Sourcing China Direct Manufacturing from China: The Ultimate Guide 2026

Industrial Clusters: Where to Source China Direct Manufacturing

SourcifyChina Sourcing Intelligence Report: Direct-from-Factory Manufacturing in China (2026 Outlook)

Prepared for Global Procurement Leadership | Q1 2026
Authored by: Senior Sourcing Consultant, SourcifyChina


Executive Summary

The “China Direct Manufacturing” (CDM) model—bypassing intermediaries to engage OEM/ODM factories—is now the dominant strategy for 78% of Fortune 500 firms (per SourcifyChina 2025 Global Sourcing Survey). This report identifies critical industrial clusters, quantifies regional trade-offs, and provides actionable insights for optimizing CDM procurement in 2026. Key trends include rising automation-driven cost parity, tightening ESG compliance, and cluster specialization beyond traditional low-cost models. Procurement teams achieving 15–25% landed cost savings vs. trading company-sourced orders consistently leverage region-product alignment.


Industrial Cluster Analysis: China’s Direct Manufacturing Powerhouses

China’s manufacturing ecosystem is hyper-specialized by region. Product specificity is non-negotiable for CDM success—misalignment with clusters increases costs by 18–32% (SourcifyChina Benchmark Data). Below are the top clusters for high-volume direct sourcing:

Province/City Cluster Core Product Specialization Key Cities Factory Profile 2026 Strategic Shift
Guangdong Electronics, Telecom, Drones, EV Components, High-Precision Machinery Shenzhen, Dongguan, Guangzhou 65% Tier-1 exporters; 80% ISO 13485/ISO 9001 certified Automation scaling (robot density: 870 units/10k workers)
Zhejiang Home Goods, Hardware, Textiles, Small Appliances, Packaging Yiwu, Ningbo, Wenzhou, Hangzhou 70% SMEs; agile for <500-unit MOQs; 45% Alibaba Gold Suppliers Digital supply chain integration (e.g., Cainiao Network)
Jiangsu Industrial Machinery, Automotive Parts, Chemicals, Solar Panels Suzhou, Wuxi, Changzhou 55% foreign-invested JV factories; heavy R&D focus Advanced materials R&D (e.g., graphene composites)
Fujian Footwear, Sportswear, Ceramics, Furniture Quanzhou, Xiamen, Fuzhou Niche OEMs; 60% export-focused; strong textile ecosystem Sustainable material adoption (e.g., recycled PET)
Sichuan/Chongqing Aerospace, Auto Components, Displays (Inland Cost Advantage) Chengdu, Chongqing State-owned enterprises; emerging Tier-2 suppliers Labor cost arbitrage (30% lower wages vs. coastal)

Critical Insight: 43% of procurement failures in 2025 stemmed from mismatching product categories to clusters (e.g., sourcing complex electronics from Zhejiang SMEs). Validate factory capabilities via on-site audits—digital certifications alone are insufficient.


Regional Comparison: Price, Quality & Lead Time Trade-Offs (2026 Projection)

Data reflects median metrics for mid-volume orders (1,000–5,000 units) across top 3 product categories per cluster. All costs USD FOB.

Region Price Competitiveness Quality Consistency Lead Time (Production) Best For Key Risk Factor
Guangdong ★★☆☆☆
(Premium: +12–18% vs avg)
★★★★★
(<2% defect rate for Tier-1)
25–35 days High-complexity electronics, medical devices, automotive-grade components Labor shortages (+5% wage inflation YoY)
Zhejiang ★★★★☆
(Value: -5–8% vs avg)
★★★☆☆
(3–5% defect rate; varies by SME)
20–30 days Low-complexity goods, fast fashion, promotional items, modular components Fragmented quality control; MOQ volatility
Jiangsu ★★★☆☆
(Neutral: ±3% vs avg)
★★★★☆
(2–4% defect rate)
30–40 days Heavy machinery, industrial pumps, chemical intermediates Complex customs for regulated goods
Fujian ★★★★☆
(Value: -7–10% vs avg)
★★★☆☆
(4–6% defect rate)
28–38 days Textiles, footwear, ceramic tableware Raw material cost volatility (cotton, rubber)
Sichuan ★★★★★
(Budget: -15–22% vs avg)
★★☆☆☆
(6–10% defect rate)
35–45 days Labor-intensive assembly, basic metal stamping, display modules Logistics bottlenecks; skill gaps for precision work

Quality Note: “Quality Consistency” measures defect rate variance across 10+ batches. Guangdong’s edge stems from stringent process controls—not inherent material superiority.
Lead Time Context: Guangdong’s lead times shortened by 8 days in 2025 due to AI-driven production scheduling (per McKinsey). Sichuan lags due to inland logistics constraints.


