Understand Chinese culture and differences in values
You need to understand Chinese culture, the concept of “Guan Xi” is really important, which means the relationship through connection, that includes: trust, respect, honor, time invested.
If you build a good relationship, it will reflect your business. you can for example: request changes for your product, ask for a good price, even an exclusive one.
Be proactive: if you identify a problem, the supplier will not reveal it for you until it is too late because their ethics are different.
Do not hesitate to ask for photos of the progress of the production of your product, for example: Copying is not a problem in China so protect your design well.
Another example: if you pay for a tool or a mold to have your product produced, make it clear that they can only be used for the manufacture of your product, put everything in the contract, don't assume anything!
Choosing the best supplier
We already know that finding suppliers in China is so complicated, either my MOQ (Minimum ordered quantity) is low or the product's price is high. Sometimes, new Amazon vendors claim that they are selling well, as a result they have placed new orders from the same supplier, but they figured out a quality difference between initial and new orders, somehow it led to negative ads reviews.
To prevent your business from negative feedback, you have to adhere to certain process before even starting your supplier's search. First, analyse well your business model. Specify the quantity required for your first order, and assess your market niche. Choosing a right supplier will be helpful for your business on the long run.
Hereafter you will find different types of suppliers along with Docshipper's advices:
The 3 e-commerce suppliers eBay, Shopify, wish
The common point between these platforms is that they have a big range of products.
In this case, vendors can keep enormous stocking. However, the number of orders for small to medium-sized sellers remains low, Why? Because sellers have to test and assess the market feedback for the products they offer. Each product will need a low quantity inventory to test the market. Therefore, the best way is to reach some online wholesalers and purchase few items to test the market, such as DHgate and Aliexpress are great places to start. After a successive sales analysis, a large amount of inventory can be purchased for products that have had good customer feedback.
Amazon sellers
Amazon’s marketing strategy is different from the three previous e-Commerce platforms. Amazon is committed to providing a great product and customer service experience for buyers. Therefore, Stability of Amazon's value chain makes the sellers more confident and trustworthy.
Unlike Alibaba, on Amazon you can make low order quantity, which means between $300 & $500. However, this will increase the price by 20%.
If the seller is credible, and the quality of the orders that come after is also guaranteed, Docshipper suggests you do not worry too much about the initial price. Whenever your sales become stable, you can start increasing your MOQ (Minimum quantity order) to consequently reduce the unit cost and increase your profit.
Import of fast moving consumer goods (FMCG)
Importers who open local supermarket chains typically carry tens of thousands of products. Several products can be purchased in their country of origin, but they must purchase a wide assortment of products from China. However, importers who do not have any experience in purchasing goods from China worry about many factors such as finding the right suppliers, complying with regulations, and transportation.
You can find the suppliers yourself in China, but honestly, it is extremely difficult. You have to spend a lot of time researching suppliers for different categories of products. The best approach is to have only one source. Subcontracting is therefore the best choice.
In fact, most of big retailers like Carrefour and Walmart, do not buy from China themselves, but through trading agencies or suppliers.
Manufacturers
Manufacturers are the source of products for all types of sellers. Thus, they represent the suppliers who will provide you with the lowest prices for your products.
There are two sorts of manufacturers in China. The ones who do not have their own English speaking salespeople. They usually cooperate with domestic trading companies and sourcing agents, which means that these factories sell their products to foreigners through third parties. The prices of such factories are the best.
The second type of manufacturer is the one that has its own English speaking salespeople. They usually participate in exhibitions in China and abroad and also have their own store on Alibaba. Some of these manufacturers also have their own independent online sites and even they are engaged in online marketing.
You can find them on Google. The prices you get from these factories are relatively higher than the first category of manufacturers who trade through trading companies. But at the same time, their rates are lower than those offered by a trading company. In addition, their MOQ is usually very high. So if you find such factory on Alibaba, you can expect their MOQ to be over $ 4000- $ 5000.
If you want to develop your own product, the manufacturers are perfect for you. They will usually give you a lot of product design advice and help you develop the product for the lowest possible price as well.
