The Complete Guide to Sourcing in China
Learn how to deftly navigate the Chinese supplier market and start sourcing like a pro.

There are many benefits of sourcing your products in China.

However, it may take time to find the right supplier, negotiate and secure a good deal.

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.

If you need help sourcing in China, this article will outline some of the best practices and everything else you need to know as a beginner.

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 be careful.

Although choosing a reseller is an okay option if you are looking to get a supply of toys or cheap electronics, it is better to opt for a manufacturer when you supply products with technical requirements.

If this is the case, then it's best to take your time and look for a manufacturer and source your products directly from them. 

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.

Therefore, you cannot simply rely on ratings either.

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

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.

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.

This is comparatively much cheaper than other countries, which makes sourcing in China an extremely attractive option.

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.

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 commission 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 caused by any intermediary as you no longer have to rely on them.

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.

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.

Always Negotiate with Suppliers

After you have spent your time shortlisting and finding a supplier, you have to start negotiating.

Here, the goal is to create a situation where both parties benefit.

Before your negotiation, make sure you have all the data and information in front of you to present your case.

This ensures that you know what you're talking about and gives you strong reasons to refute your supplier's claim.

Another important tip is to be extremely confident, so the supplier also has confidence in you and your business.

Lastly, you should not be afraid to say no to your supplier.

Sometimes putting your foot down is a good option.

You can find a better supplier that meets your requirements, or your initial supplier will take a step back and agree to your terms as they do not want to lose out on business either.

Make Sure to Order Samples

After collecting various quotes from different suppliers, you can pick the best price, depending on your budget.

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 seeing the end product.

Other factors to consider when ordering your first round of staples include the location of the factory and payment methods.

When you receive your first order of samples, you should inspect around five to ten units to ensure that each product is made to the same quality level.

You should also lookout for any defects, damages, and poor quality.

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.

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.

If you are sourcing online, make sure to use applications available in China, such as WeChat, to communicate with your supplier.

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 manufacturer a different product.

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

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.

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.

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