The nation of China is truly a marvel. The speed with which this nation has grown and become the second-largest economy in the world is truly shocking. The Chinese economy has been prospering despite the various challenges posed to it. It is a global superpower today and thanks to the proper utilization of human resources, it is the world factory today. This situation has opened the floodgates of opportunities for sellers on a global scale.
If you are an entrepreneur, then the best option for you is to buy from Chinese factories as it will allow you to get products at an extremely low price. China direct sourcing can increase the competitiveness of your small business or online store. Finding a trustworthy Chinese factory is therefore a crucial first step in growing your company.
Only relatively large corporations can afford to maintain an offshore office that could handle imports and product sourcing from abroad. However, thanks to technological advancements, everything is now accessible online, so there is no longer a need to actually travel to China, plan difficult and expensive business trips, visit Chinese manufacturers, and get in touch with suppliers.
The following are the few steps that you need to follow if you want to directly buy from Chinese factories.
1. Search for the suppliers
Do the proper research- before you even start to get in contact with the Chinese supplier to manufacture products in China. Internet these days is full of frauds, and you should avoid them at all costs. To guarantee you receive the information you require, you must write effective, concise, and thorough inquiry letters. The more details you offer, the more probable it is that merchants who can fulfil your demands will contact you.
Start your search for China online suppliers on the platforms like Alibaba and other directories which are the most popular and trusted among the companies. These directories have different categories on which the sellers are categorized. Tags like “verified” and others are testaments of the seller being genuine.
When you go to the website of the seller, it should be detailed and must not be a one-page brochure. It must appear to be trustworthy with all the relevant details available. One way how you can talk about the trustworthiness of the web page is that they have multiple offerings and that they have contact details too.
Do a Google search of the name of the supplier and observe what you see. Read all the news and the online reviews that are available on the supplier. It is an added benefit if they have a LinkedIn profile or accounts on other social media apps which are allowed in China.
Almost all of the suppliers and manufacturers in China are available on WeChat. This makes it ideal for communication. Further, if you plan to chat then the app has an inbuilt translator. This will allow you both to communicate without a language barrier. If you choose to do a video call, then ask them to show the product.
While buying creative products from China the tone of the supplier is enough to tell you whether they are willing to do business or not. A red flag is that they ask for a large sum of money upfront, or they are not able to answer the basic questions on the product and the process.
2. Perform due diligence on the suppliers
After shortlisting the suppliers from China, the next step is to finalize and verify their credentials. The basic information about them can be found online easily. Besides that, you must make sure that they are not a middleman posing to be a manufacturer. The manufacturer will have the required technical expertise to make the goods. Seeking details about the value-added tax and the audited accounts are some of how you can verify the suppliers’ trustworthiness.
It does not matter whether you have an excellent product or first-rate shipping capabilities, but it will be futile if you are dealing with a subpar supplier. Although there are websites like Alibaba where you may find suppliers, getting a company referral or recommendation from purchasing agent in China is the most reliable way to find a reliable source.
3. Identify the capacity of the supplier
Our general recommendation for choosing the correct Chinese factories for size is as follows:
- If your requirement is very small, then it is better to contact any trading company that may place an order on your behalf to a tier 1 factory and also (hopefully) keep proper track of production.
- If your order is sufficiently large enough but not that large to attract any large factory, then work with the manufacturer directly with any tier 2 factory with approximately 250-800 workforce.
- If your order is huge and significant so that companies are aggressively competing for your business, then tier 3 is advantageous for you.
4. Negotiate the prices carefully
The main benefit of getting your products from China is despite the duties and add-on charges due to the low manufacturing cost the products remain much cheaper. However, when you are negotiating the price, then you must be aware of the floor price which is the minimum price below what the sellers don’t sell. In some circumstances it is appropriate to discuss a MOQ (minimum order quantity) with the seller. If you decide to take this route, professionalism and decency are crucial.
Do your proper research to get aware of the minimum price. If the seller is selling at a price lower than that, then it is a red flag. Further, large-scale orders can help you in getting an edge over the negotiation. There are multiple ways in which the product and other things may be affected if the seller goes below the floor price. Once the supplier offers you the products below the floor price, then either he will compromise with the quality of the products, or he will cut the cost of the labour. He may also skip some important quality check processes which might be important to ascertain the quality of the products. Ensure that the payment terms on your order are explicit.
