Types of Supplier and Types of Product in China
During my daily work of helping western businessmen purchasing goods from China, I’ve seen many back and forth negotiations between supplier and buyer. But in fact, much negotiation time could be saved and the process could be less frustrating if the buyer could perhaps understand things from the supplier’s point of view before you start contacting them.
Types of supplier
In China as with the rest of the world, this can vary hugely. One supplier might be a factory with thousands of staff and at the other end of the scale you might have a mother of one working from home to try and pay the bills, along with many middle men in between. The difference in China is that it might not always be that clear exactly who you are dealing with. The mother is as likely to tell you that she is a factory as the factory itself.
The truth is that they could all offer as good a service as the other. The crucial thing as far as the buyer is concerned is that this will affect what you can buy and at what prices.
Types of product
This will also have a bearing on who you can buy from and at what unit prices. There are obviously thousands of various permutations, but to keep it simple I see that there are three main product ‘types’ if you like.
1) Off the shelf. These are made in quantity to the same design and as such reasonably easy to source. Many suppliers will sell the exact same product.
2) Off the shelf with own branding. Also made in quantity, these products might require specific branding to be added to the basic model, so will involve extra printing, design, at an extra cost.
3) Bespoke products. These are manufactured to a specific design of the buyer and as such can be harder to obtain and more expensive.
Why do I need to consider this?
If you ask a large scale factory to make you 250 small widgets, they simply won’t deal with you as it’s not worth their while. Yes, they want to make money, but they won’t make much from that order.
Should you ask the ‘mother of one’ to get these for you, chances are she will have the necessary contacts, perhaps on the back of another larger order of say 2000 widgets that she sells on in smaller batches.
Obviously once it comes down to own brand and bespoke products, there is additional design and manufacturing involved which will have a bearing on who you can buy from.
A supplier will only be desperate to sell to you if they feel it is worth their while doing so. They want to make money, which they are unlikely to do if they are manufacturing small one off orders. If you prove to them you are serious, they will respond accordingly and want to create a long term relationship with your company.
If you haggle on price so much that the base line profit they are making is very poor, it’s likely that both the product quality and the level of customer service will suffer too.
Finally, most buyers are wary of being scammed. Don’t forget this works both ways. More than likely the supplier themselves will have been scammed in the past or suffered at the hands of time wasters. Treat them as if you would treat your own customers, create a business relationship and reap the benefits of a successful long-term partnership.