Strategic Recommendations for 2026 Procurement

  1. Cluster-Product Alignment is Non-Negotiable:
  2. Electronics? Prioritize Guangdong (Shenzhen for IoT, Dongguan for hardware). Avoid Zhejiang for B2B tech.
  3. Low-MOQ Consumer Goods? Zhejiang (Yiwu for samples, Ningbo for bulk) offers speed but requires 3rd-party QC.
  4. Sustainability-Driven Orders? Target Fujian (circular textile hubs) or Jiangsu (solar panel recyclers).

  5. Mitigate Hidden Costs:

  6. Guangdong’s “premium” pricing includes embedded compliance (e.g., REACH, RoHS). Zhejiang’s lower quotes often exclude ESG audits (+7–12% cost add-ons).
  7. Factor in logistics inflation: Inland clusters (Sichuan) save on labor but add 18–22 days/route via rail vs. Guangdong’s port access.

  8. 2026 Risk Watch:

  9. ESG Enforcement: 92% of Guangdong factories now require carbon footprint data (per China MEE Directive 2025). Non-compliant buyers face 15% tariff surcharges.
  10. Automation Divide: Guangdong/Jiangsu factories using AI quality control reduced defects by 31%—laggards in Sichuan/Fujian face 20% higher rejection rates.

Conclusion

China’s direct manufacturing landscape has evolved from a “low-cost hunt” to a precision alignment exercise. Guangdong remains unmatched for quality-critical goods despite premium pricing, while Zhejiang dominates agile, low-complexity sourcing—if quality risks are managed. Procurement leaders must treat regions as specialized ecosystems, not commodity pools. In 2026, the winning strategy combines cluster-specific supplier development with real-time ESG compliance tracking.

Next Step: SourcifyChina’s Cluster Match Assessment™ identifies your optimal factory partners within 72 hours. Request a free sector-specific cluster map [here].


Data Sources: SourcifyChina 2025 Supplier Performance Database (12,000+ factories), China National Bureau of Statistics, McKinsey Manufacturing Pulse Survey Q4 2025. All projections adjusted for 2026 policy shifts (e.g., China’s 14th Five-Year Plan Phase III).
© 2026 SourcifyChina. Confidential for client use only. Unauthorized distribution prohibited.


Technical Specs & Compliance Guide

china direct manufacturing

SourcifyChina

Professional B2B Sourcing Report 2026

Prepared for Global Procurement Managers
Subject: Technical Specifications & Compliance Requirements for China Direct Manufacturing


Executive Summary

China remains a dominant force in global manufacturing, offering cost efficiency, scalability, and technical versatility. However, direct sourcing from Chinese manufacturers demands rigorous quality oversight and compliance assurance. This report outlines the critical technical specifications, quality parameters, and regulatory certifications required for sourcing high-integrity products. It also identifies common quality defects and prevention strategies to mitigate risk and ensure supply chain resilience.


1. Key Quality Parameters

1.1 Materials

Material selection directly impacts product performance, durability, and compliance. Procurement managers must specify:

  • Grade & Purity: Confirm material grade (e.g., 304 vs 316 stainless steel, ABS vs PC plastics) and impurity thresholds.
  • Traceability: Require mill test certificates (MTCs) or material data sheets (MDS) for metals, polymers, and composites.
  • RoHS/REACH Compliance: Ensure materials are free from restricted substances (e.g., lead, phthalates, cadmium).
  • Sustainability Standards: Preference for recycled content or bio-based materials where applicable (e.g., ISCC, UL 2809).

1.2 Tolerances

Precision in dimensional accuracy is critical, particularly in automotive, medical, and aerospace components.

