The Complete Guide to Sourcing in China

There are many benefits of sourcing your products in China. However, it may take time to find the right suppliers, negotiate, and secure a good deal.

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Most suppliers often face many issues when finding a supplier or after going into business with one, the product delivered did not match the specifications and was of poor quality.

It takes a lot of experience to understand the Chinese market and how to deal with suppliers which is why you need all the help you can get.

This article will outline some of the best practices, tips, and everything you need to know to help you source products in China effectively.

What is China sourcing?

Sourcing is when you look for a supplier to help deliver you the best quality of goods or services for your business.

Similarly, Chinese sourcing is when you find quality goods and services with the help of local suppliers in China. Depending on the size of your business, importing goods from China may require many suppliers with different experiences for your industry.

For example, if you're a small business owner, you may require a few Chinese suppliers, whereas large enterprises may require a sourcing company in China.

Why should you source products in China?

China is one of the biggest countries that trade globally with supply chains that can serve businesses of all sizes. They can produce, maintain, and distribute products on a large scale.

For this reason, sourcing products in China would already be a good idea. But there's more.

Here are other reasons why you should consider sourcing in China:

• Suppliers options: There are dozens of suppliers you can choose from in China. So depending on the size of your business, you can choose the suppliers that fit within your budget.
• High-quality products with affordable prices: Given several options of suppliers available on the market, you can look for those that offer affordable prices with products that are of high quality.
• Low labor costs: If you seek skilled laborers at low and reasonable rates, China is definitely the place to consider. As a country with a high population, one of the components that affect how much a product sells is the cost of labor.

A step-by-step guide to Sourcing in China

If you're looking to source products from China, you might find it challenging. The process is often time-consuming and complex, but it doesn't have to be.

Let's take a look at a step-by-step guide to sourcing in China that can help you navigate the complexities and streamline the process.

1. Spend Time Looking for a Supplier

If this is your first time sourcing in China, your first option might just be to do a quick google search.

There are many websites where you can get connected with suppliers such as Alibaba and Made in China.

However, it is not easy to distinguish between a reseller and a manufacturer online, so you need to choose carefully.

Websites like Alibaba mentioned earlier can help shortlist manufacturers during your search. These platforms have a feature where they rate different suppliers and manufacturers across China.

It would be best to keep in mind that these ratings might not be reliable as any supplier that pays for the Alibaba premium membership can get a gold supplier rating.

So, you need to take time with your search and conduct additional checks to ensure you have found the perfect supplier.

&#;&#; Pro Tip: It is better to choose a manufacturer when you supply products with technical requirements as you can source directly from them.

2. Hire a Sourcing Agent

If you are sourcing in China for the first time and are willing to spend some money, hiring a sourcing agent might be a convenient option for you, especially if you are looking to acquire products with technical specifications.

Again, this is a convenient option if you want to stay wherever you are and not travel to China to conduct factory and quality inspections.

Your sourcing agent will take care of all of that.

Other benefits include having an experienced agent who can speak the language and negotiate with suppliers on your behalf.

Companies such as Lazpanda have a strong reputation for sourcing products for businesses, saving them time and money, and making the entire process extremely smooth.

Lastly, when you use a sourcing agent, you are far less likely to get scammed or be a victim of fraud.

3. Conduct Supplier Verification Checks

After making a list of suppliers based on their experience, you will need to verify this information.

Things to verify include whether the suppliers are a factory or just a middleman and whether they have had the previous technical expertise and the ability to produce what you are looking for.

You can verify this information by examining the suppliers' VAT invoices, audited accounts, or the factory's registration records.

You can call the supplier and ask for their registration number and business license number.

While this is not always the case, it is often a red flag if your supplier does not have a landline number and only operates using a mobile number.

Suppose your supplier fails to provide a business license or a company registration number.

In that case, you should avoid doing business with them.

All registration numbers can be verified by the local administrative government or the local Bureau of Industry Commerce.

Lastly, it would be best to ask for references from the supplier's previous clients to verify their history and reliability.

4. Find a Balance Between Price & Quality

The biggest benefit of sourcing in China is that your cost is significantly reduced due to low manufacturing and labor costs.

When negotiating the price with your supplier, you should remember that all suppliers have a general minimum cost to manufacture the product.

Here is where you need to research the costs of the product and the market price to get a good idea of what a reasonable price is.

With this information, you can tell that when you are offered a price below the market price, the quality of the product may not be the best.

