It may be easy to forget these days, with all the attention that China is getting, that just over 30 years ago the country was little more than an afterthought. This was not just in global politics but also in terms of manufacturing and exports, which now are activities nearly synonymous with China. As recently as the 1970s, when one considered product sourcing in Asia, the first thought was either Taiwan or South Korea.

Theoretically, importing from China may have been cheaper, but in addition to the language barrier there was little infrastructure development, a lot of business unfriendly bureaucracy, and poor accommodations and travel facilities for buyers, all of which combined as a massive barrier to entry for anyone who wasn’t either incredibly brave or naively adventurous enough to attempt buying from China.

Not many foreign companies were present in these early days of China’s “Opening Up”, however China Performance Group (CPG), an American company specializing in China sourcing, was one of the early entrants. To examine the development of CPG is thus a good way to explore the progressively changing landscape of the China exporting industry. This approach offers a unique perspective on how one kept pace with the country’s record growth and unpredictable evolution, managing to find success in this previously improbable “land of opportunity”.

Nowadays, when you want to find a Chinese manufacturer, it can be as easy as signing into Alibaba.com and entering a few keyword search terms. In 1978 however, when CPG first began operations, things were not as easy. In those days, China preferred to export commodities rather than manufactured goods. All exports were handled by central government organizations called Foreign Trade Corporations (FTCs) that all operated only out of Beijing and were assigned well-defined product groups. For example, chemicals were handled by an FTC called Sinochem, machinery was handled by Machimpex, and instruments by Instrimpex. This gave buyers little to no control over the manufacturers but it kept things simple. Thus it was typically the case that the best way to help foreign importers buy from China was to operate as a trader or a reseller, buying the goods through the system and selling them to clients abroad. At that time CPG focused its efforts on developing best practices for sourcing, quality control and expediting processes to ensure satisfaction from its growing customer base in the USA.

However, as we have seen during the past few decades, things do not stand still in China and it was not long before manufacturing started to de-centralize, with regional FTCs emerging and increased direct access to factories without the need of intermediaries. It progressively became easier to do business in China while at the same time more difficult to supervise factories and ensure quality. This was an indication that business could not go on as usual. It soon became clear that the best choice for large importers of “Made in China” products would be to start buying direct from China. This trend created a need for increasingly specialized sourcing systems and services offered by professional China procurement specialists. These kinds of services enabled buyers to focus on their product and the development of their business rather than exhausting themselves in finding ways to effectively manage the growing network of suppliers around the country. This would ensure the quality of the factories and production lines and at the same time expedite delivery.

Through the 1990’s and 2000’s, it was becoming obvious that China was the go-to place for procuring a majority of manufactured goods for companies and end-users around the world. However, as Adam Smith taught us, with demand comes supply and Chinese suppliers started to react swiftly to a broad range of demand as new factories were popping up all around the country. A comprehensive understanding of opportunities became more important than ever in China as buyers could find themselves overwhelmed with too many factories to choose from, all just trying to get a piece of the rapidly growing pie. Personal relationships and word of mouth recommendations gave way to impartial, professional evaluations of factories and quality control standards to ensure that manufacturing was carried out properly according to ever increasing and demanding standards.

The landscape in China over the past century has been anything but predictable or stable. So how does one find success in such a volatile atmosphere? As our experience has shown, success in China, or anywhere else for that matter, is about identifying opportunities and using them to your advantage. Though many are predicting the decline of the export industry of China, sourcing from China is even more exciting today than it was over 30 years ago even if both the challenges and opportunities are vastly different. China now has one of the most advanced expressway, railroad, and port systems in the world and the manufacturing capabilities in the country have become increasingly sophisticated. On the other hand, cultural and linguistic barriers remain high especially when layered over an increasingly complex legal and tax system, questionable ethics from too many manufacturers, rising environmental concerns, and an often confusing bureaucracy. Thus to have had companies emerge that can assist buyers with increasingly sophisticated sourcing services can be a valuable resource to have access to, providing some peace of mind while accessing one of the largest, most diversified, and, now, most sophisticated source of products in the world.

For a more detailed look on the growth of China and CPG, please look at CPG’s White Paper, The Unbelievable Growth Story of China’s Exports: A First Hand Perspective from an American Sourcing Company. You can also contact CPG today to see how they can help you with your China Sourcing program.