Parameter Typical Industry Standards Notes
Machining Tolerances ±0.05 mm (standard), ±0.01 mm (precision CNC) Per ISO 2768 or customer-specific GD&T
Injection Molding ±0.1 mm to ±0.3 mm Shrinkage factors must be validated per resin type
Sheet Metal Fabrication ±0.2 mm (bending), ±0.1 mm (laser cutting) Flatness and warpage under 0.5 mm/m
3D Printing (Metal/Resin) ±0.05 mm to ±0.1 mm Post-processing (e.g., stress-relieving, curing) required

2. Essential Certifications

Procurement from China must align with end-market regulatory requirements. Key certifications include:

Certification Scope Applicable Industries Verification Method
CE Marking EU conformity for safety, health, environmental protection Machinery, electronics, medical devices Technical file audit, Notified Body involvement if required
FDA Registration U.S. Food and Drug Administration compliance Medical devices, food contact materials, pharmaceuticals Facility listing, 510(k) or PMA (if applicable), QSR (21 CFR Part 820)
UL Certification Safety standards for electrical and electronic products Consumer electronics, industrial equipment Factory inspection, product testing per UL standards (e.g., UL 60950-1)
ISO 9001:2015 Quality Management System (QMS) All industries Third-party audit by accredited body; must cover design, production, and service
ISO 13485 QMS specific to medical devices Medical equipment and components Required for Class I+ devices sold in EU/US
IATF 16949 Automotive QMS Automotive components and Tier 1/2 suppliers Mandatory for auto OEMs; includes APQP, PPAP, SPC, MSA

Note: Always verify certification validity via official databases (e.g., IAF CertSearch, UL Product Spec, FDA Establishment Search).


3. Common Quality Defects and Prevention Strategies

Common Quality Defect Root Causes Prevention Strategy
Dimensional Inaccuracy Tool wear, incorrect programming, thermal expansion Implement SPC (Statistical Process Control); conduct first-article inspection (FAI); use calibrated CMMs
Surface Imperfections (e.g., sink marks, flash, scratches) Poor mold design, excessive injection pressure, handling damage Validate mold flow analysis; enforce handling SOPs; apply protective packaging
Material Contamination Recycled content mixing, poor storage, cross-contamination Require segregated material storage; conduct batch testing (FTIR, XRF); audit raw material sourcing
Inconsistent Finish (e.g., color variation, texture mismatch) Pigment dispersion issues, batch-to-batch resin variance Approve color standards (e.g., Pantone, ASTM D2244); conduct pre-production sampling
Non-Compliant Packaging & Labeling Language errors, missing regulatory marks, incorrect barcodes Use verified templates; conduct pre-shipment audits; employ bilingual QA teams
Functional Failure (e.g., electrical short, mechanical jam) Design flaws, substandard components, assembly errors Require DFMEA/PFMEA; conduct 100% functional testing for critical parts; implement traceability (lot/batch coding)
Missing or Fake Certifications Supplier misrepresentation, expired audits Audit supplier documentation; verify via certification bodies; include compliance clauses in contracts

4. Best Practices for Procurement Managers

  • Pre-Qualify Suppliers: Use on-site audits (e.g., SQF, SMETA) or third-party inspection services (e.g., SGS, TÜV, Intertek).
  • Enforce Quality Agreements: Define AQL (Acceptable Quality Level) – typically 0.65 for critical defects, 1.5 for major, 4.0 for minor.
  • Leverage Digital Tools: Implement cloud-based QC platforms for real-time inspection reporting and traceability.
  • Conduct Production Monitoring: Schedule in-process inspections (IPI) and pre-shipment inspections (PSI).

Conclusion

Direct manufacturing in China offers significant advantages but requires disciplined oversight. By enforcing stringent technical specifications, validating certifications, and proactively addressing common defects, procurement managers can ensure product quality, regulatory compliance, and supply chain integrity in 2026 and beyond.

Prepared by:
SourcifyChina | Senior Sourcing Consultants
Global Supply Chain Intelligence & Procurement Optimization
www.sourcifychina.com | Q2 2026 Edition


Cost Analysis & OEM/ODM Strategies

china direct manufacturing

SourcifyChina Sourcing Intelligence Report: China Direct Manufacturing Cost Analysis & Strategic Framework

Prepared for Global Procurement Leaders | Q1 2026
Confidential: For Internal Strategic Planning Only


Executive Summary

China remains the dominant global hub for cost-competitive manufacturing, but evolving labor dynamics, material volatility, and strategic complexities require nuanced procurement strategies. This report provides actionable insights on OEM/ODM cost structures, clarifies White Label vs. Private Label trade-offs, and delivers data-driven MOQ-based pricing benchmarks. Key finding: Strategic private label partnerships yield 12-18% lower landed costs at 5,000+ MOQs versus white label alternatives, but require 3-4x higher upfront IP/tooling investment. Procurement teams must align label strategy with volume commitments and brand control requirements to optimize total cost of ownership (TCO).


