Getting Your Products from China: A Beginner’s Guide
Thinking of getting your products in China? A great step! And an intelligent one. Their manufacturing environment is simply amazing. However, to be frank, when you are a beginner, it seems like you are in a new busy city without a guide. What do you start with? Who should you trust? And how can you be sure you do not get a shipping container of, well, junk?
Deep breaths. You can do it.
Consider me a friend who has already tripped over this process and learnt a few lessons. We will take it bit by bit and separate the confusing parts. I am going to provide you with a clear and simple roadmap, so that when you begin your sourcing journey, you will feel a lot more confident and a lot less anxiety-ridden.
Where Are All the Good Suppliers?
This is the largest question mark that is over your head, right? It is like being at the gate of a huge sprawling market. You can sniff the opportunity but where is the directory?
The experience of the majority of people starts online on B2B websites. You have definitely heard of the giant: Alibaba. It is the unchallenged emperor, a virtual city of factories, suppliers and trading companies. There is somebody to create almost everything you can imagine. No, grave, anything.
However, the thing about Alibaba is that it is just too big. When you begin searching you will find two main types of sellers: Manufacturers (Factories) and Trading Companies. The individuals that will actually manufacture your product will be manufacturers. The advantage of going directly to a factory is the cost is normally lower. You also get a greater control on how your product is being customized. The catch? They tend to possess rather high Minimum Order Quantities (MOQs). They are prepared to make big sales, not selling you few items. Trading Companies are similar to links or project managers. They do not own the factories, but they are well related with a number of factories. They may have slightly higher prices but they tend to have lower MOQs and will be able to get a wide range of different products on your behalf. To be frank, as a novice, a decent trading firm may be a life-saving solution, as it facilitates communication and takes care of logistics.
Alibaba is not the only one anymore. It is a good idea to snoop around other websites such as Made-in-China.com and Global Sources. Global Sources is a well-established company, particularly in the electronics industry, and is said to have a fairly strict screening process on its suppliers. And you can never discount the old fashioned method: trade shows. Canton Fair, which is held twice a year in Guangzhou, is the mother to all sourcing events. Nothing can be compared to the feeling of walking on those huge halls, meeting your suppliers face-to-face, touching what they offer, and establishing real human connections. It is harder, no doubt, but the reward may be tremendous.
How to Distinguish Reliable Suppliers
All right, I have discovered some possibilities. What can I do so I am not played?
You have scrolled, you have clicked and now you have a short list of suppliers. High five! But how do you distinguish the gems out of the duds? Here is where you should bring out the inner skeptic and dig a little.
Okay, let us be honest, there are scams. It is the way of life. However, it is possible to reduce your risk significantly by thoroughness. Consider it as a pre-flight checklist.
- Check Their Profile: On platforms such as Alibaba, you will find labels such as Gold Supplier and the number of years they have been in the site. The longer history is always good. Also, check whether they have paid an on-site verification report. It is not a hundred percent assurance, but it shakes out the not-so-serious players.
- Request Documentation: A legitimate company will not be afraid to provide you with a copy of their business license and any quality accreditation they have (such as ISO9001). There are even online services that can perform a simple check on the registration number of a company at a small fee.
- Read the Vibe: What is their style of communication? Do they give professional answers to your questions? Or are they indeterminate and indirect? Casual communication is a giant red flag. It is a taste of what you will be up against later.
- Sample: Period. This is not an option at all. Under no circumstances and I mean this, should you order in bulk without first seeing and touching a sample. You should check the quality by your hands. Yes, you will have to pay the sample and the shipping, but it is a small investment compared to the price of a complete order turned out bad.
- Ask for a Video Chat: It is a plain but genius step. Request a live video and a short visit to their factory or showroom. It is an awesome method of ensuring that they are who they say they are. And when they are only a person working out of their kitchen, they will find it difficult to fake a factory floor.
Frankly, it is so much a matter of a hunch. When a deal appears to be much too good to be true, then it is. The glitz of an insane low price should not cloud your judgment.
Discussing Financial Aspects
Now, let us discuss the financial aspect.
You have a supplier whom you are comfortable with and the sample is just right. So, it is time to discuss figures. Negotiating is a given, however, do not assume that you will be haggling like you are at a flea market. These are professional operations.
The size of your order is the same as your bargaining power. The greater the amount you purchase, the greater is the space to negotiate the price. And on smaller orders you may have flexibility on other terms, such as packaging, or payment terms. Talking of payment terms, this is essential. The most popular one you will find is the 30 percent deposit to begin the production process, and then the rest 70 percent is paid once the order is finished (but not yet shipped). At no time should you pay 100 percent upfront. It takes away the motivation of the supplier to provide quality goods at the right time.
Once you get to the how, you can send money in a number of primary methods. Bank Transfer (T/T) is so common, however, it is like sending cash. It provides minimal redress when things fall apart. And that is why that 30/70 payment arrangement is your friend. Alibaba Trade Assurance is an amazing insurance policy, particularly on your initial few orders. It is an escrow service basically. You pay Alibaba and they do not give the money to the supplier until you confirm that you have received your goods and that they are of what you ordered. The other alternative is PayPal. It will be accepted by some suppliers and it provides good buyer protection. The negative is that the charges are often high and the larger and older suppliers do not like to use it to make large transactions.
Quality Control and Shipping
Quality control and shipping maze: the home stretch.
You are so near! You have paid the deposit and your products are under production. However, you cannot set it and forget about it. You cannot afford to cross your fingers and hope that everything is going to be all right.
Your last and critical control is Quality Control (QC). As you can hardly afford to fly to China to check out the goods on your own, what are you to do? Demand production reports. A good partner will be open and ready to share pictures and videos with you as your goods pass through the assembly line. Or you may employ a Third-Party Inspector. You can get an independent inspection company to go into the factory on your behalf, and this will cost you a few hundred bucks. They will carry out a professional audit according to your standards and provide you with a report containing photos. It is the final opportunity you have to intercept any issues before thousands of your products are loaded on a boat.
After you have approved the quality, now it is time to transport your goods to the other side of the ocean. Welcome to the world of shipping, which is confusing at times. You will listen to a lot of acronyms such as FOB, EXW and CIF. One can think of them simply like this. EXW (Ex Works) implies that you have to take charge at the factory gate. You need to plan each and every step. The most common and in many cases the best balanced is FOB (Free On Board). The price that the supplier quotes incorporates transporting your commodities to the closest port and loading them into the ship. At that moment it becomes your baby. You will employ your own so-called freight forwarder to complete the shipping and customs formalities in your own country. CIF (Cost, Insurance, and Freight) implies that the supplier does all it can to deliver the shipment to a port in your nation. It is easy to say, but it can turn out to be more expensive to you with the hidden charges, and you cannot choose the shipping company.
FOB is the sweet spot to most people. Locate a fine freight forwarder in your country. Such companies are wizards. They have to work through the complicated maze of logistics and customs documentation to ensure your products reach the destination port and all the way to your warehouse, or front door.
Conclusion
This is something you can definitely do.
China sourcing is a mountain at a glance, but in real sense it is made up of hills. It is something that you learn through action. Be patient, be thorough and never ask no questions. Begin with an order that is small and manageable to get acquainted with the ropes. It is an adventure and of course, there may be some bumps. However, the payoff of watching the product that you envisioned turn into reality and creating an actual business around it is worth more than the cost. Go ahead, the first step. You’re ready.
