The procurement market in China

Low-cost production, a wide variety of products and a huge domestic market: China is and remains one of the most relevant sources of international procurement. We reveal the opportunities and risks that the procurement market in China offers for Asia Sourcing.

Even if geopolitical developments such as the trade conflict between the USA and China or stricter export controls have changed the framework conditions, China remains an extremely attractive source of procurement for international companies.

Why China is an important procurement source

One decisive factor is the low production costs: the average annual wage in China is around EUR 13,300, while in Germany it is almost three times as high at around EUR 34,300. This significant difference makes China particularly interesting for cost-sensitive industries.

In addition to the financial advantages, China boasts impressive production diversity and a dynamic market environment. According to Destatis, the value of goods exported from Germany to China in the first quarter of 2024 fell by 1.1% year-on-year to 24.0 billion euros, while imports from China fell by 11.7% to 36.0 billion euros. Nevertheless, with a share of 10.9% of all imports, China remains by far Germany's most important supplier of goods.

The following applies: purchasing in China requires a deep understanding of local conditions in order to minimize risks such as delays or unnecessary costs and to make the most of the many opportunities.

If you would like to find out more about how 'Made in China' and 'Made in Germany' differ in terms of quality, production costs and market opportunities, we recommend our detailed blog post: Made in China vs Made in Germany.

Characteristics of the Chinese procurement market

Wide range of product categories

From electronics to textiles to engineering products, China offers an impressive range of products. This diversity makes it possible to procure almost any product or component required.

Flexible structures

The market is characterized by numerous small and medium-sized companies that operate both as manufacturers and wholesalers. This structure offers flexibility, but can also lead to differences in quality.

Different quality standards and norms

Quality standards can vary considerably, which is why it is essential to know the specific norms and standards of the respective industry. At the same time, it must be ensured that suppliers also comply with these.

Complex supply chains

Supply chains in China are often complex and require a precise understanding of customs regulations and transportation logistics. Careful planning is essential to avoid delays and additional costs.

Challenges of sourcing from China

In addition to numerous advantages, the Chinese procurement market also holds risks that need to be considered. For example, different quality standards can lead to significant deviations that have a negative impact on the end products. Regular and strict quality controls are therefore essential to ensure the desired standards.

Counterfeiting and unclear patent rights are also not uncommon in China, which is why the protection of intellectual property poses challenges for companies. Careful examination and enforcement of patents and trademark rights is essential to avoid legal and economic damage.

In addition, complex customs and tax regulations complicate the import process. Without precise knowledge of the current regulations, delays or unexpected costs can easily occur. Companies should therefore ensure that they are informed about the applicable regulations and optimize their processes accordingly.

Another important aspect is environmental and social standards. Not all suppliers follow international guidelines, which can pose risks to a company's compliance. To avoid this, it must be ensured that suppliers adhere to the standards.

6 tips for successful imports from China

Successful importing from China requires not only an understanding of market conditions, but also a well thought-out strategy that takes into account both technical and cultural aspects. Here are the most important tips to maximize opportunities and minimize risks.

1. select reliable suppliers

The basis of every successful procurement is the choice of trustworthy suppliers. Regular audits and thorough checks are essential to ensure their reliability and quality. You should also use specialized service providers such as Line Up, who can support you in the selection and evaluation of suppliers.

2. establish quality management

Implementing strict quality controls is essential. Ensure that your suppliers comply with international standards such as ISO to minimise product defects and the associated risks.

3. strengthen intercultural competence

Successful negotiations and business relationships require an understanding of Chinese business culture. Invest in intercultural competence training or bring an experienced partner on board as a connector to bridge cultural differences, avoid misunderstandings and build stable relationships.

4. build long-term partnerships

Sustainable procurement is based on trust and stability. Building long-term business relationships with Chinese partners promotes smooth cooperation and minimises the risk of supply bottlenecks or quality problems.

5. create legal and logistical safeguards

Legally binding contracts and cooperation with local partners offer additional protection and facilitate business transactions. At the same time, optimised logistics planning is crucial in order to minimise transport and customs risks. Experienced freight forwarders and up-to-date information on customs regulations are essential here.

6. use modern technologies

The use of digital tools and supply chain management software offers decisive advantages. These technologies enable efficient monitoring and analysis of the supply chain, allowing risks to be identified at an early stage and processes to be optimised.

How the procurement market in China is changing

The procurement market in China is undergoing dynamic change, characterised by geopolitical tensions and new requirements. Trade conflicts, particularly between the USA and China, are also having an impact on global procurement. Companies are required to remain flexible and develop alternative strategies where necessary in order to mitigate risks and make their supply chains more resilient.

At the same time, the focus on sustainability is becoming more prominent. Environmentally friendly production methods are not only being demanded by governments and consumers, but are increasingly becoming a decisive competitive factor. Companies that focus on ‘green production’ can secure long-term market share and strengthen their brand reputation.

Technological advances are also playing a key role in the transformation of the procurement market. Increasing digitalisation and automation are fundamentally changing production processes and supply chains and opening up new opportunities to increase efficiency and quality.

Seize opportunities, minimise procurement risks

One thing is clear: with a wide range of products, low-cost production options and a dynamic market environment, China remains an indispensable partner for international procurement. It is also clear that the associated risks, such as quality fluctuations, legal uncertainties and complex supply chains, require careful preparation and continuous monitoring.

Successful China sourcing therefore means not only utilising the advantages of the market, but also actively tackling potential pitfalls. With the right combination of local expertise, intercultural understanding, technological support and sustainable thinking, companies can not only minimise risks but also secure long-term competitive advantages.

Your partner for efficient China sourcing

With over 30 years of experience and a proven network in China, we at Line Up are your experts for customised procurement solutions. We support you in organising your supply chains efficiently and securely - from consulting and quality control to import processing.

Benefit from our expertise in global sourcing and optimise your procurement process. Simply arrange a non-binding consultation appointment.