The Chinese economy has been prospering. The nation has witnessed increased growth because of low manufacturing costs relative to the other parts of the world.
This reality has opened up several opportunities for global sellers. By sourcing products from China, you can get them at extremely low prices. You can then sell them in your own country at higher prices, thereby earning profits.
This, however, is easier said than done. For success, you will need to find the right product suppliers in China. This is where sourcing products can get tricky mainly because there may be a huge difference in the way things are done in your country and in China. It is not easy to understand a completely difficult language and negotiate an investment of thousands of dollars in inventory with someone you’ve just met online. The Chinese business culture may also be different from yours.
With the right guidance, however, you can find ways around this and successfully source high-quality products from China.
In this post, we will discuss a few tips or best practices for sourcing products from China without a hiccup.
1. Do Your Own Research
Before you can start sourcing products from a reliable Chinese supplier, you will have to begin the process by contacting them online. However, you need to be careful as the internet is full of fraudsters who can try to trick you into thinking that they are a legitimate Chinese supplier. This is why you need to do adequate due diligence.
You can begin your search for a supplier with online Chinese business directories. Alibaba is a renowned name and so is Global Sources. You can usually find high-volume, mass-market products and suppliers here. However, if you’re looking for niche or customized products, you may have to look elsewhere.
With the help of these directories, you can find suppliers in China who can deliver quality goods at the promised time and price. Make contact with a few suppliers. You may want to check out their business website and verify their authenticity. The website should not be just a one-page brochure-like free hosting platform. It should look professional with ample information on all their offerings. Don’t fall for the accreditations or “trust badges” you see as they can be easily purchased or copied from elsewhere.
Perform a Google search of the supplier’s name and see what you find. You want to look for the latest news and online reviews associated with the supplier’s firm. You can also check out their LinkedIn profile and other social media accounts that are permitted in China. A popular supplier who works with global clientele will certainly have a verified profile.
You can connect with a few suppliers you are interested in working with through online communication platforms such as Skype or Zoom. WeChat is a Chinese app that is popular among the people here. Talk business and ask them to show your products through the webcam, if possible. The way they conduct themselves and their tone will give you an idea of whether or not you should trust the supplier.
If they ask for huge amounts of money upfront or are unable to answer your queries to your satisfaction, avoid dealing further with them. It would be best to talk to another supplier.
2. Learn as Much You Can about Your Supplier
Once you have shortlisted a few suppliers for sourcing products from China, verifying their credentials is the next step. You may find some basic information about them online. Apart from that, you should know if they are indeed a manufacturer and not a middleman, and if they have the technical expertise, product manufacturing abilities, processes, and resources to live up to their claims of quality and delivery.
You can verify this in several ways. Ask the supplier for their audited accounts, check out their Value Added Tax invoice, and seek product samples. You can also verify the supplier’s name, location, and the nearest local government office. This office will likely have the supplier’s registration records, which you use to ascertain the details provided by them to you. Remember, doing business in China isn’t easy, but doesn’t have to be complex either.
3. Consider the Cost Carefully
As mentioned, one of the main benefits of sourcing products from China is low-cost manufacturing. In fact, these costs remain low despite the add-on charges for shipping and duties. However, when sourcing products from China, you should know that all manufacturers have a floor price, i.e. the minimum cost for manufacturing the product. You need to bear this in mind when negotiating with potential suppliers.
This means that if you have done your homework about the product and the costs of raw material and market, you will know what the price actually is. It is best not to choose suppliers who quote a price less than that. Also, large-scale orders may lead to further lowering of costs.
Either way, know that if suppliers go below the floor price, it will affect the product in other ways. The quality of the raw material may be compromised or the workers’ wages may be reduced or their work condition could suffer. It can also mean that the supplier bypasses the critical quality control process. This can be disastrous and affect your reputation as well as create legal trouble. Quality control inspections are non-negotiable as they help prevent costly mistakes and ensure that the quality of the product is up to your standards.
4. Stay on Top of Communication
A lot of clients tend to forget that when sourcing products from China, language may prove to be a barrier to communication. While the more established suppliers do have English-speaking customer support, a lot of the problems between clients and suppliers are rooted in misunderstandings in the communication process.
Often, things that may have been said by the client might not have been understood correctly by the supplier and vice versa. Of course, none of this is done deliberately, but if clients keep this aspect in mind, they can spare themselves costly mistakes, interruptions, and delays.
This is also why it is important to have all the specifications and instructions put in writing when doing business in China. These should be mentioned in as much detail as possible to prevent suppliers from making assumptions. Encourage them to ask you questions if they need clarity over something.
5. Understand the Chinese Business Culture
Respecting the legal systems and adhering to the stipulations of the contract are essential aspects of conducting business in China. Fulfilling professional obligations is a must for both parties, but for a truly successful partnership with your Chinese supplier, you will also need to understand the way business is done in this country.
Doing so is in your best interest as your competitors may have already developed their network of connections while going beyond the terms and conditions of the contract. Their contract will merely reflect what they agreed upon over a game of chess or even a meal.
In Chinese business culture, great emphasis is put on guanxi, or your place in the hierarchy of relationships. At its core, this word is about giving respect and trust to someone’s place in a network of relationships. However, guanxi needs to be earned by nurturing long-term relationships.
Conclusion
The above five tips should serve as a helpful starting point for those new to sourcing merchandise from China. From sourcing an efficient supplier and doing due diligence to fulfilling professional obligations to establishing positive interpersonal relationships, you will have to look into all these important aspects to be successful.
A prominent third-party inspection company in China, like Huaxin, can help you through the entire process of getting quotes, evaluating manufacturers, managing communication, conducting quality control inspections, and shipping and transportation. We will ensure that you receive only the best-quality goods. Do get in touch with our experts or send your inquiries to find out how we can help you.