By: Kristie Thong, China

Published: Today in Procurement Online

China - Sourcing from China may benefit profit margins, but there have been cases where vendors used fake licenses, increased prices and overlooked the quality of goods.

A recent Gartner research found some companies received products inferior in quality when purchased in high volumes. Many Chinese suppliers will reduce product quality over time to increase their margins and profits, and it typically happens after the first few orders.

Some Chinese suppliers may also buy fake certificates attesting to ISO quality standards, Six Sigma and social compliance, Supply Management reported, which is difficult to detect.

The report recommended procurement to be vigilant at supplier sites so as to prevent fading quality. In the event where company officials are not present, third party inspectors should take their place.

Mark Berlin, senior adviser at procurement consultancy Greybeard Advisors comments, "It's critical that with China sourcing and all other offshore sourcing strategies, plans and execution of those are well understood and supported by the company's leadership team and the various supporting functions in the supplier relationships across the organisation. Without this baseline support, China sourcing and offshore activities may be doomed to fail."