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A buying guide for you from a Chinese suppliers perspective

Discussion in 'China Sourcing' started by Import Expert, Jul 11, 2012.

  1. Import Expert

    Import Expert

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    I am often advocating purchasing goods from China to sell in the UK as it can reap substantial benefits such as allowing for higher sales margins and providing access to niche or bespoke products that would sell well in the UK with limited competition.

    Woodland Global arrange shipping and logistics solutions for clients once they have made the purchase to make delivery to the UK run smoothly and as I have said before in other posts ‘this is the easy bit’.
    During this process I am often copied in on emails back and forth between buyer and supplier which sometimes can be almost endless before a mutually agreeable sale has been agreed. These emails will usually cover similar subject matter and often are perfectly understandable questions made by people who are usually fairly new to importing and obviously wary of parting with their hard earned cash.

    Much time could be saved and the process could be less frustrating if the buyer could perhaps understand things from the suppliers point of view. As such I thought I would highlight some of the main issues the supplier faces and cover some of the common questions that I’ve seen in the past.

    Types of supplier
    In China as with the rest of the world, this can vary hugely. One supplier might be a factory with thousands of staff and at the other end of the scale you might have a mother of one working from home to try and pay the bills, along with many middle men in between. The difference in China is that it might not always be that clear exactly who you are dealing with. The mother is as likely to tell you that she is a factory as the factory itself.

    The truth is that they could all offer as good a service as the other. The crucial thing as far as the buyer is concerned is that this will affect what you can buy and at what prices.

    Types of product
    This will also have a bearing on who you can buy from and at what unit prices. There are obviously thousands of various permutations, but to keep it simple I see that there are three main product ‘types’ if you like.

    1) Off the shelf. These are made in quantity to the same design and as such reasonably easy to source.

    2) Off the shelf with own branding. Also made in quantity, these products might require specific branding to be added to the basic model, so will involve extra printing, design, etc.

    3) Bespoke products. These are manufactured to a specific design of the buyer and as such can be harder to obtain.

    Why do I need to consider this?
    Put in very simple black and white terms (I will cover in more detail below). If you ask a large scale factory to make you 250 small widgets, they simply won’t deal with you as it’s not worth their while. Yes they want to make money, but they won’t make much from that order.

    Should you ask the mother of one to get these for you, chances are she will have the necessary contacts, perhaps on the back of another larger order of say 5000 widgets that she sells on in smaller batches.
    Obviously once it comes down to own brand and bespoke products, there is additional design and manufacturing involved which will have a bearing on who you can buy from.

    Below I have highlighted some of the common questions I come across and helps explain the answers to these from the suppliers point of view:

    Paying for samples
    Q. I have asked a supplier to send me some samples so I can then make a larger order, but they want me to pay for them. Why are they not trying harder to get my business?

    A. If they sent samples free of charge to everyone that asked for them and then subsequently did not make an order, they would be out of business. Even if they stock the samples so have no excessive production costs, they are still essentially throwing away money.
    If a buyer agrees to pay for samples, the supplier will view them as being more serious about placing a future order. Money talks as they say.

    There will be some suppliers that will send out free samples, and perhaps just ask for the shipping cost to be covered by the buyer, but especially for higher value items these are becoming less common (Unless you happen to be a buyer for a company the size of Tesco’s, in which case they are more likely to hand deliver them).

    MOQ is too high
    Q. I want to buy 50 of these items but the supplier has a minimum order requirement of 1000 and won’t budge – Why?

    A. If it is not an off the shelf item they will more than likely need to make or buy moulds, create specific designs and suchlike. The factories also have to purchase materials and even if the order is small, chances are their own supplier of the base materials might have MOQ’s themselves. All of this can be a very costly investment for a small order. The materials themselves might be difficult for them to source if they need to meet your design specifications.
    Production of a specific product also takes time. They will need to schedule staffing and delivery of components even for a small order. The manufacturing process will mean they will be taking resources away from potentially larger orders with more profit in them.

    Why would they want to do all this for a low quantity order with a very slim end margin?.

    Unit price too expensive
    Q. Price I am being quoted is too high. China is supposed to be cheap?

    A. When smaller orders are involved, buyers will often discover that prices are not what they expected from China and when they factor in shipping and Duty/VAT that they realise that they could probably source from the UK cheaper.

    All of the base costs mentioned in the MOQ section will need to be factored into any unit price they provide you with and they will also need to consider the possibility of not being able to take on larger orders whilst your items are being manufactured.

    A factory will ideally want large regular orders, so they might even be trying to put you off by quoting over the top if they see you as a small one off importer. They might refuse to quote you altogether unless you can prove your potential to them.

