Small business owner or ecommerce seller wondering how to find a supplier in China? This guide is for you. We’ll talk through the pros and cons of using a Chinese supplier, smart ways to connect with vendors in China, and the questions you’ll need to ask potential suppliers, to make sure you get the best price and quality of products, with a smooth and reliable service.
And to help you improve your profit when dealing with suppliers in China - or elsewhere in the world - we’ll also introduce Wise, for smart business accounts you can use to pay vendors and suppliers overseas with the Google exchange rate and low, transparent fees.
Let’s start with the obvious question - why use suppliers and vendors in China in the first place? China has an enormous manufacturing industry - but it’s not the right place for every business to source their products. Here are a few pros and cons of using vendors in China you may want to think about:
So, now you’ve decided that using a manufacturer in China is the way you want to go, how do you find the right supplier or factory? Here are a few common approaches to consider.
When you think about finding Chinese suppliers, one name comes to mind - Alibaba¹. This huge marketplace site has pretty much every product type you can imagine, with listings direct from the manufacturers. You’ll be able to connect with suppliers directly once you’ve found products that interest you - but bear in mind that this will likely mean talking to vendors in Mandarin. If your language skills are rusty, consider using an interpreter or an intermediary service to make sure everything runs smoothly.
Alibaba has huge volumes of suppliers listed - so it’s no surprise that quality and reliability can vary. Ultimately it’s a case of buyer beware - although Alibaba also offers support like its trade assurance program to try to make the buying experience work better for both the vendor and the buyer. We’ll cover this, and some important questions to ask Alibaba suppliers before you start to work together, a little later.
Alibaba may be the most famous place to find a Chinese supplier - but there are actually plenty more B2B marketplaces you may prefer, depending on the products and services you’re after. These marketplaces and companies typically offer a broad range of languages, too - so if you’re not confident in your Mandarin, this may be a strong option.
Many of these marketplace sites also offer add on services, and act as sourcing agents. That means that while the services available differ, they can include far more than simply connecting you with a supplier and leaving you to deal with the rest of the process yourself.
Easy Imex², as one example, is a UK based site which offers a full end to end support program, including connecting you with suppliers, checking product quality, negotiating the price and helping with shipping. Maple Sourcing³ also has end to end support options.
Global Sources⁴ is another option, which also covers suppliers elsewhere aside from China, and has a business matching service to help connect international buyers with the best suppliers for their specific needs. Finally, Made in China⁵ vets the suppliers they use, and offers access to vendors’ audit information - they cover thousands of product categories, and have over 6 million suppliers on their books.
If you’re already connected with other businesses which operate in your niche, you may find you can get personal recommendations for suppliers through your network. This has the advantage that you’ll be reassured about the vendor’s credentials before you start to work with them - but whether or not this is an option will obviously depend on how well connected you are. For newer business owners, this may be a slightly trickier option - but one to bear in mind as you add to your product portfolio.
Another way to connect with vendors in China is to visit local or international trade shows, where suppliers come to meet potential buyers, explain their products, and show samples. The biggest global show for Chinese suppliers is the China Import and Export Fair⁶ in Guangdong, held twice a year. This show covers more or less any product you can imagine, and draws in many visitors from around the world.
There are also dozens of different trade fairs and similar events here in Singapore, often held at the Singapore Expo Centre or Sands Expo and Convention Center. You can get a listing of events⁷, which also includes details about which visitors will be welcomed, online - or get in touch with venues directly to see if there are any useful fairs coming up for your niche.
If you’re not Singapore based, a quick Google search can help you find trade fairs near you - check out Tradefair dates website⁷ as a good place to start your search.
If you’re buying direct from a supplier, you’ll be responsible for checking that the individual and business you’re dealing with is legitimate, reliable, and can provide the product you want and the price and time scale you need it.
