Fact: A majority of the ecommerce businesses I’m familiar with, source their products from China.
And with good reason. China offers a huge range of product manufacturing and sourcing options at very efficient prices.
But sourcing from China doesn’t come without it’s challenges. This post, from my friends at Sourcify, will give you a solid framework for ensuring that those challenges are handled smoothly.
Let us know what you think!
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Networking is one of the most valuable tools in business—both financially and non-monetarily. Your network can deliver untold amounts of value and improve your business overall. There’s only one problem with networking … It has limits.
When you start to source from China, you might not know anyone in the area. If you do have contacts in China, they might not be able to help you find solid manufacturers.
Luckily, you can go from having zero contacts in the country to successfully manufacturing there with a little effort. Below, information on how to ensure a smooth manufacturing experience in China is presented.
1) Do Your Research
The first step is to identify manufacturing prospects. There’s no set-in-stone timeline for this step, but you’ll want to spend at least four weeks analyzing and comparing your options. If you have the luxury to spend six weeks researching, you should. During this time, try to compile a list of five to seven manufacturers that you might be interested in working with.
To complete this process, you have a couple of tools at your disposal. The first is Google. Numerous manufacturers and suppliers are searchable online. If you use this method, keep two things in mind … One, remember that many suppliers don’t have good SEO. For this reason, the factory pool on Google is somewhat limited. Next, be aware that not all businesses on Google are factories. Some are trade companies that offer manufacturers’ products at premium prices.
Another platform that can help you identify factories shouldn’t come as much of a surprise, really—Sourcify. The platform has over 550 pre-vetted factories, offering customers an average of 32 percent unit cost savings. Sourcify also helps buyers have efficient and effective communication with their factories. Furthermore, as a customer, you’re provided with updates on your factory’s various production processes.
2) Buy Directly From Factories
There’s a common debate about whether companies should work with a trading business or directly with a factory. Trading companies buy products from a variety of categories and make money by adding a margin to the price they pay for goods. They generally have lower minimum order quantities, and they often offer high-quality customer service.
Factories, on the other hand, offer lower prices and options for customization. As long as you can meet a factory’s minimum order quantity, it’s often best to work with them directly.
3) Negotiate Prices
Once you narrow down your list of possible suppliers, you’ll want to determine the cost of doing business with each one. During this process, you’ll need to negotiate. If you want to get the best deal, here are a few tips you can follow:
Sell your company as a group that will give them a lot of business. Suppliers really want to know how much money you’ll provide and for how long. Let them know how much business they can expect from you and talk about the longevity of your relationship.
When negotiating with factories, it is best to keep it simple. Using complex words makes it difficult for the sales rep to decipher your messages.
Avoid complex words, and long run-on sentences. In your emails keep everything clear, concise, and to the point so it’ll be easier for them to understand.
We found that when communicating with your manufacturer, ask them a set of questions in numerical order like the following:
- What is your minimum order quantity?
- Where in China are you located?
- Do you produce product packaging?
- What are the prices for 200, 500, 750 and 1000 products?
Asking these simple questions, in an organized manner, will make it easier for your supplier to comprehend.
You’ll also want to consider more than price. Although lowering your unit cost is important, it’s not the only way that you can decrease your expenses.
For example, maybe you can negotiate your original down payment. Are they able to do discounts on bulk orders? What about faster shipping with no increase in price?
4) Quality Is Always Top Priority
Although you’ll spend a lot of your time trying to lower your manufacturing costs, you must keep in mind that there’s such a thing as too cheap. Factories have price floors, and for a good reason. When they dip below these prices, there are negative consequences. Maybe they cut corners with cheaper materials, less attention to detail or a number of other things. You want a good deal, but not if it sacrifices quality.
One of the best ways to ensure quality is to ask factories for pre-production samples. Request that the product they send you is exactly the same as every other product they will create for your company. You don’t want them to spend extra time or use superior materials when they make your sample. Their first production should be an accurate representation of their overall production quality. A sample may seem like an unnecessary expense, but it’s well worth the investment.
Another way to determine quality without making an in-person visit is with an independent quality inspection. You can hire an individual or an agency to check out your factory before you decide to work with them. Of course, this can be an expensive process, but it may be worth it—depending on the goods you’re ordering.
5) Remain Flexible
Sourcing products in China is an amazing opportunity for your business. The right manufacturer can make you quality products at attractive prices. The problem, of course, is that China is far away if anything should go wrong.
It’s not easy to pop into an office and speak with a representative. Paying your factory a quick visit to check on its progress isn’t likely a possibility. For these reasons and more, it only makes sense that when sourcing products from China, flexibility is key.
When things don’t run smoothly, you need to be able to keep your cool. You have to understand how to work with a remote team. Doing business with an overseas manufacturer isn’t always easy, but it is possible with a little flexibility.
6) Tips for Maintaining Communication
Good communication is the cornerstone of a great business partnership to bring your product to life. However, with all the cultural differences, the time difference, and the language barrier, how do you communicate with your potential supplier effectively?
Here is an example of an effective email to send to your supplier.
Pro Tip: Do not use your primary email address. Create a seperate email address for sourcing, unless you like a flooded inbox.
Example Email Template:
Hello,
My name is XYZ and I am searching for a supplier of [product]. I found your company and wanted to get some more information about the [product] I saw on your website.
- What are your minimum order quantities?
- Do you do your own packaging?
- What are the prices on 1000, 500 and 200 Pieces?
- What is your production lead time?
Could you please get back to me with the above information? My email is XX and my WeChat is XX.
Please give me at least three options of similar items that you have so I can review with my team. I will look at these options and get back to you as soon as possible.
Thank you and I look forward to hearing from you and hopefully placing an order with your company.
Best,
XYZ
Sending a direct and concise email like the one above is key. It will make it easier for the supplier to understand and increase suppliers response rates.
Summary
As a progressive business owner, you probably invest a lot of time into networking. One of your most important jobs is to meet contacts that can further your business. That being said, sometimes you fall short… you can only know so many people.
So, if you want to break out of your current structure and start sourcing in China, you might need to start fresh. With a blank slate, you’ll be able to collect contacts and forge relationships with various vendors. It will take a bit of time to see all of the possible rewards, but if you stick with it, you’ll find that manufacturing in China is well worth your time.
