If you are sourcing to China, then the success of your business will depend on finding the right supplier in China.
The supplier will be responsible for supplying high-quality products and fulfilling orders on time. Both of these are imperative for customer satisfaction. So a lot depends on getting in touch with a good supplier.
If you have never been to China, then finding a good supplier may be a challenge. You will have to draw up a list of potential candidates and then single out the right one from all of these possible choices. It seems like a daunting task. And truth be told, it is not as easy as many people think.
After creating a list of potential candidates, some questions must be answered to determine which supplier suits your business needs.
Here is what you can do to find the right supplier in China.
Almost everyone knows about Chinese B2B platforms like Alibaba, GlobalSources, DHGate and so on. These sites help business persons connect with Chinese suppliers and learn more about them.
However, there are a lot of questions that these platforms cannot answer. There are many matters that you must look into before settling for a Chinese supplier. To confirm answers to your most pressing questions, you will also need to visit the factory in person and take a tour of its facilities. You will also need to confirm all information they have provided, like certifications and production capacity.
Confirming all this information is an arduous task and is best left to those with experience and knowledge in handling such tasks.
You will have to get in touch with sourcing agents in China who can do all this work for you to make the right decision. A reliable and trustworthy sourcing agent is the close ally you need to discover suppliers that meet all your criteria.
Getting advice from a sourcing agent is paramount, especially if you have never been to China. Not only will you be able to get a lot of valuable information on how business is done in China, but you will also be able to avoid many mistakes that novices often make while selecting a supplier in China.
Without a sourcing agent to take care of things, you could potentially run into trouble. You can end up making mistakes that could cost you dearly. For example, you might end up with a supplier who does not ship on time. Or you might do business with a supplier who is not careful about intellectual property rights – this could land you in hot water later on in the future.
Here is what a good sourcing agent can do for you.
Find a reliable supplier who makes high-quality products
Negotiate prices so that you can get a feasible profit margin while selling at competitive prices.
Draw up a comprehensive contract between you and the supplier so that it includes all necessary terms and conditions to protect your interests. The contract will have information about payment terms, prices, delivery schedule, etc.
If required, the sourcing agent can visit the facility or supplier premises to confirm the supplier's information about themselves.
Negotiate with the supplier on quality control.
Arrange all necessary documentation and take care of all legal matters pertaining to shipment and taxes.
You will have to be careful not to run into a trading company that pretends to be a manufacturer.
When dealing directly with manufacturers, you will be able to get the lowest prices. But when ordering goods through a trading company, you will pay higher prices since the company will include their profit margins in the product rates.
There may be circumstances under which you may want to talk to trading companies. But you don't want to deal with companies that are untruthful about what they really do.
Unfortunately, certain unscrupulous trading companies do not reveal the true nature of their business. They will claim to be manufacturers when, in fact, they are a trading company. Hence, if you make the mistake of dealing with them, they will supply goods at higher rates that include their own profit margins. This is both expensive and duplicitous.
You will have to be extra careful to avoid getting ripped off by a trading company that claims to be a manufacturer.
Here are the steps that you can take to ensure that you are dealing with a trading company.
Take a look at the product range on their website. If there are far too many goods, then it is likely a trading company.
Take a look at their business license copy. This will mention whether they are a trading company or a manufacturer. However, it will be in Chinese, so not everyone will be able to read and understand.
Check out their address. It should be in an industrial area.
Note how eager the company is to arrange a factory visit. If they are willing to arrange a visit and a tour of the facility, then it may be a manufacturer.
How long are they taking to reply when you send queries about rates? Trading companies can take longer to reply since they have to wait to get a reply from the manufacturers.
Talk to them on WeChat. Do they have pictures of their factory? You should be careful since factory pictures may not be their own.
Inquire about their suppliers, customers and rivals. Reach out to them to find out whether they are a trading company or a manufacturing company. You will get to know about their reputation as well.
Compare their rates to other manufacturers. Trading companies often price products to include a 10 to 40 percent profit margin.
Arrange a live video call and ask them to show you around the facility.
Hence, there are many questions that you can ask to confirm whether or not they are a manufacturer.
But even if they are a manufacturer, you will still need the services of a sourcing agent to ascertain the veracity of the information they are supplying about themselves. The sourcing agent will inform you about reliable, well-known and reputable manufacturers so that there is no risk of dealing with a trading company. If necessary, they will be able to go on a factory visit to confirm the information provided.
Should You Ever Work With a Trading Company?There might be cases when you need to work with a trading company instead of a manufacturer.
This is true, especially if you need items in smaller quantities. Manufacturers often have a high Minimum Order Quantity, while traders are willing to ship much smaller MOQs.
Chances are, that like many other entrepreneurs you have less money to begin with, especially when your company is new. In that case, you cannot afford to take the risk of importing large amounts of goods. If you cannot sell the inventory, you will lose your money buying all these goods. It is best to start small and order lower quantities, especially at the start. You can then scale up your orders as your business expands.
Most manufacturers do not entertain small orders. They often sell in wholesale quantities. That is why you have wholesalers and traders – these are entities willing to buy in bulk. Wholesalers and traders buy goods in relatively large amounts, add their profit margin and then supply in smaller quantities to retailers like you.