China is sometimes described as the world’s factory, so it’s no surprise that there are huge numbers of different suppliers, vendors and manufacturers you can choose from when you source your product from China. The majority of suppliers will be helpful, honest, and looking to build productive long term relationships with sellers. But, as with anything, there are also fraudsters and scams out there - as well as some suppliers which push out poor quality product, or which don’t honour their commitments.
Because of the variety in terms of the overall quality of suppliers, you’ll want to vet anyone you’re considering using thoroughly. Simply going through this process should also give you a good indication of how responsive a supplier is, and how prepared they are to offer a good level of customer service - all important when you’re considering building a business relationship.
Here are some questions to ask Alibaba suppliers - or any other vendors you’re dealing with - to make sure you get what you expect at the end of the process.
This should come as no surprise - but seeing samples of the product you’ll be ordering is an important step in the process of picking a vendor. Get quite specific when talking to your potential supplier about samples. Even if you’ve seen samples on display at a trade fair or expo, it’s important to know specifically what product you’ll be sent. If it’s not exactly the same as the item you’ve already seen and handled, it’s worth asking for more samples before you move to a full production run.
Time is money, so the longer you’ll need to wait for your products, the less opportunity you have to profit in the short term. Checking how long production will take with various different suppliers can help you find the right one to suit your needs.
You may find that factories with larger production capacities have lower lead times. Or you could discover that specific suppliers are able to expedite the production process to have your goods with you sooner. Starting this discussion early in the process of finding a Chinese supplier should mean there are no surprises later.
Different suppliers will set their own minimum order quantity - and the prices may well vary based on how much you order at any given time. Ask for your options with a few suppliers, to see which suits your needs. While you don’t want to have too much of your working capital tied up in stock you’re yet to sell, placing a bigger order with a trusted supplier may mean you get a lower cost of goods.
One final conversation - what if there’s a problem? There’s always the chance that things won’t go smoothly, so you need to know your supplier can keep you informed about the production process, and will be responsive when you have questions.
If you’re using an intermediary service, the chances are that the organisation you’ve used will handle any issues or disputes. Some of the B2B marketplaces we highlighted earlier also vet all their suppliers and can provide audits and other data which you can use to complete your due diligence checks. You may pay a little more for this service, but it can pay off in the end.
You’ll also have the option to look at things like the Alibaba Trade Assurance program⁸, which allows you to access Alibaba support if either the product quality or shipping dates don’t match your original contract. To use this service you’ll have to pick from specific Alibaba suppliers which are covered by the Alibaba trade assurance program. Support is in place up until 30 days after the items are delivered. In the case that things aren’t as you expected, Alibaba can help to investigate, negotiate and resolve the problem with the factory - offering some peace of mind to buyers.
Found your perfect supplier? Once you’ve negotiated and sealed the deal, you’ll need a way to pay.
Choose Wise to send CNY, HKD or USD to Chinese suppliers, and get low fees and the Google exchange rate. All you’ll need to do is set up a Wise Business account, and you can send money to China or Hong Kong - as well as almost 80 other countries - online and in-app, for a low, transparent fee.
You’ll pay in your home currency - with a bank transfer, or using your card, for example - and the funds are converted by Wise with the Google exchange rate to the currency you need. They’re then deposited to the suppliers’ bank account - which means the supplier doesn’t need to sign up with Wise. Just get their regular bank details and you can arrange a Wise payment to save you money, and make life that little bit easier.
Learn more about Wise Business
Pricing/fees: Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information
Finding a supplier in China can make a lot of sense - no matter where in the world you’re selling. There’s an enormous choice of suppliers and products - so you’ll definitely find something that suits your business. But you’ll need to make sure you’ve done your due diligence checks, to be confident in the reliability and quality of the product once it starts flowing.
Once you’ve got your Chinese supplier arranged, check out Wise to see how you can pay in CNY, HKD and USD to China or Hong Kong, with low fees, and no hidden charges tucked into the exchange rate. That can mean you save on the transfer - and keep more of your hard earned money yourself.
