Many businesses outside of China can benefit greatly from sourcing products in China. Despite the common misconception that China only produces cheap and low-quality products, there are many manufacturing units in China that produce high-quality products that can compete in any market, depending on the budget.
In this article, readers will learn about the benefits of sourcing products in China, the different sourcing options available, how to source products from China, and six tips for successful sourcing. By following these tips, businesses can ensure that they source high-quality products at competitive prices from China.
Key Takeaways
- Sourcing products from China can greatly benefit businesses outside of China.
- There are various sourcing options and strategies available to businesses.
- Following six tips for successful sourcing can help businesses source high-quality products at competitive prices.
Why Source Products in China?
When starting a business, sourcing products from China may seem intimidating, but it is also the option with the greatest potential for profitability. China is still the only place in the world to source many private label products, due to its breadth and depth of manufacturing experience, raw materials, and technology.
However, dealing with the complex system of Chinese business requires some preparatory steps and strategies. The uncertain and sporadic lockdown risks faced by factories, ports, trucking, couriers, and inspection agencies mean delays can happen at any time. Therefore, having a sound product sourcing strategy is crucial to navigate complexities and grow your business.
Here are four principles to keep in mind when sourcing products from China:
- It’s a numbers game. More quotes mean more information, which leads to better decisions.
- Don’t be afraid to walk away. As the buyer, you hold all the money.
- Compile your data. Checking supplier quotes side-by-side can help you reach a quick conclusion.
- Price is just one factor. Logistics and quality control are equally important.
To start sourcing from China safely, follow these seven steps:
- Identify your product. Determine the product you want to source and its specifications.
- Find potential suppliers. Use online directories, trade shows, and referrals to find potential suppliers.
- Contact suppliers. Reach out to potential suppliers and request quotes and samples.
- Evaluate suppliers. Compare quotes, samples, and supplier information to select the best option.
- Negotiate and finalize. Negotiate the terms and finalize the agreement with the selected supplier.
- Arrange logistics. Arrange shipping and transportation, and ensure proper documentation is in place.
- Quality control. Inspect the product before shipping and set up a quality control system with the supplier.
During the sourcing process, keep these six tips in mind:
- Be patient. Sourcing from China takes time and requires patience.
- Communicate clearly. Ensure that communication with the supplier is clear and concise.
- Be aware of cultural differences. Cultural differences may impact communication and business practices.
- Protect your intellectual property. Register your trademarks and patents to protect your intellectual property.
- Understand the regulations. Understand the regulations for importing and exporting products from China.
- Stay up-to-date. Stay up-to-date with the latest developments and changes in Chinese business practices and regulations.
In conclusion, sourcing products from China can be a profitable option for businesses. However, it requires a sound product sourcing strategy and knowledge of the complexities of Chinese business. By following the seven steps and six tips outlined above, businesses can navigate these complexities and successfully source products from China.
4 Sourcing from China Options
4 Options When Source from China
When sourcing from China, there are four main options available. Each option has its own advantages and disadvantages. The four options are:
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Buy directly from Chinese supplier: This option is preferred by 82% of importers who want to control the process and avoid paying commissions to any intermediary or agent. This option is suitable if you have sufficient organizational capacity to manage suppliers and meet the vendor’s minimum order quantity (MOQ).
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Use a China Sourcing Agent: This option involves using a sourcing agent to help you navigate the market. There are thousands of people in China providing this service. If they come from the right industry, they can use their network and save a lot of time. They can also act as your Chinese representative.
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Buy from a Trading Company: This option is suitable if you can’t meet the MOQ, perhaps as a start-up or an entrepreneur who has been an early target. Trading companies can place their products in small workshops that accept small orders. However, working with intermediaries is not recommended in most cases.
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Use the Service Company: This option is suitable if you have already found suppliers and need some production follow-up. Some Chinese purchasing agents provide services and charge fees. Everything is transparent, including supplier name, the process followed, etc. This is an investment in your company before you start production, but if you predict a lot of it in the future, it’s a good choice.
