How to Source Products from China in 2021

2021-11-17

I插图1.jpgf you have never visited China and know little about this key economic superpower, finding reliable Chinese manufacturers may feel intimidating. However, with this guide, you will soon learn the basics of sourcing from China and start importing quality products from reliable Chinese manufacturers sooner than you think.

Internet

As with so many other things, you can turn to the internet for finding basic information. There are several B2B platforms that you can check out to discover potential suppliers.

Made in China, Global Sources and Alibaba are some B2B platforms that you can visit to discover thousands of suppliers. On Alibaba, for instance, you can search for Chinese manufacturers that specialize in mass-producing products in your niche. You can get in touch with them via live chat and send them messages for more information.

However, if you are completely new to the Chinese business landscape, you may want to look beyond Chinese B2B platforms. There are many key points to take care of, and if you don't have the requisite experience, you could miss out on something that matters and regret it.

Make Your Own Network

If you know businessmen from your community who come from China, you could ask them a few questions for more understanding on this complex topic. You may be able to learn certain important lessons from their experiences of dealing with Chinese manufacturers.

Trade Fairs

One of the best ways of getting in touch with Chinese manufacturers is to visit a trade fair in the country. Since this involves travel, this option is no doubt more expensive. Visiting a foreign country requires far more effort than surfing the web for information, but it will give you a more realistic idea of what to expect.

Visiting trade fairs in China will give you a good idea of why the country is known as the "world's factory". You will see for yourself a wide range of manufacturers, vendors and suppliers making all sorts of products that you can possibly imagine. Even global brands visit these fairs to find out about good suppliers that they can partner with.

The biggest trade fair in China is the Canton Fair. This mega trade event is orchestrated in Guangzhou, which was once known as Canton. The trade fair which is held in October and April (twice a year) attracts around 180,000 buyers worldwide and over 25,000 exhibitors.

The Canton Fair is also aptly called the "trade show of everything" since you are likely to find just about any product you can think of. Hence, the event is a good starting point for your efforts to source from China.

Other trade events are worth mentioning. You can visit the China Diecasting Fair if this is your niche. The exhibition is held each year in Shanghai; around 19,000 visitors attend this event, along with 450 die-casting organizations.

If you find yourself unable to travel to China, you can attend certain international trade shows held in the US. The National Hardware Show is held annually in Las Vegas and is a good place to find major Chinese manufacturers and suppliers.

You can also visit the International Manufacturing Technology Show held at 2-year intervals in Chicago. Buyers and sellers from about 117 countries visit this trade show.

The one drawback of attending trade shows in the US is that you will not find as many suppliers as possible with similar shows held in China.

Sourcing Agents

If you are completely new to outsourcing and want to minimize your risks, you can collaborate with outsourcing agents who specialize in finding manufacturers and suppliers for your niche. Outsourcing agents can guide you through a step by step process for locating the most suitable manufacturers and suppliers so that you can source from China.

You can team up with reputable sourcing agents who have long experience in the Chinese trade scene. Consulting such experts may be the safest choice since you can capitalize on their knowledge, research and experience to mitigate risks and maximize opportunities for product outsourcing.

Sourcing agents can guide you through all necessary steps for outsourcing that will improve your chances of finding the right vendor. They can review quotes, request quotes from multiple suppliers, resolve any problems that transpire, assess factories in China, clearly convey your manufacturing requirements, oversee transportation, shipping and quality inspection. When you work with proven outsourcing agents, you improve your prospects of finding the right supplier who will deliver goods on time and provide the highest quality merchandise.

Since China is such a vast region, you should think of several smaller manufacturing areas. This way, you can find certain areas that specialize in providing your niche products at lower prices. Your sourcing agent can help you to pinpoint such areas.

While manufacturers can be found in all Chinese provinces, you have better chances of finding a really good electronics vendor in Guangdong since this region is renowned for its mass production of consumer electronics. Likewise, Zhejiang province is well known for its profusion of plastic molding and die cast manufacturers.

Doing your own research and carrying out your due diligence is undoubtedly very important whichever route you choose. But working with an outsourcing agent if you have no experience of trading with China will certainly mitigate your risks and expand your opportunities. With inexperience, there is a much higher chance of making rookie mistakes and missing out on opportunities known to experts. To avoid this, you can turn towards outsourcing agents who can prove to be staunch allies in your outsourcing quest.

161227076.jpgShortlist Manufacturers and Suppliers

Whether you do your own research or consult experts, you will likely have a long list of potential candidates for outsourcing. You will have to exclude certain suppliers from the list so that only the most suitable are left.

To start shortlisting, you can contact potential vendors, manufacturers and suppliers to communicate your requirements. Here are certain requirements that you will need to clarify.

Specify parts and components that you need them to manufacture and the processes required like plastic injection molding, metal stamping or die casting.

State the minimum order quantity (MOQ) that is suitable for you.

If you need a prototype, you must find manufacturers willing to aid you in product development and prototyping. In China, relatively few manufacturers are willing to commit immense time, money, and effort to prototype and product development. Not only does this require a lot of work and resources, but there is also no clear indication or guarantee of good returns. This is a high-risk activity that could lead to losses. So not all manufacturers are willing to go along with product research, development and prototyping. If you go this route, be ready for extra costs, delays and plenty of tooling work.

  • Materials required to manufacture your item.

  • Cost of each item.

  • It would help if you also asked manufacturers to provide details on their processes, operations and capabilities. This is important for verifying that you are looking at reasonably good candidates.

