The present manufacturing scenario is such that it has become very difficult to run any profitable business in the global environment without taking the benefits of cheap labour sources that are available in a few Asian countries, especially China.
China can help your company to achieve a lot of competitive advantage in today’s business environment. The reason is because China has a huge manufacturing capacity and plenty of trained manpower, and the labour cost is very low as compared to any western country.
To find manufacturers in China to outsource any product needs proper evaluation of your new relations with your suppliers. Other important steps include proper communication, price negotiation, various shipping arrangements, and other administrative procedures.
How to find manufacturers in China?
It is not easy to find manufacturers in China particularly for the first timers. You must cross several hurdles and after that, you can hope to stabilize your outsourcing process and earn the profit that you had earlier thought of.
The biggest hurdle that you will face will be the language barrier. In China, very few people speak English. Also, their facial expression can be quite confusing. Often you may try to communicate something, but it will mean something else to them.
1. Search for manufacturers
Internet can offer you tons of information about different manufacturers of your interest. More than just depending on Google search, online sourcing platforms like Alibaba, Made in China, and Global Sources can connect any buyers to various Chinese manufacturers.
Another useful resource to find Chinese factories will be your industry network. This may include recommendations from any trade bodies, any of your business contacts available in your industry.
Trade fairs can also be another source to find manufacturers in China. However, that will depend on your size of business and the type of products that you are looking for. In trade fairs, many of the big companies usually try to look for a big partnership. If you have a small-sized business, then it may not be worth spending your time.
2. Shortlist potential manufacturers
After doing your initial search, you may come across several potential suppliers and hence you must list them down. You refine your list further by contacting all of them and letting them know the following:
- Complete details of the components that you want to manufacture.
- Minimum order quantity.
- The price per item.
- Whether they have specialization in manufacturing those components that you need.
- Do they have an internationally recognized certification about their production capability?
3. Verify their credentials
Whenever you are going to find suppliers in China, it will be mandatory to verify all the credentials that they have told you. Some obvious information can be easily found out online and that they also must have supplied you.
The things that you need to verify are:
- Whether the company is a manufacturer or just a middleman.
- Whether all the production capabilities and technical expertise that they claim are true or not.
You can do this verification in several ways. Instead of asking them about their business licenses and any other certifications, you may ask for their factory’s audited accounts.
You can ask them to show their invoice for VAT (Value Added Tax), and also ask them to send their product samples. Also, you can identify the Chinese name of the factory, its location, facilities, assembly lines, machines and equipment.
You must also find under which government office jurisdiction the company falls. You can obtain the registry records of the factory from this office from their records, you can verify all details that they provided to you.
Most people who have already outsourced from Chinese companies would also recommend you visit your shortlisted factories before finalizing on a manufacturer.
For buyers, it is very common to combine this kind of trip with a trade show so that you can get the maximum out of your money. Alternatively, you can also take help of any of your trusted sourcing agents to do this verification of the China factory for you.
How should you narrow down your options?
By now, you must have shortlisted at least 5 to 6 companies after screening a long list. To find Chinese factories can be challenging at times and a tedious task, as you need to scrutinize each company carefully. However, to narrow down your choice you may look at the following:
To narrow down your choice you must look for:
1. Those manufacturers who make similar products as that of yours
Ideally, you must go for a manufacturer who has specialized in those types of products, rather than those who are having a side business of that product.
Most important will be to shortlist those manufacturers that are specialized in manufacturing similar or same type of product that you are dealing with rather than selecting any small-sized company that may assure you that they have manufacturing capabilities to produce your products.
You may always find many quality issues with such companies, howsoever, competitive their offer maybe. It may take a very long time to stabilize your business by choosing such companies.
2. Check their ratings and reviews
You can also do these through internet search where you can find their online rating and reviews. It will be good to know what others are telling about the manufacturer whom you are considering.
Identify those manufacturers who mostly export to western countries and the US. Generally, you will find that such companies have much higher quality standards. They will mostly follow the various international regulations for safety and packing too.
3. Check their honesty
Any reputable Chinese manufacturers will readily share info about their business license, quality control system, documentation related to any certifications.
Make sure that the Chinese manufacturer that you are going to deal with is open to provide you their business license details, documentation regarding their various quality control systems, and any other related certifications.
You must finally come up with at least 3 possible Chinese manufacturers whom you can shortlist as your possible outsourcing partner under consideration. Before you proceed further, you must get them to agree to sign a certain nondisclosure agreement, particularly for overseas manufacturers.
4. Check their experience
Those Chinese manufacturers who have already dealt with a few companies of the US or any other western countries will always maintain higher quality standards. In most cases, such companies will be able to meet your expectations.
These companies will be aware of product safety, packaging, and labelling regulations, other terms, and compliance of all western importers. They will also have a better experience handling the logistics needed for shipping products to the international market.
What questions should you ask your potential manufacturers?
After your shortlisted manufacturers have finally agreed to a nondisclosure agreement as per your idea, then your next step will be to get a quotation. You may send them your product’s pictures and images with other technical details like the type of materials, the size of or any other relevant things that they may need to know for making the item.
1. Minimum order quantity
The more units of your product that you will order, the less will your every unit will cost. All factories have a certain minimum required order quantity.
Therefore, you have to strike a certain balance between not making more expenditure with buying too many of them than what you need, and not asking such a small quantity that you have to go for a second-rate manufacturer.
2. Prices for samples
It is very important that before choosing a Chinese manufacturer, you must get a few samples of your required product so that you can inspect its quality. However, the price for the sample can have a wide variation, from free samples to a little discount to their normal price to manufacture the product.
3. Prices for production
It will be interesting to find out how the prices will change based on your order volume. You may ask for a cost breakdown, such as what is the basic cost of the item, what is the shipping cost, the cost of other tariffs, and any other thing that the manufacturer may include while deciding the price.
4. Time to manufacture
You must know how long will they take to complete your order? This is very crucial that can make or break the choice of your supplier as you would never like to wait very long to receive your order.
5. Payment terms
The next question will be when the manufacturer expects his payment? Most manufacturers will demand 100% payment for your first order that you must pay upfront. However, you must ask about the payment terms in the future once you become their regular customer.
How to verify the product quality of Chinese manufacturers?
After you have got offers from several manufacturers, then select the ones whom you liked the most and request a few samples of the product. A manufacturer rarely gets it right in their first attempt, so you should not worry if you find any slight disparities in your sample as compared to your product.
There may be a few iterations by going back and forth several times for fine-tuning the sample till you are fully satisfied. This kind of process will also enable you to get a little more comfortable with the manufacturer and then you can also work as a single team.
Will it be necessary to visit their factory in person?
As long you are not placing a very large or too complicated order, there is no need to pay a visit. However, if you have any concerns about whether the company is legitimate or not, you may tell them your intention to visit their factory for inspection before you seal the deal. Any fraudulent company will get scared off with this tactic, however, any legitimate ones will immediately welcome it.
After you have chosen a suitable Chinese manufacturer, it may take a bit of time to get fully comfortable with their way of dealing, however, in the end, you will be highly benefited from their capability to make high volume production with very low production cost.
Working with the right manufacturers in China can make a huge difference in your business and you will see within a few years how you have prospered. You need to maintain a good and long-term business relationship between you and the manufacturers.