Each option has its own benefits and drawbacks, and it is important to consider your specific needs and resources when choosing the best option for your business.
How to Source Products from China?
Sourcing products from China can be a complicated process that involves several steps. The process can take several hours a day, and it is essential to identify all the suppliers, audit the candidate’s factory, evaluate their internal product development capabilities, and spend time managing the entire project. Here are the complete 7 steps to source products from China:
1. Do Market Researching
Before setting up your business, it is crucial to research. There is much competition in the market, and if you jump into the crowded marketplace, it will be challenging for you to reach your business at the top. You have to do more struggle to get your goals. So it is crucial before applying for any business your first step must be complete, compelling research.
2. Get In Touch With Chinese Manufacturers
To get in touch with Chinese manufacturers, you can go to online wholesale websites like Alibaba that connect you with hundreds and thousands of qualified manufacturers from China. Then, send messages to at least 10-15 suppliers. Share your message with your manufacturer by sending a simple message along with the mentioned below lines:
“Hello, my name is (your name). I’m texting you because I am in dire need of (your product name). Can you please offer me your price and quotations (also tell the number of units you want to order) and an estimated delivery time? Thank you! I would like to highlight one more thing as I’m not only contacting you but also your competitors, so please be kind and reasonable with your quote. Regards, (name).”
If you can fly to China, you have the opportunity to participate in various trade fairs and professional wholesale markets.
Types of Sourcing Products from China Suppliers.
There are three types of suppliers for importing from China-manufacturers, small trading companies, and purchasing companies. Knowing which type is right for your business is crucial.
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If you are a big buyer and can meet the factory’s minimum order quantity, you can purchase products directly from the manufacturer.
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If you are not buying a large quantity, but looking for a wide range of related products, then a trading company is a good choice. You can carry multiple products in one store, and you can import a small amount of each product.
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If you are a supermarket company, you can try to purchase from Yiwu market. At the same time, you need an agent to help you turn around all these, such as Yiwu agent.
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It is better to choose a manufacturer when you supply products with technical requirements as you can source directly from them, not sourcing agent or company.
Where to source products from China?
The process of this is relatively straightforward: All you need to do is go to online wholesale websites like Alibaba to find the products that you want to buy. Then, send messages to at least 10-15 suppliers. Share your message with your manufacturer by sending a simple message along with the mentioned below lines:
“Hello, my name is (your name). I’m texting you because I am in dire need of (your product name). Can you please offer me your price and quotations (also tell the number of units you want to order) and an estimated delivery time? Thank you! I would like to highlight one more thing as I’m not only contacting you but also your competitors, so please be kind and reasonable with your quote. Regards, (name).”
If you can fly to China, it is definitely better, you have the opportunity to participate in various trade fairs and professional wholesale markets.
3. Negotiate With the Suppliers
Before you negotiate, make sure you have all the data and information to present your case. This gives you a good reason to refute the supplier’s claim, and you understand the situation. Once you have finished finding your reliable companies, you can send them the following messages to play with them and get better pricing:
“Hello (company/contact), we are looking forward to placing an initial order just to test the quality. We would like to place orders for (number of units) of (product). What will be your offered quote for this? Must keep in mind that we are receiving plenty of good pricing from your competitors too. But we want to check yours. Thank you!”
It will be best to place orders for around 50 or more units for the first time. Ordering for only one to two products will give them the impression that you don’t have enough cash to invest with them and in this way they can’t make more money.
4. Start from Order Samples
After receiving the manufacturers’ quotes, you can now pick the best price among all and order your first round. When you receive your first sample order, you should:
- Inspection of multiple units (to ensure a consistent level of product quality)
- Look for any defects, damage,
6 Sourcing Products from China Tips
1. Plan Everything Ahead
When sourcing products from China, it is crucial to keep in mind that time is of the essence. Any delays or errors can cause significant disruptions in the logistics chain. Therefore, it is always recommended to plan for extra time to import from China.