    Deposit required
    Q. I have ordered some goods from a manufacturer, but they want part of the payment up front. Is this a scam?

    A. No not at all. If a supplier is manufacturing a product for you, they will want part payment up front. Firstly, to show you are serious (it is a non-refundable deposit after all), and secondly to pay for materials.

    More than often the deposit will be 30% with the remainder due on completion of the order or prior to delivery/release of bill of lading, etc.

    Manufacturing process taking too long
    Q. I ordered my goods three weeks ago and I’ve paid the deposit – Why have they not been shipped yet?

    A. Very few suppliers will hold large quantities of stock, or indeed if they are factory they will not have surplus materials just laying around waiting for a potential order. One of the reasons is that the factories need to move quickly with the times, so a big selling product right now could be out of favour in a months time. In addition to this, any stock held is essentially invested money that is going nowhere until the goods are sold.

    Some products such as the bespoke ones mentioned will take longer to manufacture, as there is more work involved and designs need to be finalised and materials sourced.

    A factory production line is not just a few dozen staff sitting round waiting for someone to press a green button on a conveyor belt once an order is received. They will often have a full schedule, some working 24 hours a day. They need to find a slot in their schedule to work on your product.

    Often this can panic buyers, as they see any delays such as this a potential stalling tactic that they think will develop into a scam. It’s simply not the case.

    Always ask for the lead time before you make an order, but be aware that things can sometimes change.

    In summary
    A supplier will only be desperate to sell to you if they feel it is worth their while doing so. They want to make money, which they are unlikely to do if they are manufacturing small one off orders. If you prove to them you are serious, they will respond accordingly and want to create a long term relationship with your company.

    If you haggle on price so much that the base line profit they are making is very poor, it’s likely that both the product quality and the level of customer service will suffer too. If you were trying to sell regular orders to two customers, one you were making £10 an item and the other £40, who would you want to impress more?

    Finally, most buyers are wary of being scammed. Don’t forget this works both ways. More than likely the supplier themselves will have been scammed in the past or suffered at the hands of time wasters. Treat them as if you would treat your own customers, create a business relationship and reap the benefits of a successful long-term partnership.
    saahaodotcom, psxgamer, lllh and 8 others like this.
  2. Digitalfever

    Digitalfever

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    And this ladies and gentlemen is why Darren own's MOTM !!
  3. Import Expert

    Import Expert

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    Haha, thanks Digital. Glad you like it. :)

    Its a bit long winded but hard to condense down without missing something out. Hopefully it will be of use to someone.
    saahaodotcom likes this.
  4. MSFB

    MSFB

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    Nice post.

    After visiting them in person Ihave started to see things from their perspective a lot more. Some of these people work on miniscule margins and lets face it, they probably get a lot of time wasters and n00bs from Alibaba which we all are or have been at some time. The more you understand about the people you do business with, the more you can improve your own operation. Knowledge is power!
  5. jaybee999

    jaybee999

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    Great post Darren. Should put a lot of people straight on how to approach suppliers and what to realistically expect from them. Nice one.
  6. JustCraig

    JustCraig

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    Fantastic thread - some really good points well made.
    saahaodotcom and Import Expert like this.
  7. Bingxing Tu

    Bingxing Tu

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    This is a very good posts! i hope i can add more information on this post.
    where we can find our right supplier?
    In China you can source most of products as you can. After 10 years of development, most of company has account on Alibaba, Made-in-China, and Globle sources. Most of suppliers here are likely accept large MOQ. This might cause problem when we comminucate with them. But if you are a trader or distributor with large qty, that will not have any problem.
    If you are a seller and have a store on Ebey or Amazon for very small order, you can probably try to source on Aliexpress.com, madeinchina.com and dhgate.com. About the webiste you can google. Most of suppliers here are the wholesalers or distributers. so we can start on a very small qty for a trial. about the scammer most people are concerned, all buyers are protected here. Of you paid a supplier, the money out from your credit card is directly paid to the Third parties. When your target products arrived at your house, if there was no any problems in the product, you finally paid, and the third party paid to the supplier. If there was a problem you can ask discount or return before you final pay.