Sources:
Sources checked on 17/02/2023
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China is the world’s manufacturing hub, and it makes sense for western companies to take advantage of the highly competitive prices of suppliers in China. Chinese labor is cheap and abundant. However, additional factors enable low-cost Chinese products, including a solid business ecosystem, minimal regulatory procedures, and low taxes and duties.
As prices in the west continue to rise, suppliers in China provide ideal opportunities for western companies to buy and sell products at competitive prices, rather than increasing pricing on goods sourced outside China.
There are various established methods of finding Chinese suppliers: online research, networking with companies who successfully import from China, and visiting Chinese trade shows. In this section, we’ll look at these methods in-depth.
How to Find Trusted Suppliers in China
The most straightforward option for Western companies looking for trusted suppliers in China is to begin online.
Online supplier hubs for wholesale China products include Alibaba, DH Gate, Global Sources, and Made In China. These sites are not niche-specific. Instead, they are general marketplaces offering a broad selection of products from independent suppliers who advertise on various platforms.
Each platform has procedures to promote its advertisers’ honesty and reliability. We’ll use Alibaba as an example.
If you go to Feeds> Discover on Alibaba you will find verified companies and additional information: company profile, products, and production methods. Alibaba’s verified companies are third-party assessed.
In addition, there are Gold suppliers in China on Alibaba, which means that they have paid Alibaba accounts rather than free accounts, another indicator of reliability.
One low-cost, low-risk method of tracking down wholesale China products is to use Alibaba’s sister company Ali Express. Companies advertising on Alie Express will deliver small sample product quantities via Air Mail, saving time and enabling western companies to evaluate product quality and speed of supplier response.
Ultimately, there is no way of determining rock-solid reliability when buying from online Chinese sellers. Unfortunately, some Chinese suppliers contribute to a reputation for poor service and product quality in goods from China, so many Western companies do not consider online bulk purchasing to be appropriate.
How to Find Reliable Wholesale Suppliers in China
Word of mouth is one option when looking for reliable wholesale suppliers in China. If you have trusted industry contacts in your home country, ask which Chinese suppliers they recommend.
An online search in your niche can be helpful to get unsolicited testimonials that attest to the quality of Chinese suppliers.
A good sourcing agent will ensure that you find a reliable Chinese supplier. They have a wide range of contacts within China and will put you in touch with an honest and efficient company that will meet your production needs. For many companies, a sourcing agent is the best option to find reliable suppliers in China.
Are you looking for a supplier in China?
When evaluating wholesale options from suppliers in China, it’s best to focus on your industry, rather than conducting a broad search. In this section, we’ll investigate some of the most important niches related to China supplier wholesale.
To find wholesale suppliers in China, narrow your search within your industry. Usually, different Chinese provinces serve different niches. Here, I will describe the best purchasing practices for industry-specific niches.
Find China Manufacturers for Clothing
One of the most popular searches for western companies online is China manufacturers for clothing. Here we discuss your options for suppliers of clothes in China in-depth.
Seventy percent of China manufacturers for clothing are in the provinces of Zhejiang, Fujian, Guangdong, Shandong, and Jiangsu. China is the global industry leader in garment manufacturing, renowned for timely and cost-efficient clothing production.
If you are wondering how to find a manufacturer in China for clothing, online B2B marketplaces like Global Source and Made In China are good places to begin.
Suppliers of Clothes in China: Investigating your Competition
As clothing is such a popular industry, finding companies in your country who import from clothing suppliers in China is a good option. Look for companies that already sell similar clothes to those you plan to import and ask them if they can recommend any specific suppliers.
Use your Contacts to Find Out more about Suppliers of Clothes in China
If you already know clothing importers in your niche, they will be the best companies for you to approach for guidance and recommendations, so that you can find out more about suppliers of clothes in China.
Wholesalers in China: Working with Gym Equipment Suppliers
Chinese gym equipment manufacturing centers around China’s southeast coast in provinces like Jiangsu, Shanghai. Shandong, and Guangdong. Most gym equipment comes from China; western companies benefit from the knowledge and expertise of wholesalers in China for gym equipment production.
