they have experience with your product? Don’t be a guinea pig! 

(2) What is their history and how long have they exported to your target market(s)?

(3) Are they willing to work with you on your quantity and specifications

(4) Can they provide support outside of just purely manufacturing the product? 

(5) Are they easy to communicate with? Fast to respond? 

(6) Can they meet your timelines?

Why We Keep Sourcing Products From China

We have done this practice, and in many cases we end up back where we started—in China. Even when considering additional tariffs.

The costs make sense, and the relationships are easy to form, manage, and scale.

But JK, your sourcing agency name is called “China Product Pros,” surely you must be very biased?

This is true! But we have done the comparison, for our brand and for clients

We’ve spoken with factories in different countries and compared notes. 

At the end of the day we want what’s best for our clients

And the numbers and flexibility make China still a top choice for most products. 

Nowhere else is it as easy to start working with a factory, get lower MOQs, have everything kitted in house with sourced accessories and even store finished goods after production! 

But there can certainly be a business case for sourcing elsewhere.

So, explore your options and make the best decision for your brand.

How about you? What has your experience been when sourcing from different countries?

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