It is advisable to start organizing the import process at least three months in advance. Depending on the port and destination, the transit time may vary significantly. It is also essential to consider the time required for inland transportation.
To ensure timely delivery, it is recommended to work closely with the supplier and the freight forwarder to establish a realistic timeline.
2. Quality is Directly Proportional to the Cost
One of the main reasons buyers all over the world prefer Chinese suppliers is their low manufacturing cost. However, it is essential to keep in mind that quality is directly proportional to the cost.
When negotiating with potential suppliers, it is crucial to remember that all manufacturers have a minimum price, which is the minimum cost required to manufacture the product. If a supplier falls below its minimum price threshold, it may result in a decline in the quality of raw materials, workers’ wages, or working conditions. It may also lead to skipping steps in the quality control process, which can impact the product’s quality and reputation.
Therefore, it is recommended to negotiate a reasonable price that is meaningful for the business while ensuring the product’s quality.
3. Write an Effective Inquiry
To ensure that you get what you need from potential suppliers, it is crucial to write effective, clear, and detailed inquiries. After collecting a list of suppliers, it is recommended to contact them to negotiate transactions or custom requirements.
It is essential to provide all the necessary information, including product specifications, quantities, delivery dates, and payment terms. This will help the supplier provide an accurate quotation and avoid any misunderstandings.
Build Professional Relationships with Your Suppliers
Developing a professional relationship with the supplier is essential, whether ordering online or traveling to China to meet them in person. Communication is key to building a strong relationship with the supplier.
It is recommended to use applications available in China, such as WeChat and QQ, to communicate with the supplier. Maintaining an ongoing relationship with the supplier can offer discounts and better deals. Additionally, if looking for another supplier to make a different product, they can use their network to introduce reliable people.
4. Have Confidence in the Negotiation
Negotiating with the supplier is an essential part of the sourcing process. To succeed in the negotiation and reach a deal that meets the business’s needs, it is crucial to enter the negotiation with a professional attitude, confidence, and reasonable requirements.
It is recommended to research the market and have a clear understanding of the product’s manufacturing cost, quality, and delivery time. This will help in negotiating a reasonable price that benefits the business.
It is also crucial to keep in mind that the supplier may not accept the first offer, and there may be some back and forth. Therefore, it is recommended to have confidence in the negotiation and ensure that the price set is meaningful for the business.
5. Pay Through Legal Channels to Avoid Illegal Remittances
When making payments to the supplier, it is essential to choose a legal, safe, and reliable payment method to avoid any illegal remittances. It is recommended to avoid paying suppliers through illegal channels, as it can have legal implications.
It is crucial to ask the supplier to provide the details of the business account of the company you are trading with and avoid transferring money to a personal account through any payment method. Additionally, it is recommended to draft a strong agreement that includes payment terms and the choice of payment method before making any payments to potential suppliers.
6. Use Professional Freight Forwarders to Handle the Goods Safely
Finally, it is recommended to look for a professional freight forwarder to deliver the goods safely and efficiently. It is essential to check the company’s certificates, experience, and work history to ensure they are reliable.
It is recommended to choose a company with a reputation, a reasonable price, and proper timing. It is crucial to ask each of the shortlisted companies about their details and ask questions to make an informed decision.
By following these tips, businesses can ensure a smooth and successful sourcing process from China.
Sourcing Products from China Conclusion
Sourcing products from China can be a profitable venture, but it is not without its risks. As a developing country, China has a higher potential for risks such as poor quality goods, fraud, and difficulties in enforcing contracts. However, the potential for significant cost reductions may make the risk worthwhile.
To successfully source products from China, it is important to take the time to learn the process and do thorough research. Rushing the process can lead to being scammed or taken advantage of, which can seriously affect a business.
The seven steps outlined in this article provide a helpful guide for sourcing products from China. However, it is important to proceed with caution and carefully consider all factors before making a decision about who and where to get supplies from.
For those who are new to sourcing products from China, it may be beneficial to seek the assistance of a product sourcing company. With their expertise and knowledge of the process, they can help ensure a successful sourcing experience.