China Sourcing, the In-Thing in International Trade

US international trade with China dates back to the early 1900s. With the signing of trade deals in 1999, the partner countries have increased access to mutual exports. Look at the China sourcing figures for the year preceding the agreement and the current year as a case in point. The trade deficit of US$56.92 billion for 1998 has reached US$117.50 this half year alone. At first sight China sourcing appears to have benefited China manufactures and China supplies are flooding the US market. A second look gives clear insights into mutual contributions to the burgeoning trade which let China manufacturers of consumer products access US market while B2B has grown both ways.

In fact, the USA is enjoying a surplus in almost all the high technology trades which crosses $55 billion. This apart, US SMEs in the retailing sector and China manufacturers are collaboratively filling product gaps with China supplies, both B2B and consumer products. Of course, US companies also continue to rely on China sourcing in greater numbers to find competitively priced components in China to improve their global competitive position.

China sourcing ?C An Overview

It would be improper to assume that large corporations are taking away a big share of this international trade. The advantage China manufacturers and suppliers present has thrown open vast opportunities with extreme cost competitiveness for small and medium businesses. China suppliers are more than willing to partner with US SMEs that are willing to take advantage of the Chinese B2B edge. Professional supply chain management companies are assisting businesses with identifying China sourcing, vendor assessments, and pulling off supplier agreements.

Impact on B2B and China Sourcing

Business houses in USA are dependent on China supplies as much as China manufacturers are on the US consumer market. If on one side outright outsourcing is leading the way for mutual international trade, turning Chinese cost competitive advantage into manufacturing opportunity is fast catching up.

Chinese barriers to US exports will decrease, thanks to tariff-rate-quota (TRQ), and eliminate limits on importers and distributors in China just as quotas and licenses that restricted imports from USA. China has also cut tariffs of 100-80% to 25% now in the auto sector, which is further going to be cut to 10% by the end of 2007.

The elimination of quotas has benefited China manufacturers in more than one way. While China sourcing by US SMEs has quadrupled in the eight years since, agriculture, high-end products and automobiles are making inroads into China.

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