Chapter 6
Sourcing
On the surface, sourcing in China operates no differently than in most other countries. Common steps include:
- Issuing a request for quotation (RFQ).
- If accepted, requesting production part samples (PPAP).
- If samples are approved, preparing purchase orders (PO).
- Following up with vendors on product quality and delivery.
What makes sourcing in China unique is how these tasks are managed. For example, Chinese manufacturers typically won’t accept letter of credit (L/C) payment terms. The perception is L/Cs carry more cost and risk for manufacturers. After all, manufacturers are usually responsible for bank advisory charges, payment charges, discrepancy charges, bank reimbursement charges, and communication charges. In China, ...
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