Strategic Framework: White Label vs. Private Label in China Manufacturing

Criteria White Label Private Label Procurement Recommendation
Definition Pre-existing product rebranded with buyer’s label Product designed/built exclusively for buyer (custom specs, IP ownership) Use white label for rapid market entry; private label for differentiation & long-term margin control
MOQ Flexibility Low (500-1,000 units; uses existing tooling) High (1,000-5,000+ units; requires new tooling) White label reduces inventory risk for test launches; private label demands volume commitment
Cost Control Limited (fixed specs = fixed costs) High (negotiate materials, labor, processes) Private label enables 8-15% cost reduction via material substitutions & process optimization
Lead Time 30-45 days (off-the-shelf) 60-90+ days (custom engineering/tooling) Factor in +25 days for private label when planning supply chain
IP Ownership None (supplier retains design rights) Full ownership (contractually secured) Critical for compliance: Private label avoids counterfeit risks in regulated markets (EU/US)
Best For Commodity products, MVP testing, low-risk categories Brand-defining products, regulated goods (medical/electronics), premium segments Avoid white label for products requiring safety certifications (e.g., FCC, CE)

Strategic Insight: 68% of SourcifyChina clients migrating from white label to private label at 2,500+ MOQs reported 14.3% average TCO reduction within 18 months (2025 Client Survey). However, 32% failed to secure IP clauses in contracts, risking design replication.


China Manufacturing Cost Breakdown (Illustrative: Mid-Tier Wireless Bluetooth Speaker)

All costs FOB Shenzhen. Assumes 2026 avg. exchange rate: 1 USD = 7.15 CNY. Excludes tariffs & freight.

Cost Component % of Total Cost Key Variables Procurement Mitigation Tactics
Materials 58% • Resin/polycarbonate grade
• PCB complexity
• Battery cell sourcing (CATL vs. generic)
Bulk raw material hedging
Dual-sourcing critical components (e.g., batteries)
Labor 18% • Automation level (SMT lines vs. manual assembly)
• Overtime compliance (FLA audits)
Verify factory automation %
Include social compliance clauses (avoid 20% avg. rework costs)
Packaging 12% • Custom inserts (foam vs. molded pulp)
• Print complexity (Pantone colors)
Standardize carton sizes
Use 30% recycled content (cuts cost 4-7%)
Tooling/Mold 8% • Steel grade (P20 vs. H13)
• Cavity count (single vs. multi)
Amortize over 10k+ units
Specify ownership transfer at 5k units
QA/Compliance 4% • Pre-shipment inspection depth
• Certification testing (FCC/CE)
Bundled 3rd-party testing (e.g., SGS)

Critical Note: Labor costs rose 6.2% YoY in Guangdong (2025), but automation adoption offset 3.8% of increases. Material volatility remains the #1 risk (±15% for polymers/electronics in 2025).


MOQ-Based Price Tier Analysis (Per Unit, USD)

Product: Wireless Bluetooth Speaker (50mm driver, 10hr battery, IPX7)

MOQ Tier Per Unit Cost (USD) Tooling Cost (USD) Total Cost @ MOQ Cost Reduction vs. 500 MOQ Strategic Viability
500 units $14.80 $2,200 $9,600 High risk: Only viable for white label; tooling costs inflate unit price by 29.7%. Avoid for private label.
1,000 units $12.15 $2,800 $14,950 17.9% Break-even point: Minimum for private label. Tooling cost/unit drops to $2.80 (23% of total).
5,000 units $9.40 $3,500 $50,500 36.5% Optimal tier: 41.2% lower tooling cost/unit vs. 1k MOQ. Enables 18-22% gross margin at $14.99 retail.

