What European SMEs Get Wrong About Sourcing from China in 2025

After more than twenty years in the middle of the Sweden, Europe and China supply chain I have seen hundreds of sourcing projects from both sides of the table. Some were smooth and profitable. Others turned into expensive lessons that could have been prevented with a few hours of preparation and a different mindset.

In 2025 buyers have more tools than ever, yet the same classic mistakes keep showing up when European SMEs start sourcing from China. Factories are faster, product cycles are shorter and logistics have become more unpredictable. This means the gaps between a good supplier and a bad one, and between a good sourcing process and a sloppy one, are bigger than they were ten years ago.

My goal in this article is simple: show you the major traps I still see every month, explain why they happen and give you a practical system you can start using tomorrow.

The 2025 reality, China is efficient but not automatically cheap or low risk

A common misconception in Europe is that China automatically equals low price. That era is gone. Chinese suppliers today compete on engineering capability, speed, design flexibility, material availability and the strength of the local supply cluster around them.

The cheapest Chinese factory is often the most dangerous one. Not because they are dishonest, but because low margin means low stability. A factory running on thin margins cannot easily afford extra quality checks, higher grade materials, better packaging, slower setups for special batches or reworking problems without recharging you.

Many of the problems European SMEs face are not about bad luck, they are structural. They come from the way projects are set up and managed. The good news is that structure is something you can fix.

Mistake 1, trusting pretty factory photos more than real systems

Every supplier looks good online in 2025. Even small workshops can produce perfect drone footage, glossy showroom videos and staged production shots with workers in clean uniforms. It all looks professional enough to impress a buyer sitting in an office in Stockholm, Berlin or Paris.

The problem is that photos behave like social media. They show the best possible moment, not the daily reality. They do not tell you anything about process control, production capacity, maintenance routines or how the factory behaves when something goes wrong.

• Photos do not show how often they outsource orders to another factory when they are full.
• They do not show how often they change materials or components when prices move.
• They do not show how they handle complaints or rework when defects appear.

I have seen small European buyers send a large first order simply because the factory logo looked serious and the salesperson was friendly on WeChat. There was no simple supplier profile, no internal scoring, no visit and no structured reference checks.

How to fix it

• Create a one page supplier profile template with basic data, ownership, certifications and key products.
• Score each candidate on a few things that matter for you, for example communication, engineering depth and quality systems.
• Ask for video of real production, not only the showroom.
• Use photos and showrooms as a bonus, not as a decision driver.

Mistake 2, chasing the lowest unit price and ignoring total cost

Unit price is the most visible number, which is why inexperienced buyers focus on it. It is easy to put three prices in a spreadsheet and pick the lowest one. The problem is that the unit price might only be forty percent of your real cost.

A quote that looks ten percent cheaper on paper can easily become the most expensive once you add packaging, transport damage, longer lead times, higher defect rates and more time spent on firefighting.

What cheap quotes usually hide

• Cheaper materials. Changing a material grade can be invisible until the product is in use. That might mean more returns, more customer complaints and a shorter product life.
• Cheaper packaging. The single biggest reason for damaged goods when shipping from China is packaging shortcuts that nobody paid attention to up front.
• Longer lead times. Low price factories often run at full capacity and your order will wait in line behind bigger customers.
• Outsourced production. A very low price often means outsourcing to micro factories you will never see and never have a direct contract with.

Mini case from a real project

A European ecommerce brand received three quotes for a new product:

• Supplier A: €4.10 per unit
• Supplier B: €4.30 per unit
• Supplier C: €5.10 per unit

They picked Supplier A, because on paper it looked like an easy win.

After the first shipment:

• defect rate was 9 percent
• packaging had to be redone in Europe
• shipping took 23 additional days due to rework

When they added the extra packaging, rework and delay costs, the actual cost per unit became roughly €6.20, far higher than the original more expensive quote. The cheapest price turned into the most expensive choice.

How to fix it

• Standardise quotes on the same incoterm and the same quantity.
• Ask for material certificates, thickness data and batch information in writing.
• Request packaging specifications with drop test results or at least clear photos.
• Push for previous defect rates or example quality control reports.
• Add a simple risk overhead in your mind for suppliers who answer vaguely or promise everything too quickly.

Mistake 3, working without a real specification

A shockingly high number of SMEs still send emails like “can you make something like this?” or “we want the same quality as Brand X.” That is not a specification. It is an invitation for the factory to guess.

Factories will happily proceed, but they will fill in the blanks themselves. Suppliers are often very willing to help, but they are not inside your head. If you do not define materials, tolerances, tests, packaging and labelling, they will make assumptions that fit their way of working, not necessarily yours.

What happens when specs are incomplete

• Suppliers make assumptions that may be very different from your priorities.
• Samples do not match expectations and every round of changes adds cost and time.
• Both sides become frustrated, but nobody can say exactly what went wrong.

A factory cannot guess if you care more about durability, cost, finish, weight or feel. Without clarity they will optimise for what works best for them, usually cost and production speed.

How to fix it

Your spec sheet does not need to be a fifty page manual. It just needs to be clear.

• List materials and grades, not just “steel” or “plastic”.
• Define key dimensions and tolerances.
• Describe colours and finishes with codes where possible.
• Include certification and testing requirements.
• Specify packaging dimensions, materials and labelling.
• Add photos or diagrams of important details.
• Give the spec sheet a version number and date, and update it when you learn something new.

Even a simple two page spec sheet can save you thousands of euros later by preventing confused assumptions.

Mistake 4, treating quality control as something at the end

By the time you reach final inspection, most of the cost of the order is already locked in. The materials are bought, the labour is spent and the products are packed. Quality control is not something you add at the end, it is something you design into the whole process.