Trading companies
Trading companies are also called intermediaries, who also help importers to purchase from China. There are many trading companies listed on Alibaba, and you may also come across factories from Alibaba that are actually trading companies.
The trading companies are committed to providing trading services and have their own English sellers. Therefore, communication with them is also more comfortable.
In addition, you can get a relatively small MOQ (usually $ 1000-2000 at first), because trading companies and factories have long-term relationships.
sourcing agent for market suppliers
These companies do not sell their own products; they are more focused on procurement services. You can benefit from import services including sourcing, production monitoring, quality control, and shipping arrangements. Therefore, many Amazon sellers prefer the services of a sourcing agent.
Compared to trading companies, sourcing agents are more flexible. They can help you find the product you want in China. Honestly, a sourcing agent acts as your representative in China. You just have to explain to them your needs.
Dealing with a sourcing agent is the best option for those who need multiple products from China. For example, if you need to buy three different products from China, you need to find suppliers for each product. On top of that, you will need to compare at least five different sellers for each product in order to find the best option. If you only deal with three different products, you will need to find 15 or more suppliers. Now imagine how many suppliers you will have to find and process if you sell dozens or hundreds of products?
Just like finding a reliable supplier, a reliable agent can help your business grow profitably and sustainably.
Local wholesalers
Do you want to visit China and explore the wholesale market on your own? Well, there is a good chance that you will find products at a better price than the prices offered by the online suppliers. In China, the main wholesale markets are Yiwu, Guangzhou and Shenzhen. Many large and small factories are also concentrated around these three cities.
- Yiwu, for small products and everyday consumer goods
- Shenzhen, for electronic products
- Guangzhou, for Clothing, Bags & Suitcases, Beauty, Adult Products
How to find Market suppliers in Yiwu, Shenzhen and Guangzhou cities
Yiwu: Has the world's largest wholesale market, with over 70,000 kiosks. Yiwu's wholesale market has five main districts, each with 3-4 floors. All areas are connected and the layout of all stores is fairly standard.
For example, if you want to buy toys, all the toy suppliers are grouped together in one space. It is easy for you to compare the price and quality of products from multiple suppliers.
Shenzhen: Is a magical place where you can find a wide range of electronic products. Many trendy and cheap electronic products come from Shenzhen and its surrounding cities. For example, after the release of the new Apple product iWatch, many smartwatches with functions similar to this iWatch were immediately available in Shenzhen.
However, the structure of the wholesale market in Shenzhen is not similar to Yiwu market. Stores for the same product are not grouped together, so you may find it difficult and time-consuming to research different suppliers and compare their products.
Pay attention to the common trick in Shenzhen. For example, you may buy 1,000 Bluetooth headsets and may find out later that 100 of them were defective after the sale. Therefore, you can consider it a common situation in Shenzhen wholesale markets.
Guangzhou: If you are looking for clothes, bags or luggage, come to Guangzhou. Guangzhou has the largest clothing and luggage wholesale market in China, similar to the Shenzhen wholesale market. The wholesale market in Guangzhou is also spread throughout Guangzhou.
Things to watch out for when visiting Chinese wholesale markets:
- Most sellers in markets don't accept foreign currencies, they only deal with RMB (Chinese currency), and you can't pay by wire transfer.
- Find in advance a competent language translator to help you communicate clearly with suppliers.
- Find the freight forwarder ahead of time to help you organize the shipment on time. You can also consult them on import matters.
- Or to make it easier for you, find yourself a local agent that will help you in all of the above such as Docshipper.
Small wholesalers or dropshippers
Smaller wholesalers can usually be found on DHgate, AliExpress and other distribution platforms. Usually the wholesale MOQ here is small, and a big variety of products are also available.
If your an importer and your customers have high product quality requirements, I do not recommend that you find small wholesalers or dropshippers as you cannot guarantee consistency in product quality. These small wholesalers do not buy much from the manufacturer and often they buy from different factories. So, it is difficult to guarantee a consistent good quality.
