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.
No doubt, China and also a few other Asian countries have got sufficiently trained and skilled manpower, who can help your company to achieve a lot of competitive advantage in today’s business environment. However, before jumping into any of these countries, you need to have a thorough understanding of the whole process of outsourcing.
To find manufacturers in China or any other Asian country to outsource any service or 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.
Outsourcing will not mean just buying cheap products, you also need to emphasize acquiring a newly formed business partnership too. While quite a few companies only think of benefits from cheaper manufacturing, but a few others also look for special skills or to set up much leaner operations.
This can make the business operation further efficient and ultimately help you to achieve your business objectives.
The term outsourcing is roughly correct if it is not at all concerned with in-sourcing. As this term suggests that a company will integrate a process, which was formerly done by a certain partner outside. Although this is relatively quite uncommon, however, now the focus here will be to find manufacturers in China.
It is no more a secret that many companies all over the world these days try to find China manufacturers for various products. China is particularly preferred because it can generate a big volume of products.
Although few people may think that Chinese products have become so common due to the availability of cheap priced labour, however, there is much more to it besides cheap labour. China has turned into a powerhouse of manufacturing in the world also due to its strong business ecosystem.
Also, their currency practices are competitive and the duty or tax structures quite are flexible, which is also another reason why you can see so many different products are manufactured in China.
Besides that, China has also developed many networked suppliers, manufacturers of parts, and distributors and as a result, it has become more affordable and efficient to manufacture any products in China.
Having said all above, if you ever try to find manufacturers in China it is not as easy and particularly for the first-timers. You have to 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 best advice will be to go step by step. You have to take one step at a time and fully stabilize it and then go for the next. Therefore, you need to break up your outsourcing process into several steps and stabilize each step first and then move to your next step.
The biggest hurdle that you will face will be the language barrier. In China, very few people speak good English. Also, their facial expression can be quite confusing. Often you may try to communicate something but it will mean something else to them.
So, the best thing will be to learn their language to start with. You may follow these steps to make your communication easier with them. You may get Chinese to English interpreter, but it will be good to know something of your own too.
Try to learn a few basics - To address people in their language is not only considered respectful, but also it will break down the trust and cultural barriers.
Don't rely too much on phrasebooks - If you fail to pronounce the words correctly then you become a clown.
Get the right mobile phone app - Where you can get voice and written translation and conversation instantly.
Be friendly with local people - You may make friendship with Chinese people by having coffee with them, be open and you will find that Chinese people are willing to converse with you and also their knowledge of things will amaze you.
Make friends before doing business - Try this and you will get a rich dividend later.
Try to use any new words/phrases that you learn - You can smile if they correct you and listen carefully while they are correcting you.
Never try to assume you know everything - Always listen to their advice as they know better about their country.
Take an interpreter during a business meeting - This will avoid misunderstanding that may lead to mistrust.
Never refuse their hospitality - It will be very rude to reject any food offered by them and ask them with a smile how to eat it and also their table manners. For making any mistake, no one is going to blame you.
If possible, attend their local events - This can help you to absorb the local culture.
Having gone through your initial phases of knowing China a little better, you should then make your effort to find manufacturers in China and follow these steps.
The Internet can offer you tons of information and details about many different companies of your interest. More than just depending on Google, Yahoo, or Bing search, hitting B2B platforms can be more helpful.
A few other online sourcing platforms are Alibaba, Made in China, and Global Sources that can connect any buyers to various Chinese manufacturers. To find suppliers in China on all these sites will be as easy as just typing your requirements in their search bar.
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 participate and they look for a big partnership. If you have a small-sized business then it may not be worth spending your time.
Nowadays, there are many sourcing agents also available particularly if you want to find China manufacturers before you plan to visit China. Once the sourcing agents understand your needs and expectations, the process of outsourcing any product or component can become quite straightforward
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.
What is your minimum order quantity?
Whether will you need any prototype or fully developed. Usually, Chinese companies do not take much interest in development projects.
The price per item.
Also, you could ask them for additional information about their company that can help you during your verification process. You may ask the following questions:
Whether they have specialization in manufacturing those components that you need.
Since when they are in this business.
Are they already exporting to western countries?
What is their minimum order quantity?
Do they have the necessary business licenses?
Do they have an internationally recognized certification about their production capability?
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 really true or not.
You can do these 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.
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 to visit your shortlisted factories before finalizing on a manufacturer.
For buyers, it is very common to combine this kind of trip with a trade fair visit 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.
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:
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.
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.
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.
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.
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.
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.
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.
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 will never like to wait very long to receive your order.
The next question will be when the manufacturer expects his payment? Most manufacturers will demand 100% payment for your first order that you have to pay upfront. However, you must ask about the payment terms in the future once you become their regular customer.
You must get the same type of information from all the Chinese manufacturers so that you can make a straight comparison.
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.
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.
Ultimately, after you have chosen a suitable Chinese manufacturer that 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.
Finding any right manufacturer 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 manufacturer.
It will also be a very good idea if you can find at least 2 or a few more such manufacturers who will be able to meet all your business needs.