China is a famous destination for finding cheap products to resell. Companies can expand the boundaries of their profits by buying from China directly. There are several consequences to be wary of when planning to buy products from Chinese manufacturers. When addressed properly, the Chinese market can provide outstanding products at high-quality costs.
Earlier, only a few large corporations were able to afford and maintain a sales office that could manage product sourcing and imports from abroad. However, owing to technological advancements, everything is now accessible online, so there is no longer needed to travel to China, arrange difficult and expensive business trips, visit Chinese manufacturers, and get in touch with suppliers.
If you choose to purchase bulk products from China at factory price, you could increase the competitiveness of your wholesale business or online store. A strong supplier relationship can result from direct purchases. When first starting, the procedure may seem complicated and perplexing, but it doesn't have to be that way. For decades, businesses have effectively sourced products from China. Making proper decisions may simplify and secure the sourcing process.
E-commerce obviously has advantages and disadvantages since, despite its potential for speed and cost-effectiveness, it can occasionally result in unpleasant shocks.
What are key advantages of directly buying products from China?
1. Low cost
Purchasing from China presents a special chance to save cost while expanding. In China, the cost of general production, labour, and assembly are all significantly lower. Direct purchasing saves on retail space costs, transportation costs, and wholesaler fees. Both parties can gain by splitting the costs of the contracting party's infrastructure, people, transportation, and storage.
Bypassing the entire supply chain and buying products from Chinese manufacturers directly can help avoid additional costs that accrue between interposers. Although there are fewer options available to consumers, it is a more cost-effective option. Direct purchasing gained a significantly decreased price from the elimination of intermediaries.
2. High output in less time
Costs can prevent scaling, but long wait times can throttle exciting growth. China's manufacturing sector is well-developed and ready to assist a range of different enterprises to expand fast and easily.
Fewer errors and problems result from direct contact. Furthermore, it enables a more rapid information flow and direct manufacturer assistance. A steady, long-term relationship with many advantages for both sides can be developed with the use of open communication.
3. Better quality control
The chances of poor quality and extended shipment times rise when a distributor is involved. Manufacturers provide better shipping choices, greater control over transit, assistance with customs, and quality control in a direct transaction.
Direct access offers a chance to address the problems and ask questions to get advice and ideas from the manufacturer, who is familiar with their product. That helps in maximizing the use of the product and its advantages.
4. Product customization
Your company won't be forced to sell a small range of items. Manufacturers in China are frequently skilled at modifying current items to meet your unique needs, and it is quite easy to get your prototypes made in China.
However, many people often end up doing the following few mistakes that you must be aware of before you decide to directly order products from China.
What are common disadvantages of directly buying products from China?
1. Not understanding cultural differences
Businesses that are considering China manufacturing for the first-time face difficulties due to language and cultural constraints. Negotiations will be challenging if there is a language barrier, and explaining product requirements or adjustments may be problematic.
2. Choosing products based only on the low price
Businesses will be tempted to choose the factory with the lowest price, but this is frequently a grave error. Cheaper manufacturers frequently have longer lead-time and a lower level of professionalism.
Budget manufacturing might be situated in an area with significantly higher international shipping costs, which would wash away any savings without providing any further advantages.
3. Starting an order without receiving samples
Even if you locate a trustworthy manufacturer, it is usually expensive to begin mass production before viewing samples. It is possible that your product has design defects or other issues, and your manufacturer might not have followed your specifications exactly. The sampling procedure provides evidence that your design is effective, and that the factory is aware of your requirements.
How to the right Chinese manufacturers?
1. Internet
Reaching out to B2B platforms can be more beneficial than conducting a generic search on Google, Bing, or Yahoo. These are websites that link purchasers and Chinese manufacturers, such as Alibaba, Global Sources, and Made in China.
2. Peers or industry source
Your professional network is another beneficial resource. This may include referrals from trade associations, your contacts in the industry, or even other businesses.
3. Trade fairs
If you have the time and energy, attending a trade fair in China like Canton Fair, is a great method to discover manufacturers or suppliers. The size of your company, the kind of products you want to outsource, and your budget will all have an impact on how much time and money you can invest.
4. Sourcing agents
Companies that are just getting started with outsourcing can choose to work with sourcing agents who can assist them find suppliers and walk them through the process slowly.
What are the key steps of directly buying products from China?
1. Approach Chinese suppliers
Timelines for production and delivery should be considered. In fact, if you choose to purchase from China, you must keep in mind that it may take months for your order to be fulfilled. Just keep in mind that a package shipped by sea typically takes 35~45 days to arrive. Therefore, it is a good idea to be specific and explicit when describing your needs, as well as the quantities and timeline for delivery.