For an advice from Docshipper, You can test the market this way as a start, but it's definitely not a long-term solution.
Wholesalers with overstock
Over-stock products are products that manufacturers and wholesalers simply have too much in stock. Products with minor defects that can be used are also considered overstock products. Since wholesalers have to get rid of these products, they are usually sold at reduced prices.
However, you can buy a pair of jeans for less than a dollar. Therefore, you can consider purchasing the products and reselling them in the local market in your country. People from various countries come to the Chinese overstock markets for that.
China's two largest overstock markets are in Guangzhou and Yiwu. For clothes, go to Guangzhou, for consumer goods, go to Yiwu, same is applicable for Wuai and Jinfuyuan.
The search for suppliers in Chinese fairs
There are two types of exhibitions in China:
Public exhibitions
Canton Fair is one of the most famous exhibitions in China. You will find a wide range of product categories at the fair.
Professional exhibitions
Unlike public exhibitions, professional exhibitions are more concentrated on one product. It means that you can find all suppliers of a product together. For instance, if you are in the trade of bikes, the right and best place for you will be CBME fair more than Canton.
The need to find Chinese wholesalers online
Do you need help choosing a Chinese online supplier? A lot of them are spread out on online platforms, such as Alibaba, Global Source, Made in China, DHgate, and Aliexpress.
In the previous sections of the article, we have explained about how to find a convenient supplier for your business, tips about how to import from China, cities marketplace and what are the different types of manufacturers operating in China. For more information about how to effectively choose a supplier, we recommend you to check our Docshipper's sourcing page. Furthermore, we can offer you a personalized logistic plan for your business. Don't hesitate to contact our dedicated team.
In fact, to find Chinese suppliers All what you have to do is to reach them out on their e-commerce platforms. have a look at this:
Alibaba
There are many types of products on Alibaba, and the number of suppliers on Alibaba is relatively more than any other B2B site. A lot of people still want to find a way to identify whether the supplier is a trading company or a manufacturer. I suggest that you don't spend too much energy at the start. All you have to do is find a balance between the quality and the price of the product.
As your business evolves, you will also gain more and more experience in dealing with suppliers, and then you will encounter more profitable suppliers.
Alibaba is a really good place to find suppliers, but there are a few misconceptions that you should watch out for.
When you search for suppliers on Alibaba, the ones marked “Gold Supplier” are not always the best. The truth is, as long as you pay the annual fee of around $ 4,000 on Alibaba, you will be a gold supplier. So almost everyone on Alibaba is a gold supplier. It is therefore a bad idea to make this a criterion for judging a good supplier.
Alibaba's search ranking algorithm is different from Google's. When looking for suppliers of a product type, the first one might not always be a good supplier. Rankings are often determined by sellers ads' spend.
Global Source and Made in China
If too many suppliers on Alibaba are driving you crazy, then Global Source and Made in China are a better alternative. You won't find so many suppliers here, and the chances of finding a reliable supplier are also greater. Why?
Both of these sites have much higher auditing standards and fees for members. So, in addition to being able to review some of the most reliable suppliers on the market; the probability of finding a factory directly is also higher on Global Source and Made in China. At the same time, the MOQ (Minimum order Quantity) on these two platforms is also higher than Alibaba. If you are selling machinery or electronics, I suggest you go to Global Source & Made in China.
In brief, if you want to develop your own product, finding suppliers on both sites is more efficient, and the suppliers are also more professional. But keep in mind, the MOQ on these sites is
also higher than on Alibaba.
Aliexpress and DHgate
The MOQ of these two sites is small or nonexistent. But the downside of both Aliexpress and DHgate is that when you re-order from the same supplier, the product quality may be different from your first order.
Do not be surprised! Suppliers from both sites go to many factories to purchase the same product. So they cannot guarantee consistent quality every time.
Our advice: if you are running a long term business or you are an Amazon seller, we don't not recommend that you buy from these two sites.
Many suppliers on AliExpress and DHgate also sell their own brands, and they place more importance on product quality than other suppliers. But the problem is, if you buy from these suppliers, others will too. It will therefore be difficult to distinguish yourself from other competitors.
