Managing Supply Chain Risks in Chinese Manufacturing

If you're in the business of manufacturing goods in China, you know that managing the supply chain can be a daunting task.

From natural disasters to political risks, there are so many things that could go wrong – creating costly delays!

According to a survey conducted by the law firm Baker McKenzie, “93% of Chinese companies are planning to upgrade their supply chain processes to tackle the effect of trade tariffs. Out of which 18% are planning to transform their production and supply chain process entirely, 58% are making some major changes while the remaining 17% companies are incorporating minor changes.”

There is no doubt that after COVID-19, the primary concern for businesses lies in the risk of supply chain disruption.

But don't worry – we're here to help!

In this blog post, we'll explore the different types of supply chain risks associated with Chinese manufacturing and show you how to avoid them.

So sit back, grab a cup of tea (or coffee, if that's your thing), and let's dive into the world of supply chain management!

4 Major Supply Chain Risks Associated with Chinese Manufacturing – Along with their Solutions!

Planning to conquer the world of the supply chain without understanding the concerned risks and their solutions?

It's like going to battle without a sword – you've already lost before you've even begun!

It's important to be aware of the potential issues before taking the plunge and entering into an agreement with any supplier or factory – especially while manufacturing in China!

So, let's look at the four major supply chain risks associated with Chinese manufacturing, along with their respective solutions.

1. Natural Disasters:

Ah, natural disasters – the wild card of the supply chain world.

From earthquakes to typhoons and everything in between, it's like Mother Nature decided to have a party in China, and everyone's invited.

These events can cause major disruptions in the supply chain, and we're not just talking about a delay in getting your morning coffee.

Do You Know?

According to a report published by the Chinese Ministry of Emergency Management, “Natural disasters result in $13.13 billion in losses for the Chinese economy in the first half of 2022.”

Can you imagine losing that much money just because Mother Nature decided to have a temper tantrum?

The Solution:

You might be thinking, “Well, how can I possibly prepare against something as unpredictable as a natural disaster?”

The answer is simple – diversify!

Try to have multiple suppliers in different locations so that if one area is affected by a natural disaster, the other will be unaffected and can come to the rescue.

The Hidden Side:

Finding a supplier with similar quality and budgeting is no less than an arduous task.

And that's another hurdle you need to overcome!

But with proper strategy and planning, you can sidestep this risk and find a suitable supplier to meet your requirements.

Want to know more about finding a suitable manufacturing partner in China – Check our recent blog post!

Recent Blog Post: Finding Manufacturing Companies in China – Top 5 Do's and Don'ts

2. Political Risks:

Politics and the supply chain – a match made in… well, not heaven, but you get the point.

While natural disasters are out of our control, political risks are something we can actually prepare for.

And let's be real – politics can be just as unpredictable as Mother Nature.

But we're not here to discuss the latest election results but to discuss the political risks that can impact our supply chain in China.

While trade tariffs, sanctions, and political unrest affect the supply chain, it's important to be prepared.

A Misconception:

Some business owners/managers might think that political risks only include trade tariffs and sanctions.

But there can be other political risks like changing local regulations, banning certain materials/goods, or changing the tax structure.

All of these can affect the import and export process – leading to delays and disruptions!

The Solution:

Here's how to navigate the murky waters of politics in the supply chain:

Keep an eye on the news – Stay up-to-date on current events and how they may affect your supply chain.
Diversify your sources – As we mentioned before, diversifying your sources. Don't put all your eggs in one basket. Having multiple suppliers in different regions can also help mitigate political risks.
Foster strong relationships with suppliers – Building a solid relationship with suppliers can help ensure that they'll stick by you even in tough times.

Now everything is good to go, but here's a twist!

If you are onshore, it might be easy for you to navigate these risks – but what happens if you're sourcing from overseas?

You can't predict the political risks in an overseas market – but you can prepare for them!

The Solution (Overseas):

Partner with a reliable local sourcing agency. They will not only help you find the right supplier, but they can also monitor the political situation and plan accordingly.