5. Choose your supplier and request samples
Sending an email asking for samples of the goods you are interested in is necessary after you have contacted a possible source on your supplier list online. Most vendors will offer you product images or catalogues without charge, however, it might be difficult to determine the quality of the goods from the images. You should ideally get a test sample of the product to confirm its caliber. The samples could cost money, but it is hardly an expense compared to your peace of mind.
6. Place an order
It is time to submit an order when you have confirmed the specifics of the final agreement. When importing products from China, don't trust that the supplier understands your needs or that he won't cut corners to meet the agreed-upon pricing. So, orders should contain as many specifics as feasible, such as size, colour, thickness, and material. Send a chart or graphic if at all feasible to eliminate any doubt. Finally, you should do your own study and research on the best contract to sign with Chinese manufacturers.
Most suppliers require a down payment, often around 30%, with the remaining balance due upon shipment. Most vendors will not even consider your order until your deposit has been transferred to their account. This is hazardous because you won't get your money back if the supplier doesn't ship. Consider Alibaba Trade Assurance in this case. Trade assurance is the name of a payment security service offered by Alibaba. If you don't receive the number or quality of the things you ordered, this will refund your money.
7. Arrange China quality control
It is difficult to control the quality when the source is based abroad. You might hire a third-party inspection agency to check the product quality if the order is significant.
Understand QC inspection services - The primary objective of product quality control inspection services is to spot issues and flaws before they become serious to ensure that consumers are getting genuine products.
Be careful about scams and poor quality - It should be noted that receiving absolutely nothing at all due to a scam on a China factory purchase is different from receiving all the materials of your order, but you are not completely satisfied with them. Receiving inferior products undoubtedly falls under the category of "scamming," but that is a separate issue that has to be addressed.
Most of the time, these subpar goods cannot pass the tight customs and are either thrown out, destroyed, or subject to additional punishment. In such circumstances, it is tents amount to that you won't receive the items that you ordered and may feel "scammed."
8. Get ready for shipment
You have a variety of shipping choices when it comes to getting your goods from China or Alibaba to your nation. Sea and air freight are common choices. The options you select, however, could either boost your profit margins or eliminate them, depending on what size of the wholesale goods you purchase.
Shipping costs are typically lower for huge amounts of relatively heavy material when using sea freight. However, air freight will be a more appropriate decision if you purchase a lot of lightweight stuff.
Also crucial are the shipping terms that the seller offers. Ex-works (EXW), free on board (FOB), or cost insurance freight (CIF) are all possible shipping methods. Choose the term that best fits you after evaluating each item.
9. Receive your goods
Receiving your goods is the last stage in the process of buying directly from China. Remember to promptly assess the quality of the goods after getting them and provide feedback to the manufacturer. The problem with the goods must be resolved quickly if it arises.
Usually, the seller will assist you in shipping the items to your nation, but the freight will cost more. Using a freight forwarder to help you export from China is the best course of action in this case. Request quotes from two to three freight forwarding firms, and then pick the one with the best pricing and communication.
If you have decided to buy from Chinese factories directly, one smart thing to do is hire service from a certain product sourcing agent. There are many such English-speaking agents available in China who have a wide knowledge of the Chinese market and the business culture of that country.
10. Keep regular communication
The language barrier is critical in the communication of the suppliers. However, as discussed above this barrier can be overcome easily. The next thing is that you will have to make sure that the concerns and parameters regarding the quality of the products are communicated clearly to the manufacturer.
The problem with China sourcing is that mandarin is the sole language of communication there. However, some big suppliers have an English-speaking client base, and which is why they have some level of command of English. Communication plays a critical role, and any level of misunderstanding will lead to compromise in the quality.
Once the concerns and parameters have been communicated clearly, you should regularly check on the manufacturer to make sure that all things are going as planned. You better encourage them to ask questions about the specification of products.
Understand the business culture of China - it is very important to understand the business pattern of the country that you are doing business in. This is especially the case of China because Chinese businessmen are very different from the ones that you find in the local market.
Conclusion
Doing business in China is not an easy task. When you decide on doing business in China, make sure that you pay attention to the details. If this is your first time, then you must play it safe and must avoid taking risks. This will ensure that you do not make rash decisions while trading with China. Buying directly from Chinese factories requires a lot of patience and a great level of skills.
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