    Suppliers on alibaba, Made-in-china, and Globle sources, and order procedures
    Most of supplier are trading company and factory. When we buy large qty here is the place we recommend. Because most of companies are trustable and real. When we purchase in large qty, we probably must across 1. Enquiry, 2 Select supplier,3 confirm, 4, confirm samples, 5. delivery and shippment. Point 4 here is the most important, and most company in China have the policy. you cover all or only cover the shippment. Samples are very important to avoid scammer. We found a better price, but if we received goods in a wrost quality, that might be a very big problem.
    About the payment, usually 30% deposit advance, but depend on the item we are going to purchase, we might have some different policy. For example, if what we ordered are for clearance item. may be more. For the balance are clear depend on the copy of B/L.
    For the fisrt time transaction supplier, i suggest you can select a third party for inspection before delivery to make sure all goods are same quality as we paid. BV Inspection are highly recommended. But most of importers are not welcome to accept this way. i dont know why.
    About how to avoid frauds, we can find many threads on TWF.

    How can we find the right supplier
    As my experiences, there are three reason that might cause the frauds when we purchase from China.
    1. Market changes which caused cost high and make order can not procedure forward, or deliver less quality one;
    2. Supplier met runds problem and disapeared.
    3. Scammers
    About the points 1, this might be the most happened situation. I think most customers have suffered. When we do international business we must confront many risks which make us very serious when we talk with suppliers and make decision very slow. this is quite normal, especially for orders which long leading time. So in avoiding this, we must avoid the hot season and make quick decisions. In China, in the first of 7 months, most of company are more free than the rest of 6 (before spring festival). in the rest of 6 months material supply market almost change higher each months. this time is the most risks for long time deliver order. so in other word, if we planned to a program, we try to avoid the hot season. If we need to decide in the hot season, we must short the leading time, Usually, one month for most of company in china can complete any order. So the longer time delivery, the much risks we will suffer.
    About the points 2, i have to say it is a shame thing as a chinese business man. there is a very few company can live for over 10 years. most of company live 2 or 3 years then disapear. So this is why we can explain we have a supplier but 2 or 3 years later we can not contact them any more. In domestic China, most of business are not cash by cash. just by Credit. This increased a lot of risks for all parties in the business. So we'd better according to the point 1 to make business.
    About the points 3 as many as the point 1. when we past a target key words in Google or alibaba or globle sources. we can find hundreds supplier make the same products. Cause the completely competetive market which leads some suppliers in order to get customer and make money they might offer a unregual price, a price very very competive price which makes you un-believable! when we saw this, we must be concentrate. 99% of them are scammers. these suppliers we must eliminate from our potential supplier list.

    Hope my point could help you and hope you can enjoy doing business with China. My best Regards.
  8. Import Expert

    Import Expert

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    Many thanks for the information Bixing Tu. The more feedback UK buyers can get from a Chinese perspective the better. As MFSB says. "Knowledge is power" and it can only help business from both sides in the long term by having a better understanding of both points of view.
    saahaodotcom likes this.
  9. Bingxing Tu

    Bingxing Tu

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    Many thanks Importsexports!
    saahaodotcom likes this.
  10. MSFB

    MSFB

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    Import Sexpots I read that as
  11. comix

    comix

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    Never trust them when they say they have thier own factory ........
    saahaodotcom and PearlBanggood like this.
  12. PearlBanggood

    PearlBanggood

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    i think so...
    maybe just some of the companies have their own factories but lots of site say they have their factories
    saahaodotcom likes this.
  13. micamao

    micamao

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    wowo so many imformaiion there thank you very much
    saahaodotcom and Import Expert like this.
  14. 1711

    1711

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    Good post!
    saahaodotcom and Import Expert like this.
  15. AngelaLuo

    AngelaLuo

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    Learned a lot ,thank you for the info :)
    saahaodotcom and Import Expert like this.
  16. TradeSparq

    TradeSparq

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    Developing right suppliers might be as difficult as encountering friends for life. once you have the right suppliers, you have friends for life.
    How can buyers find out the right suppliers?
    - right sites: Among many other factors, this factor is at hugely play when it comes to finding the right suppliers. Currently, there are hundreds, if not thousands, out there, of which only a few well-known. These include: Alibaba, Globalsources, Made-in-China etc. However, the features at these sites are not as strong as the size of their site in terms of verifying the potential suppliers for the buyers.
    saahaodotcom likes this.
  17. Salsal Sahib

    Salsal Sahib

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    very helpful thanx
    saahaodotcom and Import Expert like this.
  18. UTMETAL1988

    UTMETAL1988

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    Interesting ...
    saahaodotcom and Import Expert like this.
  19. Liang2013

    Liang2013

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    being scammed?I also searching and purchasing products from China to sell in SG for several years,now I am staying in here,
    it is lucky I did not get scammed before!!!
    saahaodotcom likes this.
  20. htskxb

    htskxb

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    Good post
    saahaodotcom and Import Expert like this.

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