Business Management | Resources
Sourcing In India, China And Vietnam: Challenges And Opportunities
Feb 01, 2022 | Konark Ogra
An introduction on key factors before you decide on sourcing from south east asia. 1. Product Selection
- China is the world’s largest export of “anything”, if you are planning to build a brand it's challenging to get registrations and brand protections.
- India also produces a lot of things mostly medium quality mass-produced products for the domestic market and high-quality Handmade, unique products. Products for Living, giving and Dining, Artisanal wood, and Furniture, Home furnishings, Metalwork, Garment and textiles, Eco-friendly products, stationery, can find high-quality products in India (not just cheap (Mostly Low volume production)
- Vietnam produces Handbags, clothing, clothing, textiles, purses, bag packs, belts, etc fabrics of all kinds, Wood- High-end furniture, Homeware, Kitchenware, Plastic products- PPE.
2. Quality
- China: From cheap to high end.
- India: High quality and Expensive.
- Vietnam: High quality and mix of expensive and moderately expensive.
3. Key materials
- China: Wide range - textiles (synthetic and natural), metals, electronics, plastics, rubbers, etc.
- India: Natural materials - Artisanal wood (acacia, mango, teak), leather, metal (brass, copper, stainless steel (low end), wrought iron), organic cotton, jute, Eco-friendly materials
- Vietnam: Natural solid wood, electronics, steel and iron finished products and clothing and textiles- high end.
4. Labour cost
- China: Moderate (Min wage $327/ month) Low skill- focus on mass production.
- India: Low (Min wage $90/ month), highly skilled maker communities.
- Vietnam: Moderate-but lower then China. (Min wage $155/ month)- Moderate skill.
5. Minimum Order Quantity (MOQ)
- China: High - expect at least 500pcs/SKU
- India: Low - as few as 10 or 5K to $10k MIV (Min invoice value)
- Vietnam: High - expect at least 200-500pcs/ SKU.
6. Factory Production Time and payment terms
- China: Fast - production usually take a month to 75 days - 3-4 weeks by sea 30%-70% - 30% Down and 70% at time of shipment, people also work on Letter of credit.
- India: Slow -Takes 10 weeks and another month on the water to get to the port 30%-70% - 30% Down and 70% at time of shipment, people also work on Letter of credit6-12 Weeks. 30% down and 70%
- Vietnam: Lead times- demand has gone up, wait for capacity opens up, components sourced from china zipper and locks etc. 4-6 weeks, ports in Vietnam are smaller.
7. Ease of source
- China: Moderate - Alibaba, trade shows like Canton fair
- India: Difficult - No simple online platform such as Alibaba; Delhi Fair, Sourcing companies, or CBP searches
- Vietnam: Prices are closer to real price, 50% are Vietnam owned.
8. Logistics
- China: Smooth and easy to monitor
- India: India's infrastructure (roads, rails, etc) is not as developed - expect delays and keep a cushion in hand.
- Vietnam: infrastructure (roads, rails, etc) is moderately developed since the country is small - Minor delays and keep a cushion in hand.
9. Tariffs
- China: 25%+
- India: 0-5%
- Vietnam: 0%, free trade agreement with the EU and Vietnam, also free trade agreement with Vietnam.
10. Language Barrier
- China: Low to Moderate - most suppliers have English speaking staff for ease of business.
- India: Virtually none - English is widely spoken in India
- Vietnam:Casual work culture.
11. Risks
- China: Risk of the product being copied quickly, risk of the product being sold by Chinese sellers are very skilled, most e-commerce sourcing from china has no Brand identity. Lack of transparency
- India: Delays and longer lead times, potentially higher costs for higher quality products, need an inhouse member for executing the project. Lack of transparency
- Vietnam: Few multi-skilled workers, Worker loyalty to factories is low, Lack of transparency.
12. Vacation time
- China: Chinese new year
- India: Diwali and Eid and many others
- Vietnam: Lunar New Year, Tết, The Lunar New Year
13. Packaging facility
- China: Very superior
- India: Medium to Low-quality packaging infrastructure
- Vietnam: Quality is great and have everything from cardboard boxes, soda cans, plastic packaging, and much, much more.
14. Top websites for meeting suppliers
China:
- Alibaba. https://www.alibaba.com
- DHgate. website: https://www.dhgate.com
- Global Sources. https://www.globalsources.com
- Made-in-China: https://www.made-in-china.com
- DHgate: https://www.dhgate.com
- GlobalSources: https://www.globalsources.com
- Hktdc: https://sourcing.hktdc.com
- 1688: https://m.1688.com
India:
- Indiamart: https://www.indiamart.com
- Tradeindia: https://www.tradeindia.com
- Alibaba: https://www.alibaba.com
- ExportersIndia : https://www.exportersindia.com
- Connec2india: https://connect2india.com
- DHgate: https://www.dhgate.com
- eWorldTrade : https://www.eworldtrade.com
- Global Sources: https://www.globalsources.com
Vietnam:
- Alibaba: alibaba.com/vn
- Vietnam Export: en.vietnamexport.com
- Vietnam Manufacturers: vietnammanufacturers.vn/en
- VTown : vtown.vn/en
- VietnamAZ : vietaz.com
- VietnameseMade :vietnamesemade.com
- VCCI News : vccinews.com
- Global Sources : Globalsources.com
15. Scalability and Flexibility
- China: Very High but not flexible.
- India: Low to Moderate, highly flexible
- High: Very High and moderatly flexible.
16. Brand recognition
- China: Very High
- India: High and oppurtunity for great story telling
- Vietnam:High
Fig1: Table of comparison for sourcing from China, India, and Vietnam Recommended
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