Don't know anything about local sourcing agencies?

We suggest you check out our most recent blog post!

Recent Blog Post: Sourcing Agent Guangzhou China

3. Quality and Compliance Risks:

Quality and Compliance – the two best friends of the supply chain world.

Who doesn't love a good quality control check and staying on top of regulations and standards? But being real – it can be a bit of a headache to navigate all the different requirements. And with the constant changes in regulations, it's easy to fall behind.

Let's understand this scenario in detail.

For Example:

Suppose you're sourcing from China and importing the goods to a European market. You'll have to adhere to both the Chinese and EU regulations and make sure that the products you're importing comply with both sets of standards.

But what if your inventory is not compliant with either of them?

You could face hefty fines, and your shipment may face customs delays or even be rejected altogether.

The Solution:

It's important to stay up-to-date with the regulations and standards in both countries.

You can either do the research yourself or partner with an experienced Chinese export agent who has local people and expertise in the region.

Here's something else you can do!

Conduct regular audits to help ensure that suppliers meet quality and compliance standards.

But wait a moment – do you have the resources to conduct on-site periodic quality checks?

If yes, then great!

But if not, the only way we suggest is to hire a third-party QC team. And you will be amazed to know that the sourcing agency you plan to partner with will also offer quality control services and conduct several quality checks on your behalf – during production & before shipment!

Still, are you concerned about outsourcing to a 3rd party Chinese QC team?

We suggest you read our blog post on this topic!

4. Logistics Risks:

Logistics – the backbone of the Chinese supply chain.

With goods and products constantly moving, it's important to make sure everything is running smoothly.

But with so many moving parts, it's easy for things to go wrong – delays, lost shipments, and unexpected events!

Most of the clients who came to us had faced challenges like goods being stuck in customs, delays due to lack of proper documentation, etc.

And you know where they made a mistake?

Entirely relying on a Chinese manufacturer or partnering with a scammer/fake manufacturer.

They don't bother to check their credibility, local presence, or custom registration certificate.

The Solution:

Here are a few tips to make sure you avoid logistics-related risks and delays:

Plan ahead – Anticipate potential issues and have contingency plans in place.
Use technology – Utilize real-time tracking and predictive analytics to stay on top of shipments and potential issues.
Partner with a reliable import agent – The right agent will be able to support you with customs clearance, documents, and other logistics-related tasks. Contract manufacturing companies in China like MorphoMFG offer a broad range of services from manufacturer onboarding to product development and quality control to logistics handling. You will find everything under one roof.

To learn more about the benefits an import agent can bring to your business in China – Check our latest blog post.

Related Blog Post: Top 7 Benefits to Hire a China Import Agent in 2023

Managing Chinese Supply Chain Risks – A One-Man Army vs Professional Team:

So you're thinking of handling all the supply chain risks associated with Chinese manufacturing on your own, huh?

Well, kudos to you for your bravery!

But before you take the plunge – let's weigh your options.

On the one hand, you could take on the challenge of navigating complex regulations, logistics, and quality control issues by yourself. And who knows, maybe you'll surprise yourself, and everything will go smoothly.

Or, on the other hand, you could partner with experts who have years of experience in managing these risks.

Contract manufacturers like MorphoMFG, for example, have a deep understanding of the local market and can help you navigate the complex regulations and cultural differences associated with Chinese manufacturing. They can also handle the logistics, quality control, and supply chain management for you, taking the weight off your shoulders and allowing you to focus on growing your business.

So, is handling all of the risks on your own okay?

Sure, if you're a fan of stress, long nights, and surprises.

But if you want to ensure the success of your supply chain, partnering with experts is the way to go.

And MorphoMFG can be a perfect partner in that case!

It's like going on a road trip. Sure, you could try to navigate the roads and deal with unexpected detours all on your own, but why not let a GPS do the work for you?

It's a no-brainer, right?

So why not let the MorphoMFG experts navigate the supply chain risks for you?

Trust us – you won't regret it!

Source