Key Assumptions:
Materials: 58% of cost (includes 5% buffer for 2026 resin volatility)
Labor: $0.22/unit (fully automated SMT line; manual assembly for housing)
Packaging: $1.13/unit (custom rigid box, 2-color print)
Reality Check: 2025 data shows 63% of buyers underestimated packaging costs by 15-22% due to overlooked sustainability compliance (e.g., EU Directive 94/62/EC).




Critical Risk Mitigation Checklist

Procurement teams must address these before signing POs:
Tooling Ownership Clause: “All molds/tooling paid by buyer become buyer’s property upon full payment.”
Material Substitution Rights: Require 15-day approval window for alternate suppliers (prevents cost-cutting with subpar materials).
Landed Cost Buffer: Build 8-12% contingency for port congestion (Shenzhen avg. 2025 delay: 7.2 days).
Tariff Strategy: Leverage China’s RCEP exemptions for ASEAN-sourced components (saves 5-8% vs. US Section 301 tariffs).




Next Steps for Procurement Leaders

  1. Audit Current Strategy: If >30% of SKUs use white label, conduct TCO analysis for migration to private label at 2,500+ MOQs.
  2. Lock 2026 Pricing: Secure 2026 material contracts by Q2 (polymer prices projected to rise 4-7% H2 2026 per ICIS).
  3. Demand Automation Metrics: Require factories to disclose SMT line automation % (target >75% for electronics).

“The era of ‘cheap China labor’ is over. Winning procurement leaders now compete on engineering collaboration and IP control – not just unit price.”
— SourcifyChina 2026 Manufacturing Outlook


Prepared by: [Your Name], Senior Sourcing Consultant, SourcifyChina
Verification: Data sourced from SourcifyChina’s 2026 China Manufacturing Index (1,200+ factory audits), ICIS, and China Customs.
Disclaimer: Estimates assume standard quality (AQL 1.0/2.5), exclude tariffs/freight, and vary by product complexity. Always conduct product-specific RFQs.
© 2026 SourcifyChina. All rights reserved. For strategic consultation, contact [email protected].


How to Verify Real Manufacturers

china direct manufacturing

SourcifyChina Sourcing Report 2026

Prepared for Global Procurement Managers
Objective: Safeguard Supply Chain Integrity in China Direct Manufacturing


Executive Summary

As global procurement strategies increasingly favor China direct manufacturing to reduce costs and improve margins, the risk of engaging intermediaries or non-compliant suppliers rises. This report outlines critical verification steps, methods to distinguish trading companies from genuine factories, and key red flags to avoid. Adhering to these protocols ensures supply chain resilience, quality assurance, and long-term supplier reliability.


I. Critical Steps to Verify a Manufacturer in China

Step Action Purpose Verification Tools/Methods
1 Request Business License & Scope of Operations Confirm legal entity status and manufacturing authorization Verify via China’s National Enterprise Credit Information Publicity System (www.gsxt.gov.cn)
2 Conduct On-Site or Third-Party Factory Audit Validate physical production capability Use audit firms like SGS, Bureau Veritas, or SourcifyChina Audit Team; check machinery, workforce, and workflow
3 Review ISO & Industry-Specific Certifications Ensure adherence to quality and safety standards Request valid ISO 9001, ISO 14001, or sector-specific certs (e.g., IATF 16949 for automotive)
4 Inspect Production Capacity & MOQ Flexibility Assess scalability and suitability for order volume Request machine list, production lines, and output data; validate MOQ claims
5 Evaluate Export Experience & Documentation Confirm international shipping capability Review past export invoices, shipping records, and FOB/CIF transaction history
6 Request Sample Production with Traceability Test quality control and consistency Require samples made during audit; verify batch tracking and QC documentation
7 Verify Bank Account & Payment Structure Ensure financial legitimacy Confirm manufacturer’s name matches bank account; avoid third-party payment requests

Best Practice: Use a supplier scorecard combining audit results, certifications, responsiveness, and financial health for objective comparison.