Find Chinese Suppliers for Gym Equipment
Gym equipment is a large and growing industry in China; there is no shortage of suppliers in China. Providing that you do due diligence in determining the best company for your products, there is less risk in partnering with gym equipment suppliers in China.
The Advantage of Well-Known Gym Equipment Suppliers
If you buy from established gym equipment suppliers, the chances of you getting scammed are minimized. Among the most successful gym equipment suppliers are Johnson, Impulse, Tanre, and WNQ.
Find Chinese Suppliers for Toys
About eighty percent of toys come from China. Most toy manufacturing in China is in Shantou City, Chenghai District, and Guangdong Province. The low production cost and the cheaper materials used for production make China wholesale suppliers popular with western countries for importing toys.
All toys for importation need a certified tracking label on the packaging or product; these should include
The name of the manufacturer
Toy production area and date
Batch or run numbers for the manufacturing process
Product source information
Toy consignments for children under 12 should include a Children’s Product Certificate. Testing is at a CPSC (Consumer Product Safety Commission)-approved laboratory.
Find Chinese Suppliers for Furniture
Over 50,000 furniture manufacturers in China account for over forty percent of the world’s furniture. In China, most furniture wholesalers in China are in the Yangtze River Delta and the Pearl River Delta regions.
Lecong Town is home to the Shunde Empire Furniture market and is the capital of furniture production in China.
China wholesale suppliers have a reputation for high-end furniture, but as with other wholesale China products, the quality varies; it is essential to find a company that understands your needs.
A signature Chinese style enables wooden furniture without glue, screws, or nails. This furniture is designed to last over 20 years but demands high raw material quality and expert supervision of product creation. Because of this, the best option is usually to employ a china furniture sourcing agent to oversee all aspects of production and importing.
Find Chinese Suppliers for Construction Material
The majority of industries now source their construction materials from China. The main provinces in China for construction materials are Jiangsu, Zhejiang, and Guangdong in the east. Qinghai, Tibet, and Ningxia are also buoyant construction sectors.
Amongst the materials for construction in China are stone, tiles, and bricks. Tu-mu is the combination of wood and earth, synonymous with construction throughout China’s history.
If you have found a promising building materials supplier in China, check that they have appropriate patents, trademarks, and safety certificates.
If the supplier is on AliExpress, you can order a low sample quantity for expedited delivery so the evaluation process will be straightforward.
Your potential China wholesale suppliers should have a sound and verifiable background within the industry. Check for reviews on the internet that affirm a reliable local and international reputation. There should be no problems with their monetary history.
As with other wholesale products from China, the complexities of importing from China soon mount up; it’s best to get a good sourcing agent to handle construction material import processes on your behalf.
Where and How to Find Suppliers in China
When investigating how to find suppliers in China, it pays to dig a little deeper for wholesale products from China than a basic internet search. Before you begin, ensure that you know what your initial requirements will be.
Define Product Specifications for China Supplier Wholesale
Regardless of the method you choose to find a China supplier wholesale, it’s crucial to define product specifications.
Using multiple channels to convey product specifications to a supplier will be unhelpful to your company and theirs. Avoid a mix of email threads, Zoom calls, samples, and face-to-face meetings.
Instead, if you’re not buying products off the shelf and there is any degree of complexity to your product specifications, assemble a master document that contains all product specifications in one place.
The supplier’s designated sales assistant should also be able to translate the document into Chinese and convey the instructions clearly to the technicians and engineers assigned to manage the production of your goods.
Wholesalers in China: Source Providers
When a western company wants to source providers from China, it’s beneficial to choose direct, straightforward wholesalers in China to avoid complications and difficulties further down the line.
Trade Fairs and Events in China
Visiting trade shows is a helpful method of finding wholesale products from China. Meeting companies is an excellent way for western companies to build relationships with potential suppliers in China. Unfortunately, governmental responses to Covid both in and outside China make trade show visits difficult.
