If you own a small business and are looking for reliable factories to manufacture your products, then China is the best option for you. China is a popular manufacturing hub due to its low labour costs, many businesses, big and small rely on Chinese suppliers for producing their products. If this is your first-time manufacturing product in China, then it is natural to be confused about which suppliers to choose.
Be a smart researcher
When it comes to any suppliers, you cannot rely on everything that pops up on the internet. Many suppliers might update misleading information that can result in scams and frauds. You can search for your suppliers on credible sourcing platforms such as Alibaba, Global Sources, and Made-In-China.
You can key in your requirements and choose from the list of suppliers as per your preference. Some platforms also have green ticks against verified suppliers that make it easier to verify their credentials and contact them. Websites such as Alibaba have a list of blacklisted companies which you can use as references to verify the real from the fake ones.
It is always better to visit China and attend trade shows and exhibitions. This allows you to talk to the suppliers personally and enquire about their production capacity, materials, and the technologies they use.
Another way to search for sourcing companies is through social media presence. Websites like LinkedIn and Alibaba have forums and blogs that can help you in reviewing suppliers. You can even check the reviews offered by existing businesses and then take the right decision.
Your work does not end by finding the supplier. You need to verify their credentials thoroughly. Some of the checks that you need to do are:
Check the company’s registration through a local government agency
Ask for a copy of their certificate of authorization
Request for the financial statements from the suppliers
You can even ask for references from their client
Now, that you have verified your supplier, you can either buy directly from them or any B2B platforms. If you want to save time and money, you can opt for purchasing directly from the sourcing companies.
If you want to buy products in small quantity, then you can look at trading companies. These companies will purchase the materials from manufacturers and sell them to you. The only downside to this is that you might end up paying more than when it comes to getting them manufactured by suppliers, as they will include their margins as well.
It is always better to ask for product samples when you work with suppliers. Be transparent in what your requirements are such as the quality of material, size, dimension, and packaging. Give the supplier a small batch to manufacture. Ask them to share the sample.
Looking at the sample, you will be able to judge the capability of your supplier. If the product requires some changes, you can get them modified and altered after discussing it with your supplier.
Ensure that you have all the terms and conditions listed on your contract. Details such as project completion, raw materials used, assignment of roles and responsibilities along with the labelling and packaging details need to be mentioned. Have the contract vetted by a local lawyer to avoid any last-minute surprises.
Leaving the groundwork to sourcing agents
If you are unsure about finding reliable suppliers for your business, you can always consider Chinese sourcing service, hire a local sourcing agents or companies to do the job for you. Sourcing agents act as a mediator between you and the suppliers. They will find a list of suitable suppliers for you through their networks, negotiate on your behalf, and put forth your queries to the suppliers.
Many of the Chinese suppliers may not be fluent in English and will not cooperate with you. Sourcing agents will be fluent in Mandarin and can effectively communicate your requirements to these suppliers.
A sourcing company, on the other hand also performs the same functions as sourcing agents. The only difference is that they will have different teams under them which will look at various aspects such as shipping, inventory, quality checks, and more.
Whether you are hiring sourcing agents or a company, you need to understand the services that they offer. A credible agent or company will:
· Selecting the suppliers
Sourcing agents ensure that you get the right suppliers for the job. They will compile the list and share it with you. They will also be able to pull details such as verified licenses, financial statements, and other certificates required for validation purposes
Professional sourcing companies or agents will be masters at negotiating. They have in-depth knowledge of the market and will know if the supplier is charging higher for their services and what is the reasonable MOQ demand.
· Quality inspections
Some sourcing agents can offer inspection service in China. They can easily visit the factories and inspect the manufactured products for defects. They will also follow up on the production process to ensure that the products are manufactured within the estimated timeframe.
· Logistics and Shipment
When the products are ready to be shipped, sourcing agents will ensure that all the documents and certificates are in place. They will also check the packaging details and labelling and help clear the customs at the time of delivery.
Now, before you finalize your sourcing agent or company, you need to discuss the payment methods with them. The common ones are:
Under fixed price, your sourcing agent will charge you on a daily or hourly basis. They will charge you a one-time fee for their services. Their main job would be to find a suitable supplier as per your requirements. Once you approve the supplier, they will hand over the responsibility to you
Under the commission basis, your sourcing agents will charge you anywhere between 5%-10% of your total order value. The percentage may vary depending on the size and nature of your product.
Finding reliable sourcing companies is a cumbersome process. You need to spend a lot of time and effort researching and investigating the agents. Below are certain key points that can shed some light on whether the agent or company is genuine or not:
They will answer all your questions clearly
They will offer complete reports right from supplier selection to logistics management
They will have their network reach all over China
They are aware of the sourcing procedure and the risks involved
They will have the proper resolutions in place in case they see risks involved
They will have a thorough knowledge of the entire procurement process
They will be able to give their advice or opinions without any hesitations
You might also want to avoid mistakes made by other businesses when hiring sourcing agents. There are high chances that some agents or companies might ask for bribes or kickbacks, which will leave you paying more than what you bargained for.
Sometimes suppliers might bribe the agents to land them the orders. The agents will accept the bribe and without conducting any verifications, will push the suppliers to you. If any quality issue is found, your agent will defend the supplier, thereby leaving you to handle the mess alone.
Secondly, if you are a beginner, it is easy to be duped by sourcing agents or companies when it comes to procurement costs. Initially, the agents will charge a low service fee but might include hidden charges into product and shipping costs. They will assure you that the quality inspection has been carried out and share wrong reports, but the result would be poor quality products.
Last, but not least, stay away from agents who over-commit themselves. They will agree to all your demands and boast about how many suppliers they have worked with. The truth is that they will have limited knowledge of the Chinese market and provide you with a list of unexperienced suppliers.
Now, you might wonder why to opt for Chinese sourcing companies when you have other options available. Certain Non-Chinese sourcing agents might offer you better services. Many of these suppliers have their offices located in their own country and purchasing country. Let us look at both the pros and cons of doing business with such agents.
The benefits include:
You might not have to deal with language barriers as many would be fluent in English
The role of sourcing agents is minimized, thus saving on costs
You can easily find credible local suppliers for bulk orders
The downside to this is:
You may need to pay higher commission for small orders
Many of these suppliers work with big companies and might not be interested in small or medium industries
When compared to non-Chinese suppliers, Chinese suppliers tend to have the upper hand as they offer low service fees and labour costs. Secondly, they cater to all types of business and have the right equipment and knowledge to manufacture your products.
Applying the right tactics can help find the right suppliers for your products. Ensure to focus on the quality factor rather than the cost to improve the efficiency of your business.