Going below the minimum market price or the product's cost price should be a red flag as the supplier is compensating for something missing that you might not have realized as yet.

To protect yourself from dealing with such consequences, you should avoid working with suppliers that offer you a price that is way too low.

5. Buy Directly From Suppliers

Eliminating the middleman and buying directly from the supplier gives you more control of the entire manufacturing process.

Additionally, you also avoid paying extra fees or commissions to the agent or middleman.

If you have the time and experience to carry out your own search, effectively communicate with suppliers, and oversee the manufacturing process, this is something you should consider as it can significantly lower your costs.

Moreover, communicating and buying directly from suppliers avoids the risk of miscommunications and delays in sending money to China as you no longer have to rely on them.

6. Effectively Communicate with Your Suppliers

The major challenge businesses face when sourcing in China is the lack of clear communication due to the language barrier and cultural differences.

Therefore, most of the issues in dealing with suppliers come from misunderstandings and miscommunication.

It may be worth hiring a translator as miscommunication can cause huge delays in delivery and production times, negatively impacting your business and its profit margins.

All technical details such as product specifications, technical requirements, and packaging guidelines should not be arranged orally and should be put in writing in both languages.

You should also make sure to discuss the progress of the work so all issues can be dealt with immediately and ensure that there is a good flow of communication.

7. Conduct Quality Control Inspections

Conducting regular quality inspections is crucial to ensuring that your product is made correctly and that its quality is not compromised.

Having a regular check on the manufacturing process ensures that things are not left to the last minute and that any issues that turn up are dealt with immediately as it's easier to fix problems during the manufacturing process than after the final product has been made.

Tips to consider when sourcing in China

Now that you know the steps you need to take when sourcing in China, it's important to understand some of the important factors, which will be beneficial to you in your journey.

Let's dive deeper into each tip.

Always Negotiate with Suppliers

After you have spent your time shortlisting and finding a supplier, you have to start negotiating. The goal is to create a situation where both parties benefit.

Before you negotiate, make sure you have all the data and information to present your case. This gives you strong reasons to refute your supplier's claim and that you're aware of the situation.

Other important tips you should consider are:

• Be confident when making a deal, so the supplier also has confidence in you and your business
• Don't be afraid to say "no" to your supplier, if a deal is not right
• Always remember that there are better suppliers that meet your requirements

Make Sure to Order Samples

It is always a good idea to order samples before committing to one supplier and ordering in bulk. You don't want to make a huge commitment and waste money without testing the end product.

When you receive your first order of samples, you should:

• Inspect a few units (to ensure the consistent quality level of products)
• Look out for any defects, damages, or any poor-quality components used.

If you are not satisfied, you can ask for a second round of samples with the necessary changes made or simply opt for another supplier.

Other factors to consider when ordering your first round of staples are the location of the factory, the payment methods available, and the time it takes to deliver.

Build a Professional Relationship with Your Supplier

Whether you are ordering online or physically going to China to meet your supplier, you should always build a professional relationship with them.

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There are many benefits of having an ongoing relationship with your supplier as they may give you discounts and better deals.

Additionally, suppose you are looking for another supplier to manufacture a different product.

In that case, they can introduce you to some reliable ones using their network.

&#;Recommendation: If you are sourcing online, make sure to use applications available in China, such as WeChat, QQ, and Momo to communicate with your supplier.

Final words

It is important to keep these tips in mind when sourcing in China, especially if it is your first time.

As a beginner, you do not want to be scammed or taken advantage of, as it can severely impact your business.

Taking your time throughout the process and not rushing things is the best option as you can carefully consider all factors and make an informed decision regarding who and where to get your supply.

Any Amazon seller will tell you that the risk of finding dishonest Chinese supplier or getting stuck with a poor-quality shipment is high. Whether you delve into an online B2B marketplace, an online supplier directory or visit a tradeshow or wholesale market, you&#;ll need to watch out for the few bad apples. In this post, we discuss your sourcing options and recommend the best way to find a dependable supplier for long term relations.

1. The Canton Fair - China Suppliers everywhere

China&#;s largest import/export convention is held twice a year and covers virtually every industry that makes physical products. It is so huge that it runs in three phases:

Phase 1: Electronics, machinery, building materials and chemical products

Phase 2: Consumer goods, home décor and gifts

Phase 3: Textiles, recreational products, office supplies, shoes, medical devices and health products

You can attend for free but once you&#;re in, be prepared for what&#;s in store. Here&#;s a teaser:

     - The sales representatives can speak basic business English. Some are hired for the fair and may not work for the company. You&#;ll learn about MOQs and some product details only.

