Sourcing Products from China Has Changed. Here’s What U.S. Brands Need to Know Now.

I’ve been developing products and working with factories in China for decades.

I’ve walked more factories than I could possibly count. I’ve spent countless days at the Canton Fair. I’ve developed products from a sketch or an idea, negotiated tooling and costs, solved manufacturing problems, built brands around those products and eventually watched them land on the shelves of major American retailers.

For much of my career, sourcing from China followed a relatively understandable formula.

Find the right factory. Develop the right product. Get the quality right. Negotiate the cost. Manufacture it. Ship it. Sell it.

It was never quite that simple, of course.

But today?

It isn’t even close.

The current importing environment has made product development and sourcing significantly more complicated. Tariffs and trade policy can materially affect the economics of a product, and importers still need to understand whether particular Chinese products fall under additional duties by their specific HTS classification.

Trade policy continues to move. That’s why I wouldn’t build a product-development strategy around today’s tariff percentage. The rules can change faster than your product-development cycle.

So if you’re developing products in China today, knowing where the factories are isn’t enough anymore.

You need to understand the entire business.

The Cheapest Factory Is Rarely the Cheapest Product

This may be one of the most important lessons I’ve learned in sourcing.

Companies understandably focus on FOB cost.

“Factory A is $6.85 and Factory B is $7.40.”

Therefore Factory A is cheaper.

Maybe.

And even landed cost isn’t the whole story.

Because ultimately the question is whether you can build a profitable product around that cost.

Sourcing Doesn’t Begin With the Factory

This is another mistake I see repeatedly.

Someone comes to me and says:

“Rick, can you find me a factory that makes this?”

Maybe.

But that’s not necessarily the first question I want to answer.

First I want to know:

Then we start talking about where and how to manufacture it.

That’s the difference between buying something from a factory and developing a product.

I’ve never viewed China simply as a place to buy inexpensive merchandise.

To me, the best factories are product-development partners.

The Factory Is Part of the Product

I’ve always believed that the factory is part of the product.

I believe that more strongly today than ever.

The right manufacturing partner brings much more than machinery and labor.

Some of the most interesting products I’ve discovered over the years weren’t created because an American company handed a Chinese factory a finished drawing and said, “Make this.”

They came from conversations.

Those are some of my favorite questions to ask in a factory.

Because every once in a while, somebody walks into the sample room with something you weren’t expecting.

And that’s where things get interesting.

China Isn’t Automatically the Answer. And It Isn’t Automatically the Problem.

There has been enormous discussion about moving manufacturing out of China.

Sometimes that’s absolutely the right decision.

I’ve worked across Asia and in other manufacturing regions, and there are products where another country can provide better economics, capabilities or strategic advantages.

But moving production simply because a spreadsheet says another country has a lower duty rate can be an expensive mistake.

You have to ask:

Country-of-origin strategy isn’t the same thing as factory strategy.

The objective isn’t to manufacture in China.

The objective isn’t to manufacture outside China.

That’s a much more useful question.

Product Development Has Become Risk Management

Twenty years ago, I probably wouldn’t have described product development that way.

Today I would.

Before committing to a product, you need to understand much more than whether consumers might like it.

That doesn’t mean companies should stop developing products.

Quite the opposite.

It means they need to develop smarter ones.

A differentiated product with healthy economics gives you room to maneuver.

A commodity product surviving on pennies doesn’t.

And Now I’d Like to Speak to the Factory

There’s another side to this story.

I’ve spent a significant part of my career working directly with manufacturers throughout China.

And I’ve noticed something increasingly interesting.

Some extraordinarily capable Chinese manufacturers have spent decades making excellent products for other people’s brands.

What they don’t necessarily have is an American brand.

Or a clear understanding of how to turn their manufacturing capability into a product proposition an American retailer and consumer will understand.

That may be one of the biggest opportunities I see today.

Instead of asking only:

“Which American brands can we manufacture for?”

Perhaps some manufacturers should also be asking:

Those are two very different questions.

Great Manufacturing Is Only the Beginning

Building a successful U.S. business requires more than putting an English-language logo on an existing product.

I’ve spent much of my career working on that bridge between manufacturing capability and American market opportunity.

Sometimes that means helping an American company develop and source the right product overseas.

Sometimes it means helping a manufacturer understand what product it should build for America.

And sometimes it means seeing something sitting on a factory shelf and realizing:

That’s the part I still love.

I’m Going Back to Canton

Next month I’ll be returning to Guangzhou for the 140th Canton Fair.

The Fair runs in three phases from October 15 through November 4. For my world, Phase 2 — October 23–27 — is particularly important because it covers housewares, kitchenware and tableware, household items, gifts and decorations, furniture and related home categories.

And I’m going with a somewhat different mission this time.

Of course I’ll be looking at products.

I always am.

But I’m particularly interested in meeting manufacturers doing something different.

Or simply a management team that looks at the American market and thinks:

“We know how to manufacture. What we don’t know is how to build the business there.”

I’d like to meet those people.

Because that’s where I think The Product Foundry can be particularly useful.

From Factory to American Market

At The Product Foundry, we work on both sides of that bridge.

For American companies, that can mean product strategy, development, sourcing, factory identification, cost engineering, manufacturing, importing, brand development and retail commercialization.

For international manufacturers, it can mean evaluating technology and products for the American market, developing the product proposition, creating or repositioning a brand, determining the right channels and helping build the path into U.S. retail.

And for certain highly demonstrable products, that evaluation can include whether there may be an opportunity in the QVC and HSN ecosystem — an area in which I’ve spent more than 15 years building brands and businesses.

Not every factory should become a brand.

Not every product belongs in America.

And not every interesting product belongs on QVC or HSN.

Knowing the difference is part of the work.

One Last Thought

For years, companies looked at global sourcing primarily as a way to answer one question:

“Where can I make this product?”

I think the better question today is:

What business are we trying to build — and what product, factory, country, cost structure and retail strategy give us the best chance of building it?

That’s a harder question.

But it’s also a much more interesting one.

And after decades doing this, it’s the question I still want to help answer.

From Idea to Market.

Source Notes

Current tariff applicability depends on product classification and current U.S. trade policy. Verify applicable HTS classification and duty treatment before commercial decisions.

• U.S. Trade Representative tariff resources
• Canton Fair official information