Here are some advantages of collaborating with an honest trading company.
Trading companies that focus on exports often have a highly motivated team of savvy sales professionals. These professionals often speak good English and are friendly, courteous and polite. Hence, you can enjoy clear and fast communication as well as great customer service.
If they have experience with different manufacturers, they may help you find relatively low prices from various reliable manufacturers. Besides lower rates, they may also be able to help you buy at lower MOQs.
Good trading companies also ensure top quality from manufacturers that they deal with. This can help you to get the best in terms of product reliability and quality.
With their relatively small MOQs and competitive prices, you can try out a few products to understand their delivery times, customer service and product quality. If you are satisfied, then you can expand your orders to include more products, goods and items. There is lower risk and higher flexibility with good trading companies.
As you can see, there are certain benefits of working with a trading company. But these benefits can be realized only if the trading company is reliable. With so many trading companies to choose from, how do you find one that is reliable and just right for your business needs?
You can count on a good sourcing agent to find a trading company that will fulfil all your business needs. With a sourcing agent at the forefront, you can mitigate the risks of dealing with unknown entities.
A sourcing agent can help you find suppliers who will be best suited for your business requirements.
Besides having the right product quality, manufacturers, suppliers, and vendors need to ship on time. Timely delivery is paramount for customer satisfaction. Hence your supplier should never be late on their delivery schedule.
But there is a lot that can go wrong due to which there might be delays. Hence, you will need to work with suppliers who are serious about avoiding delays and can take necessary steps to deal with disruptions as they arise.
Sourcing agents can help you to locate suppliers who are known for shipping on time.
Certifications are proof of the manufacturer’s commitment to quality and continuous improvement. When checking vendors, suppliers and manufacturers, you should ask them to show their certificates. You can also inquire about any milestones they have achieved in the past.
Be sure to check for quality control and quality assurance certifications. Manufacturers who are very serious about top quality often hold quality certifications that they can quickly show to customers on demand. And don't forget to check out a few samples rolling off the conveyor belt to understand product quality.
You will need a sourcing agent to check all these certificates and confirm their claimed milestones. The sourcing agent can check for authentic documents so that you can feel confident in trusting potential suppliers.
The sourcing agent will have a checklist of documents that you need to check up on to ensure that you are dealing with a legitimate supplier who is earnest about complying with all necessary business rules.
You cannot judge a book by its cover. Likewise, you cannot judge a manufacturer simply by viewing their Alibaba page or their website. It is also not enough to meet up with the salesperson at the Canton Fair and take their word for it. How can you tell whether the products on display are from the factory as claimed or bought somewhere else?
You will have to see the factory for yourself and check out the production processes as well as quality control and assurance. There is no substitute for a factory tour.
There is a lot that a tour of the facility can reveal. If you want your product to be made by specific machines and processes, you can check it out by walking the factory floor. You can see for yourself which manufacturing and assembly processes are being done in-house and which ones are outsourced.
If you are not available for a detailed tour of inspection, then you can delegate this key task to the outsourcing agent who can visit on your behalf. Besides helping you to confirm product quality and the efficiency of manufacturing processes, it will also show you how much the manufacturer is willing to invest in a good business relationship with customers. Good suppliers are transparent and open about inspection tours and always willing to answer customer queries and show them around when asked.
ExperienceYou will certainly want a supplier with years of experience in the industry. This helps in two ways. First, long experience shows that the technical knowledge, proficiency and acumen for your product niche. Since they have been in business for so long, they must be doing something right. Second, it is a good indicator that they will be around in the future. And this is important because a key supplier who goes out of business can prove to be a major blow for your enterprise.
Your sourcing agent can help you to find manufacturers with valuable experience in the field. They can also help to confirm that the company has indeed been in business for “X” years as claimed.
To build rapport and to forge a strong business relationship, you will have to focus on the nuances of Chinese business culture. You can establish a friendly relationship with your supplier by paying attention to finer points in Chinese etiquette and sensibilities.
Even if you don't speak Chinese, you need not worry, for an outsourcing agent is well-versed in regional business etiquette and can talk on your behalf to build a solid relationship.
An experienced outsourcing agent can draw up a contract that secures your share in the profits as well as other key factors like shipment schedule. The contract is extremely vital for protecting your interests and ensuring that there are disagreements or ambiguities.
The outsourcing agent can negotiate on your behalf with the supplier for favorable terms and conditions, especially cheaper rates. You can also request your outsourcing agent to inquire about the quality impact that lower prices will have. A good outsourcing agent can negotiate optimal rates that can enable you to set competitive prices while providing good product quality.
Your outsourcing agent can also discuss credit terms so that you can enjoy a smooth cash flow. For example, if you instruct them to, the agent may negotiate a 10% advance deposit with full payment in 60 days.
There are many matters that you will need to look into when trying to find the right supplier in China. Besides understanding the business environment, you should know what to look for when assessing potential candidates. Unless you have decades of experience dealing in the Chinese business landscape, you will need the services of seasoned sourcing agents in China to avoid making costly mistakes and to leverage available opportunities.