     - You can hire an interpreter at the fair at 400-500 RMB or $60-$75 per day. Service charges are higher for minority languages.

     - Suppliers bring samples so you can see and touch the product to get an idea of quality.

     - Low prices and not-so-great quality go hand in hand. Unless you&#;re willing to pay more than the advertised price, you won&#;t see the quality you want.

     - After you speak to suppliers, they will ask for your business card to follow-up with you after the fair. Some Amazon sellers are hesitant to give their business cards to every vendor they meet out of a fear of their details being sold to other vendors. For etiquette&#;s sake, they may pass out fake cards to give to everyone except the suppliers they&#;re interested in.

 The Canton Fair is HUGE. Find the list of exhibitors and their booth location on the trade show&#;s website in advance to save time and energy. The same suppliers participate each year, so novelty is missing. Don&#;t expect to see innovation either &#; the companies with a newer design or function may show prototypes and only be looking for distributors rather than OEM or private label manufacturing.

2. Yiwu Market - China Suppliers all year round

 Disclaimer: Yiwu wholesalers are trading companies, not manufacturers.

 The Yiwu Market in Zhejiang is open all year round. It has 40,000 shops and should be on your radar ONLY IF you want to source bags, shoes, textiles, watches and accessories at low prices. This is because the marketplace is heavily tilted towards buyers in India, Africa and the Middle East, and therefore their products don&#;t reflect the regulations and safety standards in the EU or USA. If you want toys, cosmetics or medical devices, you should look elsewhere.

 Here, prices can go as low as you want but quality will go up or down accordingly. If your target market is highly segmented and you&#;re selling on multiple channels or distributing to other sellers, Yiwu Market can be an option. Some sellers use Yiwu as a complementary supplier for their existing suppliers when their stores are empty and need filler products.

 Yiwu wholesalers work with factories in Zhejiang and Jiangsu. An advantage is that you can buy products off-the-shelf on the spot or have them shipped to your location in bulk.

 If the goods you want aren&#;t ready for sale, make sure you&#;re clear about your quality requirements so that your supplier can place the order with a matching factory. Bickering on price will only result in the factory using cheaper materials which results in adjusting quality downwards.

 You can hire a purchase manager to simplify sourcing. Yiwu agent services typically include picking you up from your hotel and driving you around the market to meet wholesalers, negotiating price and order terms, and coordinating procurement, including collecting different orders in one shipment. Agents are not responsible for reviewing quality control at factories.

 You will bump into fake products at the market. Any famous brand you see at a Yiwu shop is likely a knock-off. Not to knock on Yiwu but it should have a place in your sourcing strategy only for equivalent products at low prices.

 How to tell the difference between a trading company and a factory

 Trading companies can pose as manufacturers, making it essential to know who you&#;re dealing with. Here are tips to differentiate correctly:

      - Most factories make a specific type of product or focus on a specific type of manufacturing process to keep costs and overheads low. A company that advertises a range of items is more likely to be a middleman rather than a manufacturer.  

     - Trading companies generally have business names that appeal to global buyers. On the other hand, manufacturers usually include the town or city they&#;re based in within their company name.  

     - Check the company&#;s business card for the factory address. If the location is a downtown area or on the 20th floor of a building, you may be looking at a trading company. See if a separate office address is mentioned &#; it could be their sales office and located in the city.

     - Trading company websites are in English to cater to foreign buyers. Small Chinese manufacturers may not even have a website, or it may be a basic site with inadequate Chinese to English translation, although bigger manufacturers may have sophisticated sites. This could be yet another clue to the company&#;s true identity.

     - Ask for the company&#;s quality certificate (CE, UL and other certifications). A factory will be listed as an &#;owner&#; on the certificate.

These checks become necessary when you seek out China suppliers without help from a sourcing agent that not only cooperates with but has strong relationships with Chinese factories. Agents are a safe bet to source quality goods in a hassle-free way.