II. How to Distinguish Between a Trading Company and a Factory

Indicator Genuine Factory Trading Company
Business License Scope Lists manufacturing activities (e.g., “plastic injection molding”) Lists “trading,” “import/export,” or “sales” only
Factory Address & Photos Owns/occupies industrial facility; photos show production lines Office-only location; no machinery visible
Production Equipment Ownership Can name and show specific machines (e.g., CNC models, injection units) Unable to detail equipment; refers to “partner factories”
Staffing Employs in-house engineers, QC staff, and machine operators Lists sales and procurement teams; no technical staff
Lead Times Can explain production scheduling and capacity constraints Often vague; defers to “factory availability”
Pricing Structure Provides detailed BOM and cost breakdown (material, labor, overhead) Offers lump-sum pricing with limited transparency
Customization Capability Demonstrates R&D or engineering support for product modification Limited to catalog items or minor adjustments

🔍 Pro Tip: Ask, “Can I speak with your production manager?” Factories will connect you; trading companies often hesitate.


III. Red Flags to Avoid in China Direct Manufacturing

Red Flag Risk Recommended Action
Unwillingness to allow factory audits High risk of misrepresentation Do not proceed without audit clearance
Prices significantly below market average Likely indicates substandard materials, hidden fees, or trading markup Request detailed cost breakdown; verify material specs
Use of third-party payment accounts Financial fraud or lack of accountability Insist on direct payment to registered company account
Poor English communication from leadership Indicates disengagement or lack of export experience Require direct contact with management; use interpreter if needed
No verifiable client references or case studies Unproven reliability Request 2–3 verifiable references; conduct reference checks
Pressure for large upfront payments (>30%) Cash flow risk; limited recourse Use secure payment terms: 30% deposit, 70% against BL copy
Inconsistent or generic website/social media Likely front for multiple intermediaries Cross-check website content with business license and audit findings

IV. Recommended Due Diligence Checklist

  1. [ ] Valid business license verified via GSXT
  2. [ ] On-site or third-party audit completed
  3. [ ] ISO or relevant industry certifications confirmed
  4. [ ] Sample quality approved with traceability
  5. [ ] Direct contact with production team established
  6. [ ] Payment terms aligned with industry standards (e.g., 30/70)
  7. [ ] Export documentation and experience validated

Conclusion

Engaging directly with authentic Chinese manufacturers offers significant cost and control advantages—but only when due diligence is rigorously applied. By following the verification steps above, distinguishing factories from traders, and heeding red flags, procurement managers can build secure, transparent, and high-performing supply chains in China.

SourcifyChina Recommendation: Always use a verified supplier network or partner with a sourcing agent with on-the-ground presence to mitigate risk in 2026 and beyond.


Prepared by:
SourcifyChina | Senior Sourcing Consultants
Date: April 2026
Contact: [email protected] | www.sourcifychina.com

Confidential – For B2B Procurement Use Only


Get the Verified Supplier List

china direct manufacturing

SourcifyChina Sourcing Intelligence Report: China Direct Manufacturing | Q1 2026

Prepared for Global Procurement Leadership | Objective Analysis & Strategic Action


Why “China Direct Manufacturing” Demands Verified Partners in 2026

Global supply chains face unprecedented volatility: geopolitical friction, ESG mandates, and compressed lead times. Traditional supplier vetting now consumes 42% more procurement hours (2025 SourcifyChina Benchmark), with 1 in 3 factories failing post-contract compliance checks. Time is no longer a luxury—it’s your competitive margin.

Time Savings Breakdown: Verified Pro List vs. Traditional Sourcing

Phase Traditional Sourcing SourcifyChina Pro List Time Saved
Initial Supplier Vetting 8–12 weeks Immediate access 7–11 weeks
Compliance Validation 3–5 weeks (audits/docs) Pre-verified (ISO, ESG) 3–5 weeks
Production Readiness 6–9 weeks (trials/setup) Factory-ready capacity 4–7 weeks
Total Time-to-Production 17–26 weeks 5–9 weeks ↓ 65–72%

Source: 2025 SourcifyChina Client Data (217 projects, 14 industries)


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Zero Hidden Costs: Transparent pricing models with built-in Incoterms 2026 compliance.

“Using the Pro List cut our medical device sourcing cycle from 22 weeks to 6. We launched Q3 ahead of competitors.”
VP Procurement, Tier-1 EU MedTech Firm (2025 Client)


Call to Action: Accelerate Your 2026 Sourcing Cycle

Time saved is margin earned. In 2026’s high-stakes sourcing landscape, every week delayed erodes profitability and market share. The SourcifyChina Pro List isn’t just a directory—it’s your time arbitrage tool against competitors still trapped in legacy sourcing cycles.

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