Sourcing Agent
Sourcing agents make commissions on product orders by contacting various suppliers and finding the products you want to buy. The agent receives a commission on the supplier and buyer-created order.
There are additional benefits to using a sourcing agent in China rather than going it alone when buying wholesale products from China. They can also supervise the product creation process and undertake quality control checking.
Sourcing agents usually deal with multiple clients at once. It’s unusual for sourcing agents to investigate your company. They are most suited to off-the-shelf products sourced from one of the manufacturers they know.
As a result, sourcing agents may miss out on better deals. You will find it challenging to ascertain if they have done an appropriate amount of work to get the best deal for you.
Nevertheless, if your product needs are straightforward, a sourcing agent may well be the best choice for you.
Sourcing Company
If you plan to sell bespoke products requiring an in-depth production process with closely supervised quality control, a sourcing company will be better for your needs than a sourcing agent.
The downside is that you will pay more for a sourcing company. But if a sourcing agent isn’t the right choice for your needs, you may lose money in the long term.
A good sourcing company will provide:
Bilingual support to facilitate negotiation and communication
Access to high-standard Chinese suppliers
Genuine suppliers in China — no middle-men to dilute your profits
Constant production updates
Flexibility in shipping and supply options
First-class customer service
Improved return on investment
Optimization of production and fast delivery
Find out more about how smart sourcing can help your business.
Request a Quotation
A request for a quote, or RFQ, should only be sent when you are sure that you have included every element needed for your order. If your sourcing needs are straightforward, enclose a specification sheet with your RFQ. If the sourcing process is complex, you should supply a concise but detailed spec sheet with your RFQ. Send the RFQ via email.
Share your spec sheet with relevant individuals within the Chinese company. You may have been dealing with an individual within the company up to this point. Remember to include every detail of the production process within your spec sheet. If you have given details on production to your contact via Zoom, email, or phone, remember to include those details too.
To expedite your RFQ, ensure that the title is clear and relevant. The content of the email should include the following details:
Product size and dimension
Initial and repeat order requirements
Manufacturing requirements
Material needs
Blueprints and pictures
The more professional your RFQ presentation, the more seriously your supplier will take your order, and the better the response will be.
Include full company details at the end of your email. Repeat the email address and contact information, and consider including your company website link; this will help your email get to the inbox. Many emails scant in personalized detail will end up in the spam folder.
Ensure that you don’t send identical quotation requests to different suppliers in China. Companies may receive multiple RFQs every day and will not respond to all of them. The best option is to create an RFQ template and tailor it to each company you approach.
Create a List of Potential Suppliers
Use the following methods to compile a list of potential suppliers in China for your company. Begin with a shortlist of companies and then undertake a process of elimination to determine suppliers in China that are unsuitable for your needs.
First search online. Check that each wholesale company on your shortlist has policies for damages and returns. Ensure that their website contains their contact information.
Search Google for [name of company] scam, which will help weed out unreliable companies from your list. Then look for reviews and references on sites like Alibaba and Global Sources. A general search for reviews for companies will also yield more information.
If a company has participated previously in Chinese trade shows, it’s a good sign of its reliability.
Ask for a sample. If you can get a good quality sample from the company, this is another sign that you’re dealing with a reliable company.
Can the supplier create the kind of products you want to source?
Does the business have an excellent reputation, or is it highly unreliable and approaching bankruptcy?
Phone potential suppliers in China. A scammer will usually not provide legitimate information online about their business. It is customary for a fraudulent supplier to use a fake address and phone number. The only point of contact is often by a mobile phone number.
When you phone a Chinese supplier, ask for their business license number. Also, ask for the supplier’s landline phone number. There is no restriction on buying multiple mobile phone numbers in China. A landline is an indicator of legitimacy.
The preceding steps will narrow the shortlist of companies you plan to approach; this is where you can begin the more exacting task of verifying suppliers in China.
