According to sources, the global procurement industry was valued at USD 6.15 billion in 2022. The same report forecasts a 11% increase in value of the industry over the next 7 years despite disruptions due to COVID-19’s impact and global tensions (i.e : U.S-China geopolitical power struggle).
Global Sourcing context in 2024
Now is not the easiest time to be in the global sourcing business. China dominates the sourcing landscape, and built such networks and infrastructures that finding an alternative to Made in China today is a challenge.
50 years ago, Chinese exports started to strongly build up and peaked in 2003. China manufacturing is now on top of the list with exports of goods totaling up 3.6 trillion USD in 2022. Followed closely by the U.S and the European Union, other sourcing destinations such as Vietnam, Turkey or India are only able to cover a fraction of exports. For example, over 2022, Vietnam, India and Turkey together account for 1/3 of China’s export value in goods.
But the key is they ability to leverage the power of actors of the supply chain, and manage risks.
Low-cost sourcing more accessible to masses but challenges multiply
Low cost country sourcing is accessible today to masses via any computer. So many tools are available today that literacy is not so much of an issue now. However, the success of Chinese directories such as Alibaba.com triggered a frenzy among Chinese exporters. A few years later, the same business directories turned into marketplaces, surfing on intense competition between manufacturers, exporters, middlemen, etc… Within a decade B2B information became somewhat less accessible. Buyers are left unsure of whom they are really dealing with since transparency.
China Sourcing Companies part of solution to improving procurement profitability
Importers and international buyers who succeeded have deployed well-thought, sometimes daring procurement strategies. But the key is they ability to leverage the power of actors of the supply chain, and manage risks. Harnessing the capabilities of Chinese vendors, logistic chain and managing a balanced cost vs risk strategy is exactly what a sourcing agent does. How to choose your next sourcing company then?
Sourcing companies create value for international buyers by offering cost-efficient solutions, quick turnaround times and delivery performance. This ensures that buyers get the highest return on investment when buying from China.
Sourcing companies are experts in understanding the Chinese market and provide valuable insights to buyers about the best products to buy, their quality, pricing and more. They also help in negotiating with suppliers to ensure that buyers get the best deal possible. In addition, they provide support with logistics and delivery of goods to ensure timely delivery of goods.
Are Global Sourcing Businesses up to the challenge?
While sourcing agents (aka sourcing companies) are still relevant to the current network of globalized procurement, their position is threatened by new sourcing platforms that include additional services such as auditing, ERP, and order management. The 2020’s is this age of cloud computing. Many international buyers have already leaped from manual spreadsheets to automated processes. These clients are the ones sourcing businesses have to cater to. If they don’t evolve with cloud computing, aren’t they putting their businesses at risk?
