Let us say you have got a grand idea to manufacture a certain product in your company, however, you have a very limited budget. So what do you do in such a situation? One idea by which you can reduce your cost can be by manufacturing products in China. China has the ability to manufacture any product at a very competitive cost.
The reason is because China has a huge manufacturing capacity. Also, China has plenty of trained manpower available and the labour cost is extremely low as compared to any western country.
As you must be aware that China is known as the world’s factory these days, as most of the manufacturing is done in that country these days. However, the question is how to find a manufacturer in China?
So, in this article, we shall discuss this topic and will finally come out with a suitable strategy so that you can successfully find a company with whom you can partner and fulfil your dream to customize the product in China that you have conceived.
Why should you prefer China as your manufacturing partner?
The following are the reasons why most companies of the western countries are interested to outsource their manufacturing in certain third-world countries. China always remains at the top of their list. Let us try to know the reason for that.
Low-cost production
China is one of the most populated countries, which is the highest in the world. China’s government has spent enough for their education and as a result, now China has huge manpower that is technically qualified.
China has been traditionally a very poor country and therefore, the labour charges and cost of living in this country are extremely low. That is the advantage that China has got as a result they can produce any industrial products at the fraction of the cost that may be needed in any western country.
Besides that, the Chinese government industrial policy promotes more production at the cheapest cost so that they can capture the whole market of the world.
Plenty of manufacturers can be found
Due to the huge manpower and vast land available in China, they can create many factories with excellent production facilities. Therefore, it is very easy to find supplier in China for any kind of product in huge numbers.
Excellent infrastructure
Over the years the government of China has made lots of investments in creating better infrastructure, by developing excellent road and transport facilities and research and development facilities.
As a result, the technical competence and industrial climate have dramatically improved over the years. Besides that China also has many different raw materials available in abundance that give this country an edge over any other country.
Various industry cluster
Industries have also been developed in China in a very systematic and planned way. They have demarcated a certain city for only a single product.
So, if you ever visit China, you will find many industries dealing with the same type of products in the same city. Therefore, you don’t need to search the whole country to source any particular product.
Few challenges that you may face
Having seen a few good reasons to have your products made in China, don’t jump to conclusion that finding any suitable company to manufacture your kind of product will simply be a cakewalk. There are quite a few issues that can always make your search for a partner really very challenging.
Let us be aware of that too so that you will know what strategy you must adopt.
Language problem
One of the biggest problems that people of any western country may face is the language barrier. The Chinese education system is in their own language and hence there are only a very few people who can clearly communicate in English.
Therefore, it becomes very difficult to know the view of each other unless you learn their language - Mandarin. Often, due to this reason, it becomes very difficult to create a proper understanding as a result nothing works out.
Cultural difference
There is a huge difference in their culture from the west that many people fail to understand well. China has a strong hierarchical system and the workers will not listen to any of your instructions unless it is communicated through their senior managers.
No subordinate will ever ask any questions to their seniors as they are only to follow their instructions. Also, they cannot offer any suggestions even if they know the solution to certain issues.
Cannot move very quickly
A business in China cannot be done very quickly and swiftly unless you can build enough relationships with people of the company. Therefore, you need to make several trips to China to build a relationship, dine and drink with them and build a personal rapport before you discuss business.
Government role
The government policy is also quite confusing to many westerners. To start any kind of business the company has to negotiate with the state to get proper permission to start the type of business to be done.
Therefore, starting a joint venture with a Chinese company may take lots of time as there is plenty of interference from the state.
Corruption
Corruption is also another major issue in China. Although recently the government has started taking certain actions to curb the cases of bribery, theft, kickback, and also misappropriation of funds.
A majority of assets are held by the state and hence unless the government machinery is suitably managed it becomes difficult to move ahead.
Where do you start?
To start, you must try to get a few leads on any potential Chinese manufacturers. You can try to find from the following sources:
Recommendation from any business colleague or your networks
Your own industry trade association
Online directories available of overseas manufacturers, e.g. Alibaba and Global Sources or other websites similar to Alibaba.
Any nearby SBDC (Small Business Development Centre)
Visiting international trade shows.