Verify your Chinese Suppliers
Once you have eliminated unsuitable or fraudulent Chinese suppliers, you should use more exacting methods of verifying the legitimacy of Chinese suppliers. A landline number is usually 12 digits, beginning with the 86 Chinese country code. The following two digits are the area code. Check the company’s location by ensuring that the area code corresponds with the address on their website.
Tell your potential suppliers in China that you would like to pick up samples from their address using your local agent. Offer to pay cash on delivery. If your supplier is legitimate, they will comply with your request.
Notify potential suppliers of your plans to conduct a factory audit before ordering. There’s no need to go to this expense; it is another process to eliminate fraudulent suppliers. Mention this early on in your communications with possible suppliers.
A request for a Chinese supplier’s bank reference letters will determine their level of credit worthiness. Also, ask for the details of previous customers for reference purposes so that you can contact them and ask about their experience and level of satisfaction with the supplier.
You can add to your list by contacting suppliers of similar products in your industry. Ask them if they can recommend any Chinese suppliers — many will be pleased to help.
Order a third-party background check from an authentication service like China Checkup.
Their credit report service has valuable information on Chinese suppliers. On China Checkup, you can access financial records from a company’s preceding three years of business and details of legal representation and shareholders. China Checkup caters mainly to companies outside China, making it easy for westerners to navigate and access the information they want.
Visiting a supplier is the best way to verify them. You can get to know the people in the organization and discuss all your product and processing needs with them after you’ve used the other methods detailed here to narrow down the suppliers in China you may wish to work with, or it will cost you a lot of money and time.
Be exact with the methods described here. You will ensure that you settle on a professional and reliable Chinese supplier.
Importing from wholesale suppliers in China is ideal for companies that want to reduce manufacturing costs and finished products due mainly to China’s low labor and material costs. Chinese suppliers specializing in customized product creation will help with new product designs. China is particularly suited to companies creating products in these industries:
Toys
Games
Gym Equipment
Furniture
Shoes
Clothing
Iron, steel, and plastic products
China’s manufacturing base, skilled workers, and in-depth industry experience make China a perfect place for cutting costs and expanding western businesses. However, the process can be complex and confusing. Here, we break down the steps to import from Chinese suppliers.
Product Sourcing
As the importer, it is your responsibility to ensure that your products comply with your country’s regulations. As a general rule, avoid the importation of these products:
Food products
Plants
Seeds
Animals
Tobacco and related products
Fireworks
Non-flame retardant products
Lighters
Fireworks
Drugs
Cosmetics
Medical devices
Precious metals
Animal furs
Trademarked and branded goods
Alcoholic drinks
Boats
Motor vehicles
Failing to comply with your country’s rules may result in hefty fines for your company.
Once you have decided on the products you want to import from China, you need to find a manufacturer rather than a middle-man, as an intermediary will decrease your profits. Some importers make an exception to this rule when importing cheap toys and electronics.
Negotiating with Chinese Suppliers
Rather than narrowing your options to one supplier at this point, it’s best to contact a few wholesalers in China and ask them for product samples. If you plan to import bespoke products from China, you won’t immediately get the exact product you want as samples; ask for similar products that will give you an idea of their manufacturing abilities and quality control standards.
Negotiation should result in a win-win scenario for you and your potential supplier. You are seeking to get low-cost goods and initiate long-term relationships.
Once you have narrowed down your search to one supplier, you need to get an agreement in place with the supplier.
Your supplier in China should agree to keep a bill of materials (a list of components with prices and sources) that you can access.
Ensure that your supplier has granted you intellectual property rights, which means that trademarks, patents, copyrights, and trade secrets are protected. Intellectual property rights are commonplace in other countries — less so with wholesalers in China.
Design
If you anticipate delays in the product creation process, it’s best to identify them in prototyping rather than mass manufacturing.
Ensure that during prototyping, product finishing levels are up to standard. Make sure that the retail packaging is appropriately sturdy. If a part needs replacing by an end user, ensure those parts are available.
