SourceA "Made in China" label generally Made in China, product of China or otherwise Made in PRC (traditional Chinese: ; Pinyin: ; zhong ruyi: shi di Huang} The term "Made in China," though used by many companies worldwide, does not mean that the item is actually made in China. It is based on a marketing strategy using the term. In general, Made in China is synonymous with "Ministry-Directed Manufactured Products." The specific product is identified by either the name of the country where it was made, or the name of the factory that makes it.
Although there are some major restrictions on the supply chain for high-quality products to the U.S. market, Chinese suppliers and their respective channels provide an abundance of viable business opportunities for U.S. manufacturers. Chinese suppliers provide the raw material necessary to manufacture the final made in China. They typically ship raw materials, components and finished goods from factories in China to various locations throughout the world, where they complete orders. In addition, they also regularly ship finished goods that have been customized to meet the specific needs of each customer.
A recent trend among Chinese manufacturers looking to broaden their global sourcing base is to establish a "sole dealer" arrangement. This arrangement allows the manufacturer to sell its finished products directly to the end-user without having to rely on any middle-party agent. As a result, the company can expand its brand image and increase its customer base at the same time. "Sole Dealer", "ocal Dealer" or "Chinese Only" agreements are now common among Chinese manufacturers. To ensure that it remains an attractive choice for global suppliers and end-users, Alibaba has made a series of revisions to its sourcing policy, which have been implemented into the company's supply agreement policy on April 1, 2021.
One of the revisions was a reduction in the percentage of payment customs duty that would be required by Chinese suppliers. The reduction in the percentage of payment customs duty was based on the assumption that Chinese buyers were now offering a competitive price advantage. The change was implemented as part of the Chinese New Economy and Finance Review released in March 2021. According to the review, the decline in the level of taxation for most products within China's domestic market since the mid-1990s has led to a shift in the supplier base that favors large companies with strong sales and marketing budgets over small suppliers with limited resources. The changes were partially effective because the government eased some of the restrictions on foreign direct investment (FDI) in China so that companies with significant foreign ownership could invest more in China without having to provide a larger up-front payment to the Chinese government.
Another area that was reviewed during the Chinese New Economy and Finance Review was the sourcing chain. Sourcing chains are an important aspect of the supply chain management process that determine the price of goods manufactured in China. Many international companies have long complained that they are forced to buy products from low-cost suppliers to ensure timely delivery and high quality. The review noted that the sourcing chain is now playing a more significant role in determining the price of Chinese manufactured goods. The report recommended streamlining the existing chain and enhancing the connections between various suppliers in order to ensure better access to the raw materials needed by Chinese manufacturers and to reduce the risk associated with poor sourcing practices.
A number of factors also contributed to the review's recommendations on China. According to the researchers, one of the largest contributing factors to the current state of affairs is the absence of a clear finalization stage in China. Most items sent from China to international customers are not subjected to any finalization stage before being delivered to their destinations. With the lack of a finalizing process, companies are often at a loss as to how they should proceed once they have received items from China and are unable to ascertain whether they are in compliance with local laws or international standards. The lack of a finalizing process also contributes to the present issue of non-fulfillment of orders by Chinese exporters.
The researchers found that by using global sources for raw materials and finalizing orders at the right time, Chinese manufacturers can significantly reduce the cost of shipping by up to 70%. They suggested that by streamlining the supply chain and improving the current payment trend between exporters and finalizers, Chinese manufacturers can improve their profitability and quality of merchandise produced. The Chinese Government has acknowledged the need for reforms in the Chinese logistics industry. In June, 2021, it formed the China Industrial Research and Training Corporation (CRTCC) to coordinate research and development in order to help Chinese firms develop and introduce new goods into the international market. The CRTCC will merge the existing information and communication systems of the companies involved in the Chinese logistics industry and set the standards and guidelines necessary for the Chinese importer and manufacturer to function effectively.
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