Why end only quality control fails

• Defects found late cause long delays because rework is slow and expensive.
• Production might need to be redone and there is no time left in your delivery plan.
• Raw materials are already consumed so changes cost more.
• The supplier may not agree to compensate because nothing was written up front.
• Containers may already be booked which limits your options.

Good quality control starts much earlier. It starts when you agree on the specification, when you approve the golden sample and when you define what will happen if defects are found. It is always cheaper to prevent problems than to argue about them later.

How to fix it

• Agree in writing on what an acceptable defect rate is and how many samples an inspection will check.
• Approve one or two golden samples and keep clear photos and notes on what matters most.
• Use a simple AQL framework or a trusted inspector, even for smaller orders.
• Plan inspections before production, during production and before shipment, not only at the end.
• Verify the packaging line separately, not only the products themselves.

Mistake 5, believing optimistic lead times and forgetting buffers

Another classic mistake is planning around the best case lead time. The factory says production is 30 days and shipping is 30 days, so the buyer promises delivery to customers in exactly 60 days with no buffer at all.

There is no room for public holidays, power cuts, local government inspections, port congestion, extra quality checks or delays with other orders. When something small goes wrong, the whole plan collapses. Sales has to call customers and ask for patience, the warehouse sits and waits and marketing campaigns are delayed or run without stock.

How to fix it

• Ask for minimum, average and maximum lead times, not just the nice number.
• Add realistic buffers around Golden Week, Chinese New Year and other known holidays.
• Plan shipping with a window in mind, not an exact day.
• Communicate ranges to your own customers instead of a single magic date.
• Review real lead times after each order and adjust your planning based on reality, not hope.

Mistake 6, not knowing if you work with a factory or a trader

Working with a trading company is not automatically bad. Some traders bring real value in the form of coordination, design help, better English communication or financing. The problem is when you think you are working with a factory but in reality you are working with a trader and nobody says it out loud.

This can create confusion around who owns tooling, who decides on engineering changes and who is responsible when quality issues appear. It also makes it harder to understand real capacity and actual production lead times, because you only see one link in the chain.

How traders typically hide their role

• They talk about “our factory” while showing partner production in photos.
• They rent a small workshop for staged photos that looks larger than it is.
• They avoid technical discussions and keep everything on a general sales level.
• They answer quickly but in a very vague way when you ask for details.

How to fix it

• Ask polite but direct questions about their production, machines and main customers.
• Request a copy of their business license and check the company type.
• Ask for video of specific production processes that match your products.
• Notice who answers technical questions: an engineer at the factory or a sales person at an office.
• Decide if you are comfortable working with a trader and if yes, what value they need to bring for the margin to make sense.

Mistake 7, loose contracts and vague change handling

Many first time buyers sign a very basic pro forma invoice and think it is enough. There is no clarity on who owns drawings and tools, what happens if raw material prices move or how to handle design changes between the first and second order.

This creates tension later. The factory feels squeezed when costs rise. The buyer feels cheated when quality slips or price increases happen without warning. Both sides are frustrated, but there was never a shared written framework to begin with.

How to fix it

• Use a simple term sheet that covers payment stages, tooling, change requests and liability.
• Clarify how often prices will be reviewed and based on what indices or events.
• State what happens if quality problems are found and how they will be measured.
• Write everything in plain English first, then have a local partner or lawyer review the Chinese version.

A more practical roadmap for your first year of China sourcing

Fixing all of these mistakes at once can feel heavy. The good news is that you can get most of the benefit from a small set of habits and templates that you reuse across products and suppliers.

Step 1, prepare internally before you contact factories

• Define your must haves and nice to haves on one page: price, quality, lead time, certifications.
• Create basic spec sheet and supplier profile templates.
• Agree on your preferred incoterm and payment structure as a team.

Step 2, run a structured supplier search and shortlisting

• Collect a small pool of candidates rather than talking to one or two factories only.
• Score each candidate using the same criteria, not gut feeling alone.
• Narrow down to two or three options and request detailed quotes and samples.

Step 3, test small, learn fast, then scale

• Start with a pilot order that is big enough to be real, but small enough that you can survive problems.
• Use inspection results, communication quality and actual lead times as input to your next decision.
• Move more volume to the suppliers that behave well under pressure, not only the ones with the lowest price.

FAQ, sourcing mistakes and risk management

Is it still worth sourcing from China in 2025 for smaller European companies?

Yes, in many categories it still makes sense, especially where there is strong cluster expertise, good access to components and a deep supply base. In other categories, especially very simple plastic items, countries like Turkey, Vietnam or Poland might be more efficient because of shorter lead times and easier logistics.

Can I avoid all problems if I follow a good process?

No process can remove all risk, there will always be surprises. The goal is to avoid the predictable, boring mistakes. When something unexpected happens, you want to be in a position where you have good information, a decent contract and a relationship that can handle honest discussions.

Should I always visit the factory before the first order?

A visit is ideal, but it is not always realistic. For smaller companies a hybrid approach works well. Use video calls, third party inspections and local partners for early validation, then plan a visit once the product and relationship show real potential.

Do I need a sourcing agent, or can I do this myself?

It depends on your internal bandwidth and experience. Some teams are comfortable handling suppliers directly once they have clear templates and a bit of guidance. Others prefer to work with a sourcing partner for the first year, then bring more of the work in house later when they understand the patterns better.

Closing thoughts

Sourcing from China in 2025 is not magic and it is not impossible. It is a professional discipline, just like finance or product development. The companies that do well are rarely the ones that find a secret factory. They are the ones that treat sourcing as a system, learn from each order and keep communication with suppliers clear and honest.

If you want a second pair of eyes on your current quotes, supplier list or planned first order I am happy to look at it. Often a short review is enough to spot two or three improvements that reduce risk and make your first year of China sourcing calmer for both you and your customers.