The more complex a product design, the more likely it will need multiple prototypes. For complex hardware, insist on three prototypes.
Identify manufacturing milestones for bespoke products as follows:
Confirm that the design will be attractive to the target market.
Create drawings detailing work in progress and finished product.
Identify a similar product and confirm that it is successful and in high demand.
Confirm that the product functions successfully.
Employ a third party to perform product certification.
Allow for delays in the design process, and build them into your schedule. Even with careful planning with wholesale suppliers in China, some delays in the product creation process can occur.
Payment and Deposit
The standard payment to suppliers in China is 30% in advance, with the balance paid on completion, usually before shipment. Payment upfront will disincentivize the supplier from delivering in full, on time, and to the high standards stipulated. Initial part-payment will help you avoid payment fraud which is unfortunately common in China.
There are multiple payment options; each has its advantages and disadvantages.
Telegraphic Transfer / Bank Transfer
All Chinese suppliers accept telegraphic transfers, but you must pay a standard fee for every transaction.
Bank exchange rates are usually poor. An alternative is the negotiation of a decreased transfer rate with your bank. Or, decide with your supplier who will pay the bank fees and include the adjustments within your contract.
Letter of Credit
A letter of credit for supplier China wholesale is suitable for large orders and offers protection to western companies. A letter of credit negates the necessity of a deposit payment because the payment doesn’t get made until your supplier meets the goods delivery deadline.
If there is a delay, you have the right to determine whether or not the transaction progresses. You have the right to cancel the letter of credit, which incentivizes your supplier to deliver on time.
The disadvantage with a letter of credit is the excessive paperwork involved in the process.
PayPal
Paypal is suitable for small orders and samples for supplier China wholesale. Their standard fees are high and prohibitive to Chinese suppliers, who need a third-party service to move the Paypal payment into their account. There are also additional commissions for balance conversion payments.
Chinese Currency
Paying your supplier in Chinese currency (Yuan/Renminbi) often results in an improved exchange rate and is fast and straightforward. However, there may be fluctuations in the exchange rate; also, payment acceptance in China is restricted with this method.
Western Union
Western Union is used for sending money to individuals worldwide but is best avoided by companies because it involves high charges and little payment protection.
Escrow
With Escrow, a third party holds payment until the seller agrees to predetermined conditions to be met by the supplier. When the conditions are met the payment is released.
The supplier is also protected because payment occurs when the agreed conditions are met. However, this is not a popular payment method with suppliers in China because they don’t receive any upfront payment.
Lead Times
There are notable benefits of short lead times. It makes sales forecasting easier, responding to market changes is more straightforward, and there is less likelihood of goods running out of stock.
The challenge for western companies is lead time reduction from suppliers in China without sacrificing quality.
Building a relationship with your supplier will encourage them to prioritize your orders.
Be aware of where your supplier buys components. If there are delays with component deliveries, have an alternative supplier ready as an alternative.
Reduce your order sizes, as this can overwhelm your supplier. Instead, increase order regularity. It may cost more with price-based order size but offset that with the advantages of increased supply predictability.
Using enterprise resource planning (ERP) software may streamline your supply chain and reduce lead times, so it’s well worth considering.
Price per Unit
When negotiating price per unit, don’t immediately settle on prices dependent on a fixed order quantity. No matter how much you plan for smooth order processes, there will inevitably be trial and error. Instead, negotiate pricing tier quantities. You may find that you and your supplier are more comfortable with a change in order quantities.
When negotiating tier quantities, try to increase price differentials. For example, if you only get incremental 5% discounts per tier, tell your prospective supplier that their quote is disappointing and you had hoped for better prices for large quantities. In the negotiation stage, this is perfectly acceptable.
You’re more likely to get positive responses during negotiation if the supplier thinks you have a large business, whether you have or not.
To look like a large business, talk about your business team. Talk about your boss giving final permission for pricing decisions, and tell them your boss will visit the factory when he’s next in China.
Exaggerating business size is a standard business practice and shouldn’t be considered unethical.