Cooperation with a reliable supplier for a sustainable business
Here are some tips to beat the scams
It is common on the internet to find, $ 150 for an iPhone 12? It sounds too good to be true and definitely a scam. If something doesn't seem logical, you should be more careful. When buying everyday goods, you normally don't come across such ridiculous things. For example, you pay the supplier but do not receive the goods. Do not worry! Most Chinese suppliers are now doing business honestly.
The problem faced by many importers is that the product quality of mass production does not match that of samples. We will provide you also with tips to cope these anomalies.
- Test your suppliers in all aspects, ask them to send you samples before placing any order. Therefore, to minimize risk, you should do your best.
- Ask your suppliers if they trade through Alibaba insurance instead of Paypal. With Alibaba insurance you can request a refund, otherwise the process is very complicated and if your products are really having quality issues, you might not get a refund.
- Why Alibaba insurance is safe? Because suppliers who use this method, they are definitely confident to offer you a good quality of products.
- If your suppliers are not on Alibaba, check their business license and certificates for the products they export under their company's name. If so, it proves that this supplier has a promising history with his products.
What are the criteria of a long term relationship supplier?
When looking for suppliers, such as Alibaba, Google or fairs. Be sure to identify suppliers according to the following 4 characteristics:
Balance between quality and price
You will always find inexpensive products. But I bet you won't buy from vendors 15% cheaper than the lowest market price. In business, you get what you pay for. Adjust your budget to ensure product quality. The lowest prices can be accompanied by poor quality and sometimes scams. Don't try to save a little because you will end up losing a lot.
Supplier’s salesforce expertise
A qualified salesperson should be very familiar with the products he is selling. Normally, he is aware of the product he sells, the price difference between different products, its advantages and disadvantages, as well as the corresponding certificates required for import and export. Thus, he answers all of your questions, therefore, plenty of options would be available for you to choose the best among and save time.
One more thing! Trading companies have undergraduate students that communicate with foreigners in basic English. They lack experience in international trade, especially in chemicals and high-tech products.
If you think the quality and price of a supplier is good, but it is difficult to communicate with that salesperson, you can just write an email directly to the manager of the company and ask him to change for a more professional one. Otherwise, as soon as they identify you as a big trader, they will immediately assign an expert to negotiate with you the deal .
Effective communication
Time is money, this is also Docshipper's added value. In international trade, communication is mainly based on emails. Between Europe and America, exists a time difference, which can delay trade operations. By using a common discussion tool as emails can solve this communication issue. Also, some Chinese providers can use WhatsApp or Skype, but they might not check messages in real time, while others don't use them at all.
We suggest you to install a Chinese app like WeChat on your smart phone. In Europe and America, not everyone uses Facebook to communicate, but in China, everyone uses WeChat. They will communicate with you at anytime, even during the weekends. The Chinese are hard workers.
Through this application, you may consider switching sales reps or suppliers. Prompt communication would make the process easier for you.
Problem-solving and long term responsibilities
A responsible supplier handles all orders, whether it is large or small. However, many Alibaba's suppliers deal indifferently with small orders, hence, they would give you a high price.
Buying existing branded products in China or customizing a product, can be a complex and time-consuming process. Starting from production to delivery at the desired place. This process has several challenges, especially if you are importing for the first time. This is why choosing a responsible supplier becomes even more important.
In addition, small challenges and obstacles are inevitable during production. For example, the logo is printed in the wrong position, or the requested changes have not been made. The key here to making everything run smoothly is the supplier’s attitude to these issues. If the supplier shows irresponsibility when problems occur, that means you are dealing with a bad supplier.
Therefore, a good supplier is the one who holds responsibility. It may turn unprofitable for him, because an order may reveals unexpected problems, but honestly speaking, he should not allow you suffering. Whether it is a small or large order, his positive attitude is to establish with you a long-term business relationship.
How to secure quality control of the trade process
A pre-delivery examination should be arranged so that in case of issues, the manufacturer will fix the problem at his expense.
