It’s no secret that many eCommerce professionals look to manufacturers in China for products across the board. China is so often a go-to for manufacturing because it generates such a high volume of the products sold and globally.
Although some may think the ubiquity of Chinese products is due to cheap labor, there is more to it than that. China has become a manufacturing powerhouse in our world because of its strong business ecosystem. This, coupled with competitive currency practices and low taxes and duties, can be attributed to the reason you see so many products that have been made in China.
China’s business ecosystem of networked suppliers, part manufacturers, and distributors has evolved, making it a more efficient and affordable place to make products.
Here’s what you need to know when you’re looking for a manufacturer to help you meet your eCommerce company’s needs.
How to get started
Before you can create a partnership with a manufacturer, you need to find one and assess whether or not it’s the right manufacturer for your business needs. Knowing what to look for in a manufacturer can feel like a daunting task that begins and ends with price. While it’s tempting to jump on the lowest price, it’s important to realize that we sometimes get precisely what we paid for.
1) Find a manufacturer you can trust
To find a manufacturer you can trust, begin by using search engines and leveraging Chinese suppliers’ directories like Alibaba and others. Get on the phone and talk to your network and, when manufacturers look promising, get in contact with them (more on that later). Don’t be afraid to ask for samples or references, either. If the manufacturer is trustworthy, they’ll have no problem offering these up.
2) Determine if the price is right
By all means, look for a price that makes sense for your business but don’t let it be the sole driver in your decision. Make sure you understand the prices associated with purchasing the products you want at wholesale fees, any costs around exportation, and any hidden costs – like when your products are coming from a more remote part of the country.
3) Consider the geography
China isn’t exactly a small country and manufacturers can be found in a variety of places, with specializations ranging from region to region. For example, Shenzhen – a city bordering Hong Kong in the southeast – has evolved to become a hub for the electronics industry. It’s cultivated a unique ecosystem to support the manufacturing supply-chain and is now known for these products.
You’ll also want to think about accessibility – the less accessible a factory, the more expensive accessing those products may be, though the price per product could be lower. This is why it’s critical you crunch all your numbers when determining whether or not the price really is right.
How to avoid common pitfalls
Unfortunately, scammers exist in every part of the world and Chinese manufacturing is no exception. Chinese suppliers are required to register with the Chinese government authorities and obtain a unique company registration number. If a manufacturer is unable (or unwilling) to provide you with that number, walk away. To verify the registration number, visit their local administrative government website or get in contact with their local Bureau of Industry Commerce.
Tell any potential suppliers you’ll have their factory audited before a PO is issued, too, and later will want the production inspected before any shipment can be authorized. Mention this as early as possible – in the first conversations, if possible – and if they refuse or begin making excuses about why they don’t want you to do this, that’s a red flag. Factory audits are a great way to verify a supplier’s claims about their production capability and to protect your investment.
Order a report from third-party authentication services like GloBIS to obtain important pieces of information on your potential supplier from legal representatives, shareholders, business scope, and financial records to name a few.
If possible, visit the location yourself and discuss your expectations face-to-face.
The best way to avoid fraud and protect yourself is to do your due diligence and research before you enter any transaction. Be sure you’re meticulous with your verification process and you will have peace of mind knowing you can trust your potential supplier.
How to find your perfect supplier
As we mentioned before, one of the best ways to begin your search is via your preferred search engine. Look up Chinese manufacturers who create the types of products you’re looking for. Cross reference company names with Chinese directories and your own trusted network – referrals are always a good place to start!
If you’re just starting out and/or your network is unable to provide referrals at this time, Chinese manufacturer directories provide a wealth of information and lists of manufacturers across all product types, locations, and prices.
Fortunately, a lot of companies have already built relationships with China which means the resources available to you to find, work with, and manage those supply chain relationships have grown exponentially. Here are some great starting points for you to begin your search:
- China Sources – a popular website that helps facilitate connections between businesses and Chinese manufacturers and suppliers
- Made-In-China – this leading B2B portal offers quick access to sourcing exports and claims to help you find quality products and companies
- Smart China Sourcing – this site lists sourcing experts and is also ISO9000 certified
- Alibaba – likely the world’s largest B2B portal, Alibaba is a leading directory for Chinese suppliers
Build strong, long-lasting relationships for success
When it comes to the ongoing success of the partnerships you create with your Chinese manufacturer(s), it’s important to keep in mind that many manufacturers harbor fears not unlike your own. Remember: buyers swoop in promising massive purchases, ongoing volume – sometimes exaggerating their need and the scope of the buying deal, leaving manufacturers feeling duped.
In the same vein as you look for transparency, be sure to offer the same transparency and honesty to your prospective manufacturing partners. Clearly communicate your business needs and work with potential manufacturers to understand their true output potential. Here are a few tips to make sure things remain to run smoothly for you over time:
- Early in the relationship, visit your manufacturer’s factory to understand their processes and explain your expectations, what is acceptable, and examine the quality of products
- Continue to monitor production quality, ask for written and signed records, and maintain your standards (if possible) when it comes to quality, transparency, and efficiency
- End relationships with factories who can’t (or won’t) be reliable enough, those that are growing too quickly to scale properly, or any that consistently miss the mark as soon as you are able
- Give regular business to the best factories and walk your talk. Keep up your end of the bargain
- Accept that the best factories receive a reasonable premium on their prices; you’ll make it back easily on lower costs (better quality, fewer delays, faster responses, etc. which all reduce your overall costs and help you meet the needs of YOUR customers)
With a little research and some due diligence on your part, finding a manufacturer in China to help you achieve your business goals will be one of the most impactful processes you execute in your eCommerce business.
A good manufacturer or supplier should be well-versed in export and be able to provide you with real-world experience and examples to help you make the best possible choices. Remember, if you enter into a true partnership with your Chinese manufacturers, you’ll build a strong relationship that supports both parties’ growth and success.