Minimum Order Quantity (MOQ)
Chinese suppliers always observe MOQs (minimum order quantities), and no supplier is willing to send orders below an agreed threshold. Often these thresholds are high, which is part and parcel of Chinese companies supplying goods at low cost to westerners.
Chinese companies order raw materials for goods that are in turn subject to high MOQs. Goods destined for markets outside China need special certifications and may require components and materials that are higher quality than Chinese suppliers use for customers in their own country.
All these factors contribute to high MOQs.The exception to the rule is for sample quantities only.
Factory Inspections and Audits
Factory inspections are manufacturing facility assessments to assess quality control systems and production capabilities. The factory is usually out of 100, 100 being the maximum score.
The factory inspection should determine whether or not the factory is equipped to create your products if quality control standards are high and the machines they have for goods production.
Additional factory inspection results may include
Number of employees
Important customers
Number of highly skilled staff
Specialist products
Subcontractors
A list of machines
Hours of work
High volume production months
Subcontractors
Factory inspections don’t cover product quality, as they are usually made before order placement by a company.
Factory inspections don’t account for working conditions or environmental practices, which is where they differ from audits.
An audit is a neutral survey in which equipment and practices are assessed based on a supplier’s written procedures; the auditor often conducts interviews to confirm that their work experience and actions are as per the supplier’s written procedures.
For example, if the supplier has ISO 9001 certification then the auditor will look for proof that all processes, forms, and records meet ISO 9001 standards.
Sample Development
Sample development is the best way to test design viability. If poorly managed, the sample development process can take months or even years, so it’s essential to ensure an efficient sample development process.
Before product assembly, there must be a paper product plan. A supplier expects the following information before proceeding:
An ASI (Architectural Supplemental Information) or ISO (International Organization for Standardization) standard drawing.
CAD files
Product and component sizes
Color codes in either RAL or Pantone
Bill of materials
If anything is missing on the sample sheet, the sample will mimic the omission, so a complete sample overview is essential in the product plan.
Product regulations, standards, and restrictions must be conveyed to the supplier. Suppose the initial sample is deficient in any way that will be corrected in mass production. In that case, the company must insist that the supplier provides the relevant information related to the proposed correction.
Include packaging specifications such as artwork and packaging design files in Illustrator .ai format. If the product requires any additional labeling, be sure to specify your requirements, which may include:
FCC imprint
CE imprint
Warning label
Country of product creation
Serial number
Batch ID number
EAD code
Even when all the above is adhered to, it’s rare for initial bespoke sample products to meet required standards, so factor in more time for multiple sample creation.
Quality Control
Mass production is never infallible. Quality control is damage limitation; fault reduction rather than complete fault prevention.
Because goods can’t be returned to China by western companies, quality control is particularly vital when importing from China.
A quality inspector will
Photograph products
Take the product measurements
Inspect products for damage
Test products
Inspect product packaging
A day after the inspection, expect a PDF report of the collected data. Request videos if needed.
It is now your choice whether or not to accept the results and continue with the supplier.
Most quality control inspectors have online booking systems, so usually, an inspection is easy to organize.
Shipping
Shipping from China involves getting your finished order packed and loaded on a cargo ship that will sail to your home country; this means you must factor in the shipping cost and wait time. You must also be prepared to handle the goods after arrival in your country or employ a freight handler to assist you.
Depending on the size of the consignment, you can choose either FCL (full container load) or LCL (less than container load). LCL shipping is often set at low prices, as it’s not cost-effective for cargo ships to send out half-full shipping loads.
Other variables that affect cost are location and destination.
Shipping costs have increased dramatically due to governments’ responses to Covid 19.
Finding and employing suppliers in China is a complex and involved process. An alternative is to a sourcing company. At Easy Imex we’ll handle the process of sourcing from a Chinese supplier for you.
If you need a sourcing company that will handle the sourcing process for you while you concentrate on running and growing your business, we’ll be happy to help.