Today if an entrepreneur Google’s a phrase like “Sourcing Products from China”. You can get almost 39 million results and this shows that if a person decides to go to turn to China to import items, this will surely be a wise decision in terms of choices.
The main reason behind this is because China has become the world’s largest manufacturing hub in the past couple of decades, and most likely will remain one for the next few decades.
Why Choose China?
The Asian giant China has emerged with the rapid change in the technology market from desktop PCs to the mobile market, including must-have devices like the iPhones and iPads to just about every mobile device made on this planet, and they are the birth place of the 2nd biggest smartphone manufacturer China.
In today’s world there is no one who doesn’t know about e-commerce, and China has again taken advantage of e-commerce in its own in the past decade. International customers demanded cheaper prices, more choices and faster fulfilment. With advancements in technology, production became faster and gave birth to the fast fashion industry, with its short production turnaround time and unlimited choices for customers.
Although these aren’t the only reasons that has given Chinese manufacturers a competitive advantage. As a matter of fact, China’s wages have been on the rise and fast-growing countries like Vietnam and Bangladesh are developing niches in footwear and clothing manufacturing, we will cover tips for these countries in upcoming articles.
This guide includes tips which are simply things that you might have been doing in your business already, except now your new supplier might be half-way around the world or in a vastly different time zone like China. You need to learn how to find success in importing goods from China, just apply the same business instincts as before, use plenty of common sense and be sensitive to the cultural and language differences.
Tip 1:
When you’re purchasing products locally or from overseas, be sure to use an order, purchase and inventory management system that’s written from the ground up to support international and domestic trade. Have exact specification of the products you want or need.
Tip 2:
As described earlier learn about the market before ordering products from China and beware of frauds. User your common sense and do your homework when you start contacting people and suppliers online. There are plenty of scammers and fraudsters and China isn’t spared either. The rise of Alibaba and online sourcing has given rise scams as well.
Tip 3:
There are a lot of Chinese Business Directories and I like to start with a broad-based search at Alibaba and Global Sources. These are the most popular two directories, generally, are good for high-volume, mass-market products that fall into definable categories. They may not be suitable for unique, bespoke or one-off products.
Tip 4:
Not everyone is a friend even on a big Chinese business directory like these two, it doesn’t mean they can deliver the goods on time, at your budget and at the quality expected of it. You still need to shortlist a few suppliers and work with a few before settling on one or two final suppliers.
Tip 5:
After you’ve established contact, due diligence is paramount. Is the person that you’re talking to is who they say they are? Check their LinkedIn profile, one of the few social media sites that are allowed in China. Any self-respecting sales or business development professional that deals with international customers should have a verifiable profile in LinkedIn. If the supplier has a company website.
Does it look professional? Or is it a simple one-page brochure at a free hosting site? Don’t be swayed by “accredited” or “trusted” badges. They can be easily purchased or copied from elsewhere. Is there a registered business address for the company? Google the company’s name for any news, good or bad, about it.
Tip 6:
Before closing a deal with them, get online with them on Skype or Google Hangouts. Ask them to show you their products through the webcam, unless of course, they’re dealing in industrial power generators! Keep the business conversation going on WeChat, a popular Chinese chat and social media app. Their tone and your gut feeling will tell you if they are a supplier to be trusted. If they ask for large sums up front, act cagey or drop out of the conversation then they’re best not to be dealt with. Just move on to the next supplier. Still unsure? Tell them you will get a third party inspection company to contact them for a factory audit.
Tip 7:
Try to visit China and attend the Trade Shows. This way you can meet your suppliers in person, and visit their physical offices and factories. Face-to-face interaction can do so much more in little time than rounds of emails and phone calls in the office. The biggest trade show in China is The Canton Fair, also known as the China Import and Export Fair. It takes place twice a year in Guangzhou and it has just about everything under one roof, including electronics, automobiles, consumer goods and gifts, clothing and medicine. Just make sure you time your trip accordingly, since the fair is divided into 3 parts for different categories.
Tip 8:
Opportunity Cost of Not Visiting Suppliers is a big one. It’s your business and you need to make the time to find solid, trusted suppliers that will supply goods for you to sell and remain in business.
There are Chinese suppliers at trade fairs in countries around the world but their frequency will be lower and the pool of suppliers much smaller. You may not be getting a complete, full picture of available products if you settle for this smaller marketplace.
Tip 9:
If you want to buy products with lower prices, I doubt that you’ll find much success or be able to negotiate lower prices along with decent quality if you’re going to limit your business efforts to sending off some emails, making a few calls or chatting a bit online. Face time matters. Remember, if you’re not there in China already, your competitors are.
Tip 10:
Culturally, buyers from developed nations are unaccustomed to bargaining during business negotiations. Sure, you might give and take on certain clauses in a legal contract. But haggling over prices isn’t something that is widely practiced in countries like USA, Canada, but in countries like China bargaining is quite important
In Western countries a seller usually puts up a price and a buyer comes along to purchase it at that price if they’re happy with it. Otherwise, the buyer will simply move on to another seller to find the right price.
Tip 11:
In China, you need to adopt a hagglers mindset if you want to negotiate the twists and turns in securing your first purchasing contract. Think of yourself in your local market or browsing craigslist, for a moment, imagine there are hundreds if not thousands of sellers hungry for business. The market noise and activity is overpowering but there’s just enough headspace for you to haggle over the prices and terms with a merchant. And merchants expect you to haggle because they’ve already marked up their prices!
Tip 12:
Try to get professional help and try to engage a Chinese sourcing agency to source products for your small business. The agent will have ready contacts and suppliers for your products. They will arrange for samples to be sent to you and will handle negotiations with Chinese suppliers. And you should not worry about getting scammed. The intermediary will do everything for a fee. If you a have done the negotiations and contractual work on your own. Maybe think of hiring a quality inspection company to conduct a product inspection for you. This would help ensure you get what you are paying for in terms of quality and quantity.
Tip 13:
When you’re coming from a nation like the US, adhering to the letter in contracts is normal practice for honest businesses. You’ll fulfill your side of the contract, no more and no less. But adopting a black letter approach to legal contracts isn’t going to get you far in China. I’m not asking you to conclude rounds of negotiations with a simple handshake.
Some people do and it works for them. However, if you’re going to simply rely on drafting a contract that spells out everyone’s obligations, then that’s going to be the extent of your business relationship.
Tip 14:
The Chinese, like many other Asian nations, put much emphasis on guanxi, or your place in the hierarchy of relationships. While this word is commonly used to describe “connections” or “relationships”, it has a far greater impact than what these two words describe.
As an outsider, you’re not going to immediately get a whole lot of love or guanxi. You’ve got to earn it. And developing guanxi means putting much effort into your business relationships, so much so that they cross over into your social relationships as well. This might not bode well for people unaccustomed to mixing their business and social lives.
Conclusion:
Whether you’re sourcing from China you still need to apply the same business acumen and common sense in evaluating suppliers and sizing up purchase agreements as you would in your product or business plan.
Finding reliable overseas suppliers, however, does require you to put in more effort and legwork in meeting your contacts face-to-face and nurturing a long-term business friendship. You might need a helping hand at first. Do this right and you will be rewarded with your own guanxi that your competitors can’t touch.