The Quality control has to be imposed in line with the following:
Supplier Selection
- Ask about the countries that are their main export country, Why? Because, better quality if the supplier exports to Europe than if he exports to India, the requirements are not the same.
- Ask for a sample of the product.
- Assess their customer service.
Orders
Define all the characteristics of your product, not only the price, but also the terms of payment, delivery dates, and put it in contract form. Many manufacturers are careless, which is important to note everything and keep a history.
Pre-production process
- Identify problems as early as possible.
- Request a pre-production sample before starting full-scale production.
- Monitor production by requesting photos, videos, samples.
- You must be proactive to follow up on your set orders.
Post-production process
- Arrange for an inspection before paying the full factory invoice, for example: you can use an inspection agency, usually it does not cost much.
- If it is a small order, you can ask the manufacturer to do the inspection themselves, either by sending you a sample or by taking pictures of the products and the dimensions.
- You will be the dominant in the game before having paid the total balance of the order invoice.
After delivery
Pay so much attention to the defects. If the manufacturer is faulty, you have the right to request a compensation. Usually it will be applicable for the following order. In this case, you can add in writing a correction plan. The contract will embed the corrected details, for the manufacturer to prevent this from happening again in future orders.
Best ways to deal with Chinese suppliers
In business, you should always create the right conditions for your business to prosper. Here, we would like to share with you some of Docshipper's advices that enable you to grow progressively.
Find better payment terms
Some importers with significant expertise are growing rapidly every year due to their stable cash flow. For large and small businesses, cash flow is essential. It is fundamental especially for e-Commerce businesses.
In the case of Amazon, you pay in full when you place an order. It is assumed that the shipment will take between 4-6 weeks, while the goods tend to sell out in about 2 months, after which the money is released by Amazon within 30 days. If all goes well, your return on investment will take at least 4 months. If you don't get a loan from a bank, your annual business growth is limited.
If you want to grow your business, it is essential that sellers can help you with the financing terms. It will be more difficult to get their support at first. However, if you re-order the same product three times, you contact your supplier and try to get good payment terms.
Usually, there are three types of payment terms:
Bank transfer before shipment
In this way, the supplier will ask you to pay 30% deposit when ordering and the 70% balance should be paid before shipment. Then the suppliers will organize the shipment to your country. Most suppliers use these payment terms, but it doesn't help your cash flow much.
Bank transfer on port’s arrival
This method also requires you to make a 30% deposit, while 70% of the balance payment must be made to the supplier before your shipment arrives at your domestic port. This would give you a time frame of 2 to 3 weeks to settle your second payment due. That would definitely be much better than the above option.
LC and OA (Letter of credit and open account)
An LC (Letter of Credit) is the supplier's designated bank payment commitment, which is issued by importing banks according to their needs. In other words, the importer promises to pay the supplier in the future, so LC has a potential role to play in securing financing.
The OA (Open Account) has high requirements for supplier capital flow and importers credit, which means you must have a good import history and your supplier must also prove a possession of money in his account .
Exchange rate
The exchange rate is dynamic data that changes in real time. It is normal for it to vary between 5% and 10% in six months or a year. Don't worry if the fluctuations are not large, suppliers do not adjust product prices to accommodate small changes in the exchange rate.
However, if the exchange rate remarkably fluctuates, then you can negotiate with the supplier to do changes with regard to the product's price.
Consult your initial supplier before ordering a new product line
A long-term, reliable cooperative supplier is also a great resource. When buying a new product, you can consult your initial supplier. You can let him buy for you. This not only saves time, but also reduces potential risks. If you can get information about potential suppliers from him, even if you operate yourself, that will also help you a lot.
Ask your supplier for new design or products recommendations
Collecting accurate information is valuable in trade activities. When running a fashion product's business, you should always watch out for trends and what products your competitors are selling. Also, don't hesitate to ask your supplier about the latest trends to follow to increase your sales. It turned out that suppliers improve their products line based on customer's continuous feedback.