Many businesses frequently start their relationships with Chinese suppliers by providing ambiguous information. For instance, they can ask for the product's unit price, but omit to provide the total requirements or delivery dates. Although acting in such a way may seem smart, it frequently backfires because it lengthens the order's turnaround time and aggravates your supplier.
Just keep in mind a few things:
- Even a devoted supplier won't be able to provide you with a unit price for the goods because the price greatly depends on your order quantity.
- If you often modify your requirements, you run the risk of becoming an unpleasant customer because a quote involves a lot of effort, and the supply situation fluctuates significantly depending on the production quantity.
- If you just need a small amount of the requested goods, Chinese suppliers may not invest much time on your request because they are very busy every day.
As a result, we advise that you decide what you want in advance, including the products you want to acquire and the deadline for when you need them.
You will be able to give the supplier very clear and thorough instructions in this manner. Always keep in mind that a quotation is not legally enforceable. Time periods will be shorter and with transparent communication if your suppliers accept you as a promising client.
2. Find the right supplier
You will see that there are many suppliers for a single product if you search online on sites like Alibaba: How do you choose the best one?
- Write down your quotation request telling the quantities and the timeframe by which you need those products and send them to many suppliers.
- Ask if they sell such products in the EU or in the US market.
- Request for the certificates of selling in the market which you are targeting.
- Specifically, ask the suppliers whether they can arrange the shipping and what method they considered in their quotation.
- Read and thoroughly consider the supplier's reviews, as well as the duration of his business (the longer his business activity is, the safer your investment will be).
3. Communicate with suppliers to verify
You will need to narrow down the list of probable suppliers that your initial searches will produce. You can accomplish this by getting in touch with each of them and explaining your needs, such as component specifications, the materials to be utilized, the prototypes to be used the MOQ, and the pricing per unit. Additionally, you can inquire further about them, which would help in the verification process.
You must also verify their credentials. In addition to requesting their business licenses and certificates, you should request the factory’s audited financial statements, examine the Value Added Tax invoice, and request product samples. You can also find the Chinese name of the factory, its location, and the original government agency that oversees overseeing it.
4. Request a sample
You should send an email to a possible supplier after contacting them, either online or at any trade show, and request a sample of the products you are interested in.
To verify the product's quality, it is recommended to obtain a test sample. Although samples may seem expensive, this is typically a small price to pay for assurance.
5. Clarify details of your order
It is customary to be picky while importing goods from China. Don't assume that the provider knows what you need or won't make corners to keep the price as promised.
In your order, be as exact as you can. Be wary of China's large minimum order numbers while placing orders (MOQ). Each Chinese seller will have a separate MOQ.
Some manufacturers are willing to offer you a few hundred units at a time, while others work in big volumes of several thousand pieces.
6. Negotiate payment terms
Make sure the terms of payment are clearly stated in your order. When working with Chinese manufacturers, there is typically some space for price negotiation; however, be sure you have a written record of the agreed-upon pricing.
Most suppliers want a down payment, often approximately 30%, with the remaining balance due when the goods are prepared to ship. Most suppliers won't even consider your purchase until the deposit has been deposited into their account.
Trade guarantee is the name of a payment protection service provided by Alibaba. If the amount or quality of the goods you ordered are not delivered as promised, the shipment will be refunded, and the shipment will arrive.
7. Prepare for shipping
If you are shipping from China to the US, ocean shipping is essential as it is more reasonable than air shipping. If you don't know your way around, it is quite challenging.
Additionally, importers must pay a bond that serves as insurance if they fail to pay your customs duty. Of course, some products are completely prohibited from import.
Working with a customs agent who can take care of all these processes on your behalf is the best course of action in this circumstance. To find out what customs duties are applied to the merchandise you are buying, you could spend hours studying the United States International Trade Commission Harmonized Tariff Schedule, but it is simpler to have a professional handle this for you.
8. Things to watch out for
Even while everything may seem simple, there are some dangers to be aware of. No matter where you meet the supplier, communication might be very tough due to the language barrier, so you must be very clear about what you are ordering. Be sure there is a written record of what you agreed to and make sure you ask, clarify, and reaffirm all your points.
When the supplier is located abroad, quality control is challenging. Hire a third-party inspection company to check the product's quality if the order is significant. Before the product leaves the plant, you can receive a quality assurance check for about $200.
Conclusion
Although it’s uneasy, you still can directly buy products from China if you follow above tips and do your work correctly. Your business can grow as you are able to achieve lower cost, higher capacity, and better quality control.
If you appoint a trustworthy Chinese sourcing agent to coordinate all the activities as you directly buy products from China, your process can become much simpler and well-managed.
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