How do you source from China without going there? There is no better place to start a new business than in China. However, some of you may find it difficult to source from China because it can be confusing and hectic most of the time.
Sourcing products from China is an excellent way for online or physical retailers to find appealing goods for their customers. China, once known as the "world factory," is now capable of producing high-quality, high-value goods. Before you begin your Google search for the best Chinese suppliers, you should have a solid China sourcing strategy in place. This will assist you in avoiding scams, locating a trustworthy supplier, and negotiating the best deal.
Why Sourcing Products from China?
China was previously referred to as the "world factory." The Middle Kingdom exported solar energy products, fashion, shoes, electronics, and other items at a reasonable price. In fact, China's new export strategy, "Made in China 2025" (2025), was announced in 2015.
It aspires to produce higher-value products and services. Surprisingly, there are a number of tax breaks available to help achieve this goal. As a result, the Middle Kingdom hopes to gain greater independence from foreign suppliers and become a more technologically advanced nation. While cross-border e-commerce imports to China are increasing, so are exports from China to the rest of the world. China now houses the majority of the world's factories.
The 3 Sourcing from China Principles
It's all about the numbers.
More quotes equal more information, which leads to better decisions.
Be willing to walk away.
As the buyer, you have complete control of the funds.
Gather your information.
Comparing supplier quotes side by side can assist you in reaching a quick decision.
Commitment when sourcing from China
If you are sourcing from China, you will need time to identify all of the suppliers, audit the candidate's factory prior to negotiating an agreement, evaluate their internal product development capabilities (if necessary), and manage the entire project. As you can see, this will take several hours per day and is a complex task.
Quick Guide on How to Source Products from China
It is not only about finding bargains. Make an effort to establish relationships.
Business transactions are conducted differently in China and most other eastern countries than in the West. Guanxi is the method by which business is conducted in China.
Guanxi, which is pronounced 'gwon-she,' refers to "connections" or "networks" that facilitate deals and open doors for business transactions. A person who has a lot of guanxi has a better chance of growing their business than someone who doesn't. It is also important in business transactions to first establish a personal relationship with the supplier by using communication channels to build respect and trust. The success of a transaction is determined by your ability to establish a personal rapport with the Chinese supplier.
Conduct thorough research on the supplier.
For new business owners, sourcing from China can be a complicated process. It will take some thought, effort, and time to find the right supplier who is dependable and can meet your quality requirements.
There are a lot of platforms where you can look for suppliers in China like Alibaba, Global Sources, Go4WorldBusiness and much more. If you want to establish Guanxi, the best way is to attend trade shows and meet with suppliers in person. Canton Fair is the most common trade show.
Negotiate with the Suppliers
Negotiating is one of the most important aspects of sourcing products from China for your business. Negotiations extend beyond price to include the term of the transaction, quality, negotiating the terms, and the type of business relationship you have.
When it comes to price negotiations, remember that the supplier, just like you, will have a price threshold set at which they absolutely will not go below. Instead of getting stuck at price negotiations, work out other details. Check to see if the supplier will offer a lower price if the order size is increased. If you pay in full up front, the supplier may give you a discount. If you place multiple orders, ask the supplier if a lower price can be agreed upon.
Make sure you know the market price of your product before negotiating with a supplier. When you compile a list of suppliers from your research, you will generally know the current rate. Even if you think you've found a good supplier, talk to other factories. You can use the quotes from one of the factories to bargain with the other.
Beware of Scams
Knowing how to spot a scam and avoid being duped is one of the most important aspects of sourcing from China as an importer. Here are some ways to avoid scammers:
Google the supplier
A good and legitimate company will usually have a web presence. Make sure there are no warnings about them on online forums.
Be cautious of extremely low prices
When it comes to sourcing from China, remember the adage "if it's too good to be true, it probably is." A supplier with extremely low prices is a major red flag. If a supplier gives you a quote that is significantly lower than all other quotes on the market and is an exact match to what you want, you should be skeptical of their legitimacy.
Examine the supplier's email address
The email addresses of the suppliers can provide you with information about their legitimacy. QQ email addresses are widely used in China and are as trustworthy as gmail or yahoo.com email addresses. Also, see if the supplier has an email address that includes the company name.
Ask specific questions
A reputable manufacturer will be able to answer all of your questions about the process, quality standards, and timelines.
Consider the selling history
It's a good idea to ask the supplier who they've sold the product to and if they can provide a reference from one of their customers.
Pay attention to payment fraud
Payment fraud has become one of the most common types of fraud in recent years. The scammer gains access to the supplier's account, which is typically the email address, and learns which orders are being paid. They communicate with the buyer via the same email address and provide a different bank account for payment. The unsuspecting buyer wires money to the scammer's account. By the time the supplier or buyer realizes they have been duped, the fraudster has vanished and it is nearly impossible to find them. Verify the bank account details with the supplier before making a payment to avoid payment scams.
Work with a China sourcing firm
There's a lot more to sourcing products from China for your business than simply looking for suppliers on Alibaba or other platforms and negotiating. Many issues can arise during a business transaction, ranging from unexpected price increases to shipment issues, communication barriers to poor product quality.
The sourcing firms can ensure that the supplier fully understands the product specifications and technical aspects by communicating in Mandarin or the specific local dialect. They can also devise a contingency plan in the event that something goes wrong at the last minute and the supplier is unable to deliver.
JOG International has been a market leader in supply chain solutions since 2004, assisting clients all over the world. Contact us right away or send us an email at info@joginternational.com if you're interested in sourcing products from China.