How can you narrow down your choices?
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 product, rather than those who are having a side business of that product.
2. Check their ratings and reviews. You can do a little research on the internet to find such data about the manufacturer.
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 the honesty. Any reputable Chinese manufacturers will readily share info about their business license, quality control system, documentation related to any certifications.
4. You must try to find at least 3 to 5 such Chinese companies before you proceed further. You must always sign a certain nondisclosure agreement while dealing with any overseas manufacturers.
Now, let us share a few real practical steps that you must know so that you will know how to find a manufacturer in China in a systematic manner.
Create the product specification
You may face plenty of problems in explaining to any Chinese manufacturer unless you have prepared an elaborate technical specification of your product. Before you decide on what your specification should be like, you must consider including the following criteria:
· Colour of your product
· Product dimensions
· What style of packaging will you prefer?
· What are the labelling requirements and what are various product regulations?
· Full description of your product
· Complete testing specifications
· Specific type of materials you prefer for the product
· All quality parameters
· What are your criteria for acceptance?
· What are your expectations?
You need to spend enough time explaining to them what you want from them and making sure that they have understood it.
Find a suitable manufacturing company in China
Having developed your specification now the toughest part of how to find a manufacturer in China will be to find a suitable company. You can adopt 3 different approaches:
· Do it alone
You can try to find the suitable through the internet and communicate with them through email. There are a few online platforms available to locate any company of your choice.
· Hire any sourcing company or sourcing consultants in China
There are plenty of sourcing companies available that are quite knowledgeable about various Chinese industries. You can tie up with any of them and it can often give you quick results.
· Visit tradeshows and identify any company
Visiting any trade show can be a fantastic way to locate a suitable Chinese company. Mostly you will find a certain English-speaking person will be representing the company from whom you can get plenty of info about the company.
Ask for a quotation
It will be very difficult to have a teleconference with Chinese companies as the language they cannot understand and therefore email communication is the only way you can ask them to send a quotation for the kind of product that you want to manufacture.
However, while writing an email, you should be very careful with language. Make sure that you avoid using any difficult or ambiguous words that they just cannot understand.
Your language of the email should be very polite and also very professional. How can you do that?
· Avoid using any unclear language in your email.
· You must attach the product specification sheet
· Your email also must explain the correct product specification in details
Create your list of manufacturers
It is necessary to identify at least 10 to 15 potential manufacturers in China and then try to filter out by gathering more info about them through multiple sources. In the end, you must have at least 3 to 5 potential manufacturers whom you consider the best among the lots.
Verify Chinese suppliers
To verify the right suppliers in China the following are a few questions that you must consider.
a. Whether this factory matches my product needs? Will they be able to produce my product? Whether they have enough expertise and experience, particularly in this product category?
b. Whether they are really a manufacturer or any trading company?
c. Where the factory is located? How can it influence your product price? It is important to study more about the geography of China and if the factory location can affect your sourcing decisions.
d. Whether the manufacturer got an effective system of communication? Is it possible to contact them more often?
e. Whether the Chinese manufacturer a sufficiently big company to handle your order volumes?
f. Whether the company has any genuine certifications? Beware of any manufacturers who often use fake certifications.
g. What are their targeted area of selling points?
h. Whether they have any export licenses?
i. Are they interested to do business with you?
j. Whether they will negotiate the price?
k. Are they quick to respond?
Make a visit to at least 3 of them
Unless you visit the factory and see their facility with your own eyes, you cannot decide whether the manufacturer will really meet your hopes. You must visit at least three of the short-listed Chinese companies.
Fortunately, you will find all the companies located in the same city and hence you need not travel the whole country.
Get a few samples made
After you have satisfied enough after seeing their capability and the production facilities that they have now you must get a few samples made from them. You may leave a few samples with them as a reference and make them understand the specification and quality parameters.
After you get a few samples made by them and properly evaluate them at your place you can decide further. Most certainly you will not get the samples of your expectation on the very first attempt and it may take a few iterations.
If you have read the complete article properly then you will certainly get a lot of food for your thought on how to find a manufacturer in China. There will certainly be several issues however, if you have adopted a right strategy then surely you will succeed.