1. Can you find your target products in China?

The answer is yes. China is a big country with a population of 1.3 billion, there are numerous factories. No matter high-end, middle-end or cheap low-end products, you can definitely find in China.

Before you start searching any product, it is necessary to figure out where you should focus on, since China is very big. For e.g. Shenzhen and cities closed to it are electronics centre, Guangzhou is a famous clothing trade city. There are many info like that you can get through internet.

A factory area in Bao’an Shenzhen

2. How to find target suppliers?

There are many manufacturers in china, it is good for source. Whereas it make things more complex to make a choice between too many factories. Their products look quite similar, and it is not easy to judge quality in a short time. All of them tell same stories, higher price because of higher quality. No doubt that better quality normally cost more to manufacture, but it is not easy to judge the quality and price for a complex product.

2.1 To make sourcing easier, I suggest you can judge a supplier starting with its website. If the website well developed and you can easily find in Google, meanwhile the website looks very attractive and logical, it means the manufacturer is doing business well. You may think Chinese manufacturers don’t care much about their website and social media marketing. It is wrong, nowadays most Chinese companies understand the power of internet and many of them invest a lot in internet, especially those doing international trade. So you can do a quick judge just by easily visit their websites and see the search result of Google.

2.2 Search in Alibaba.

Almost all manufacturers doing international trade have been using Alibaba. It is easy to contact them there, leave a message or start instant chat.

2.3 Go to exhibitions.

Most manufacturers will go to some local exhibitions. This information normally will be shown on manufacturers’ website. It is a good chance for directly talk with their salesman and feel the real products.

2.4 Collect and test samples.

For very low value products like fabric, manufacturers may charge free for samples, but shipping cost is still needed. While higher value products like Dash cam, normally samples won’t be free charged.

2.5 Visit the manufacturers.

If you got chance to China, you can visit selected manufacturers. Most manufacturers welcome visitors. If it is you are not familliar with China, you can ask for help such as hotel booking. In china hotel booking mostly done by internet, price is transaprent and you can pay the booking room when arrive in the hotel. If you stay till luanch time or supper time, noimally they will treat you a good meal. If you don’t drink, it is ok to tell you don’t. And spicy food is popular in China, if you don’t eat spicy, better directly tell as well.

3. How to negotiate.

This is based on quantity. Because any manufacturer doesn’t produce everything by their own, they also need source parts from other manufacturers. The price is quite different for different quantities. Yes, if you have very big order quantity, you can get very good price. But if the quantity <= 5 times of the MOQ, it is hard to negotiate price. They may give you some gifts but don’t decrease the price. Yes, indeed, as what you have heard Chinese people like to bargain, they give a high price at first because they know the buyers will ask for lower price. Yes, it was true but things changing because of internet. Nowadays, buyer can get any manufacturer’s price very easy, so the manufacturer is afraid of giving too high price at first. The price of any manufacturer has become very transparent, for most products the price is already quite low, there’s not much room to decrease already. So don’t expect too much to bargain a much lower price. Instead I suggest you can ask for gifts, for e.g. give 5 pcs for free if order 100 pcs.

4. Can you trust the shipping of the manufacturers?

Yes, you can. First, manufacturers earn profits from their products, but not from freight. Besides the freight is very transparent, they won’t risk to lose their clients for just earning a little from freight. Actually most manufacturers prefer that buyers use their own freight agent, who directly get cargos from storehouse. The reason why they provide shipping service is that most of foreign buyers cannot handle shipping by their own. And the freight agents working with manufacturers have much better price than offical freight companies like DHL. So providing shipping service is helpful for buyers, which will encourage purchasing. But since the shipping service is non-profit, many manufacturers don’t want to make the document written with CNF, they prefer to write FOB or EXW. Becasue if anything wrong with freight under a CNF term, they must be responsible for that. But they arrage the freight for buyers voluntarily, no profit. Why even have to be responsible for that?

5. Can you trust the salesman?

Yes, you can. Even though the sales person get commission from deal.

5.1 But as I said above, the price has become quite transparent in the first place, as well as quite low because of brutal competitions.

5.2 Second, there are many other sales persons in the same company, if he/she give you higher price, while you get contact with another sales and get a lower price, he/she will lose you. And actually the commission rate is very low, most companies only give 1% to 3% of sales value. Give an example, a product bottom price is $30, and you buy 1000 pcs, total is $30,000. If commission rate is 2%, the sales person can get $600. But if the sales person give you one dollar higher price $31, total is $31,000, the commission is $620. So the sales can only get $20 more, but risk so much to lose you.

5.3 Third, he/she won’t give you higher price than bottom because she/he wants you buy more, cheap is good for larger quantity.

5.4 Forth, most sales has a monthly target. To reach the target is the most important for their job, comparing with selling at a slightly higher price, they prefer to increase the quantity, by which the total sales value will be more. And as the third reason, they are clear that cheaper price will encourage buyers purchase more, which is much more helpful than increase unit price a bit. Most made in china is based on quantity in the first place, cheap unit price but large quantity.

6. Another china business culture

From ancient times, Chinese people believe that a successful business relies on loyal customers. So most Chinese businessmen value long term corporation very much. They are very clear that if they sell you much higher price, which quality doesn’t match, the business won’t last long. So I also suggest buyers don’t focus too much on one or two deals, but consider long term sustainable growth.

7. Custom is not as simple as you think.

Many buyers expect their own designed/branded products, and ask manufacturers to make for them. But actually few can be satisfied, because of too small order quantity. Many people don’t know much about production, may think custom is simple and cheap. But the truth is to customize a product usually is very costly. For e.g. to mould a tiny plastic shell for electronics may at least cost $10,000. If metal, may cost at least two times more. Moulding is a complex and technical labour costly process. And considering many other customization, the cost will be quite high. Only if the quantity is big enough, the unit price can be acceptable and competitive in market.

8. Truth about manufacturing cost of China.

As mentioned above, there are too many manufacturers and the prices go transparent because of internet, the competitions became brutal for most China manufacturers. They have too decrease their prices, the price war happening in many products. Many manufacturers already rely on export tax rebates, very low profit rate. That’s why most sellers insist in export in their own name when you use your own freight.

In the other hand, the labour cost keep rising every year. Especially technical labour like software or hardware engineers are very expensive. In big cities like Shenzhen, an engineer’s month salary at least $1,500. While ordinary production line worker like welder at least $850.

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