  • Inquire if they specialize in the product that you need to be manufactured

  • Ask how long they have been operating in your niche

  • Find out about their history of exporting goods to the US and other countries.

  • Know the Minimum Order Quantity

  • Ask for their business license, tax number and certifications, if any. Certifications can give you some idea of their commitment to quality and continuous improvement.

When doing your research and sending out queries to potential suppliers, you can try making a different inbox to maintain communications with prospective manufacturers. You will likely keep receiving promotions and messages months after your send out your queries.

Using responses obtained from candidates, you can shortlist potentially suitable suppliers. You can shortlist candidates by considering various aspects that matter. For example, it is better to go for specialists rather than those who manufacture a wide variety of products. Specializing often translates to better quality and reliability.

Another factor to consider is dealing with suppliers who have a shipping history to the US and other countries. Such candidates are often well acquainted with shipping and customs issues, Western quality standards and other technicalities. Such candidates are better at handling logistics, inventory management and storage.

Verifying Credentials

Verifying supplier credentials is paramount. You will be able to find plenty of information online. You may also be able to gather useful information via their correspondence.

It is very important to ensure that the entity you are considering is an actual manufacturer and not just a middle man looking to make a fast buck at your expense.

You will also need to be sure that they have the technical expertise, capabilities and production capacity for manufacturing goods you desire.

Besides their business license, you can request certifications that they claim to possess as well as tax information. Ask them for factory audit reports. Also, it is vital to ask for a few samples so that you can get a realistic idea of what product quality will be like.

Check for the government office that governs the factory's jurisdiction. You can make inquiries from this office about the manufacturer to verify the details provided.

People with knowledge of outsourcing will recommend visiting manufacturing facilities before finalizing your choice of supplier. You can combine these factory visits with your business travel for trade shows in China. So when you are visiting the Canton Trade Fair, for instance, you may also want to schedule your factory tours.

If you can't do all of this, then the best way to go about it is to consult with the outsourcing agent. They will be able to inspect factories in person and give you the information that you need.

You will likely have an idea of parts, components, and products you need to outsource to China. But in case you are still undecided on what exactly to outsource for manufacturing, you will have to proceed carefully.

You need to first consider all the components, parts and items that must be manufactured. You will have to take a close look because not all of them may be suitable for manufacturing in China.

The items that need outsourcing should have enough dollar value and expected sales volume to justify manufacturing in China. Ideally, you should select mature products and be sure that they will have demand and relevance in the future. This can be much harder to ascertain when you are designing innovative new products and prototyping.

Specifying Product Details

You may want to start small and narrow down your scope at the beginning in particular. You should select the most promising product and check for updated drawings and specifications. You want to improve your chances of starting successfully so that you and the rest of the team are motivated to do more. Don't worry too much about the scope, especially at the start. As you establish yourself and successfully sell a single promising product, you can gradually widen your scope.     

Paying attention to drawing details is always helpful. Not only will it prove useful to your in-house team, it will also help your supplier a lot. You can include necessary comments and suggestions in drawings for optimal quality and manufacturing advantage.

Anticipating possible manufacturing issues will also prove to be expedient. If you are experiencing any problems manufacturing your product here in the US, it would be prudent to communicate these issues to your Chinese partners.

Products need not be labour-intensive to be suitable for low-cost manufacturing regions. But labor intensive products can bring you plenty of advantages since labor is much cheaper in China compared to the US. You might enjoy the most cost savings by outsourcing labor intensive products.

Also, pay attention to value addition. If you are sending in parts just to have a few holes punched in them, then that may not make much financial sense. However, if your Chinese manufacturing partner will make these parts and punch holes in them, that will yield maximum advantage to justify outsourcing. Likewise, parts that need a lot of machining are often suitable for outsourcing.

Instead of manufacturing, you may want to directly buy readymade items. This is where a key question arises. Should you purchase directly from the manufacturer, or should you buy from a wholesaler?

Certain manufacturers don't allow direct purchases. However, if they do, you may save money by purchasing directly from them since wholesalers add their own margin to make money. Goods bought directly from the factory can provide a lot of cost savings.

But then there is the minimum order quantity to think of. If you want to buy direct from a factory (provided the factory allows that in the first place), you will have to place a relatively big order. Factory operations are profitable only when production is more than a certain minimum threshold. So the minimum order quantity could be fairly large.

If you don't have the budget or are not willing to take the risk of ordering such high quantities, then you can try buying from wholesalers since they have smaller minimum order quantities.

So if the factory minimum order quantity is not a problem for you, it is best to buy directly from the factory. Else, buy from the wholesaler.

179471050.jpgPrice Negotiations

Negotiating prices is the main factor why you want to source from China.  

If you can show them that you will bring them good business and orders, then Chinese manufacturers may be more willing to give you lower prices. Suppliers are often interested in long term relationships with good business prospects. So you can discuss the market and give your projections of expected demand if they are optimistic and explain why they are justified.

While negotiating and discussing the market, avoid complex jargon and keep it simple. Don't use long sentences in your emails. You will have to be mindful that English is not their first language in your talks and correspondences. So keep it simple and short to avoid any kind of miscommunication.

Besides the cost per unit, you must also remember to ask about shipping expenses and any other associated costs.

While negotiating prices, avoid going too low. If you demand low prices, then as the saying goes, you will get what you pay for. Manufacturers may use cheaper and less reliable materials to maintain low prices.

So while discussing prices, be sure to ask the impact that it will have on quality.

Bottom Line

We hope by now you would understand the basics of how to source from China. This can improve your chances of finding a suitable supplier from China. 

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