Expense Of An Office In China, Which Is Not Necessary

Let’s assume that ABC import, a US importer, mainly imports consumer goods from China, and develops 100-200 new samples from China each year, with a limit of 200 samples.

Guangzhou inspection company

To improve supply chain efficiency, recruit an office staff with a quality background in a major Chinese city, e.g., Guangzhou (assuming only one employee named Linda),

Annual salary at a salary of $15,000 – $20,000/year, with a lower limit of $15,000/year, for example.
Office rent cost 50sqm * 60rmb/sqm = 3000RMB/month, 36,000RMB/year or (exchange rate 6.3) 5700USD/year
Office utilities and other costs 800 RMB/month, 9600 RMB/year, or (exchange rate 6.3) 1500 USD/year
Cross border courier costs, not counted yet.

Total annual base cost to run China office: $15000 + $5700 + $1500 = $22200

Usually a SCS technician of CQI can

follow up the sample development progress and sample modification progress of 4~8 factories in a day,
and finish the sample quality inspection (SQI) in 3 pcs of delivery packages from factories,
assuming that each package has 3 different samples, so the SCS technician can do SQI for 9 samples, 3 SQI reports and related videos in a day.

Assuming that ABC import’s Chinese staff, Linda,

who has the same level of expertise and efficiency as the SCS technicians,
ABC import needs 200 new samples per year in China.
If ABC Import’s U.S. headquarters staff is responsible for contacting the Chinese factory and reaching a purchase agreement with the factory,
the sample development phase will begin.
Then, China office clerk, Linda is responsible for following up the sample development in the Chinese factory,
mainly by communicating with the factory, following up the sample development progress, sample modification, sample quality assessment, sample unpacking and packing, and sample cross-country mailing.

Thus, the sample compliance cost of a single sample for ABC import = $22,200 / 200 = $111/each,

CQI’s SCS service is based on (factories’ express parcels)

each factory’s express parcels (usually no more than 3 models), and
usually factories send 3 models/parcel of samples to CQI’s office for SCS service,
SCS service charge is $68USD/parcel/factory, usually the number of models in delivery parcel is less than 3 models.
So, for example, if ABC import develops 200 samples per year, it means that ABC Import’s Chinese factories need to send 200 / 3 = 67 parcels to CQI office.

SCS service charges: (total) 67 parcels * $68/parcel = $4556 USD, which is calculated as $4500,

Comparison of sample development and follow-up costs for these two work modes,

Total annual base cost to run China office: $15000 + $5700 + $1500 = $22200
SCS service charges: (total) 67 parcels * $68/parcel = $4556 USD, which is calculated as $4500,
Total amount of SCS charges / Total cost of ABC Import’s Guangzhou, China office = $4,500 / $22,200 = 20.2%, which is only one-fifth of the cost.

Moreover, CQI’s SCS service is derived from

the quality inspection industry background of a third party quality inspection company,
which has a strong background in the quality industry and
is well aware of the quality standards of major products made in China.
This is a level of expertise that Linda, a staff member at ABC import China’s Guangzhou office, cannot achieve.

If you think I’m wrong, please send me an email at cs@cqipro.com to ask a question.

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