 3. B2B marketplaces - China Suppliers online, be wary

 Your search for Chinese suppliers can start online. Alibaba, Made in China and Global Sources are all popular websites to find suppliers and manufacturers in China. As always, you&#;ll need to be wary of a few things in order to avoid getting scammed on these B2B marketplaces:

      - Resellers may advertise as manufacturers, which isn&#;t much of a problem if you&#;re sourcing toys, clothes, accessories and cheap electronics. For products that must be made to specific technical requirements, only a manufacturer will do. So, if the product you will sell is made using a manufacturing process like metal stamping or plastic injection molding, you will need to verify the supplier&#;s capabilities early on. These websites rate their suppliers, but nothing is 100% transparent. For instance, suppliers who become premium members on Alibaba with an annual fee can get gold supplier status, which increases their visibility on the site but doesn&#;t mean anything as far as ethical behavior and quality levels are concerned. So, the vendors that get the most exposure on Alibaba &#; the ones who may pop up when you search for their product category &#; must still be vetted.

     - After you&#;ve contacted a supplier, you can request samples and place your order. But the process can be lengthy, taking weeks rather than days from initial contact to receive samples.

     - Given the back and forth with the supplier, you&#;ll wish that both of you shared a common language. The communication barrier makes explaining your exact requirements via or live chat quite challenging.

     - As major B2B sites offer an easy platform for just about any Chinese supplier to showcase before buyers, this over saturated venue may incline many quality vendors to opt out.

 Other China supplier directories include:

      · DHGate, which is great for buying products in bulk. Over two million sellers and 26 million businesses and individual buyers use the website. A &#;Superior Suppliers&#; tab connects you to companies the directory deems reliable. DHGate offers guaranteed refunds and escrow protection on every order.

     · The Hong Kong Trade Development Council (HKTDC) is a statutory body that develops Hong Kong&#;s trade, and organizes international conferences and exhibitions. Its supplier directory lists fewer companies compared to other directories.

A reminder:

      - Trading companies can pose as suppliers on online directories. If they pay a fee, they will rank higher in search results regardless of feedback and ratings from buyers.

     - Finding reliable suppliers on B2B marketplaces can be daunting. You need to separately screen each supplier, which should ideally involve a visit to their factory.

     - It is easy to get drawn to the lowest prices or MOQs. Rock-bottom prices come at the cost of product quality. Costs can change once production begins, so the massive price advantage is not set in stone. If the supplier has never made the product it has advertised on the site, quality will suffer. Find out the market price/price floor of the product &#; offers that are 20%-30% below this price should set off a warning bell.

4. Sourcing agents - Ensuring quality and delivery

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A China sourcing agent is ideal when you need products manufactured to exact technical specifications. Agents based in China visit factories to inspect quality controls closely. After you&#;ve greenlighted mass production, the agent will visit the factory again to inspect raw materials and even check the first few batches for quality.

Agents with boots on the ground in China are well-versed in Mandarin, so you can overcome the language barrier and communicate your requirements clearly. Chinese suppliers are very careful about what they share &#; they&#;re unlikely to inform you about production delays or ask questions if they aren&#;t sure about your product specifications. Sourcing agents can be helpful here as well, ensuring that the supplier is on the same page as you before production begins.

When you partner with an agent, you get comprehensive support throughout the sourcing process. If you want to get it right the first time and build along-term relationship with your supplier, engaging a sourcing agent is the right way to go.

5. Google

A Google search of Chinese suppliers may seem like a logical first step for new Amazon sellers. Chinese suppliers have business websites and a presence on social media. Generally, they have generic names like China Direct Supplier or China Wholesale Market on social channels. Some of these suppliers may actually be agents offering to help you find suppliers.

As mentioned earlier, many of the supplier websites in English are traders rather than manufacturers. If you find a manufacturer site that appears genuine, go ahead and make inquiries. You may get a quick quote, obtain a sample without waiting long, and find yourself on a plane to China for a factory visit.

Search using specific keywords for products or location, such as &#;Langfang furniture suppliers&#; or &#;Shenzhen electronics products&#;. A Google search using key terms is also a quick way to find relevant supplier pages on directories and B2B websites.

6. Baidu

Most Chinese use Baidu, and you can use a translation tool to find leads or see if those suppliers are on Google or Alibaba, and follow-up if they look promising. You may find more corporate details or information such as whether they&#;ve been involved in legal disputes.

7. Your industry network

Your business contacts may be able to connect you to Chinese suppliers or know someone who can guide you along the way. Also check with local trade bodies and Chambers of Commerce. It&#;s not just what you know, it&#;s also who you know.

Your supplier is your business partner

There will be some initial hiccups, and your relationship may weather ebbs and flows but staying on good terms with your supplier will help your business. It&#;s a lot easier to overcome language and culture barriers when you go through a sourcing agent. But you can manage on your own if you&#;re willing to travel to China every now and then, and really invest in the relationship.  

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Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since .

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