Sourcing products from China can be a game-changer for businesses looking to maximize profit margins and streamline their operations. However, success in this area requires more than finding a factory and placing an order. To help you succeed, here are actionable tips for sourcing existing products from Chinese manufacturers effectively, ensuring quality, affordability, and reliability.
Choose the Right Product
The first step to successful sourcing is selecting the right product. If you are new to selling online, it can be prudent to focus on items that are in high demand. You can use many tools to help you find which items are popular, like Google Trends, Amazon Best Sellers, or Alibaba. These can provide insights to identify trending products.
While you want to have products that are in high demand, you also want to avoid oversaturated markets if possible. It can be hard to break into a market that has thousands of sellers of the same product unless you have something very unique and distinguishable about yours.
Pick items that are lightweight and easy to ship. Products like accessories, small electronics, or home goods reduce shipping costs and are less prone to damage. Shipping costs are determined by both weight and volume, so those that take up less space and weigh less will typically cost less.
Products with consistent demand are also great to source. There are some products that will never be outdated or stopped being sold such as kitchen or office supplies.
Negotiate Like a Pro
Pricing is a significant factor, but it’s not the only aspect of negotiation. Most factories will have Minimum Order Quantities (MOQs). These are so that the factory can make enough of a profit so that the order will be worth it to them. Factories have to order raw materials and also incur setup costs for each job, so they have to have enough of a cost to make a profit.
Ordering several products from a single supplier or larger quantities of a single product can help you save on costs both in shipping and in production. Though this may be an initial challenge if you are first starting out on sourcing, it’s something that should help bring in long term cost savings if you can leverage it your advantage.
Thorough Quality Control
Quality issues can quickly erode your profits and reputation. It doesn’t take many negative reviews to cripple or even ruin a product.
Inspect samples thoroughly: Test the product for durability, functionality, and consistency. Samples are an indicator of what quality you can expect for the production order, and thus should be tested completely to address any potential quality issues for an order.
Use certified factories: Factories in China have been working to get western certifications to improve their business revenues. This includes certifications like ISO 9001. ISO 9001 is an internationally recognized quality standard. They ensure that companies have the right leadership, staff, and procedures to ensure products that meet quality standards are produced.
Sourcing from manufacturers that have certifications such as these can help make sure your products will be of high value.
Ask for batch samples. For many orders, you can request batch samples of the production order. These are parts straight off the production order so you’ll get a sample of the shipment itself to test. You can typically get these samples on most orders.
Leverage Freight and Logistics Expertise
Shipping costs can make or break your margins. It’s important to know what shipping options you have, what they mean, and how they can affect your order. Here is how you can reduce shipping costs.
Sea shipping is nearly always cheaper than shipping by air, but usually takes considerably longer to arrive. Air freight is usually considerably more expensive but is better when you are in a time crunch. It’s usually better to order ahead of time and have your shipments made by sea.
Consolidating shipments is a great way to save on costs. If you can combine shipments into one, it can allow for cheaper rates especially if it lets you reserve a full container.
Understand Incoterms – Incoterms are shipping terms that each stand for different things. If your quote says CIF, it stands for the Cost, Insurance, and Freight of a shipment. If it says DDP, that stands for Duties Delivery Paid. The second term includes all customs costs, the first does not. Knowing what the terms means will help you avoid surprise costs.
Certain times of the year can affect your orders as well. Shipments that happen around Christmas, before and after, are often pricier due to the high influx of vessels departing. Ordering from March to October is usually the sweet spot for orders in terms of minimizing shipping costs.
Look for Value to Add To Products
You should try to stand out in the market by adding value to existing products. There are some options you can do to make existing products shine and be more lucrative than ever before. Private labeling is one option, a good brand alone can sell a product, such as the success “Liquid Death” has had with selling water with an interesting logo on it, and that was the main reason their brand took off.
You can also try bundling products to entice customers to add value and increase the worth.
Improving the design of an existing product with modifications can help too. If you can make a product work better than all the competition, it can go a long way to helping you distinguish yourself above the rest.
Stay Informed About Trends and Risks
Sourcing is not a “set-it-and-forget-it” process. Staying proactive is key for long term success. Keeping your thumb on both cultural and industrial trends will give you indicators on which products will be popular in the future, and which may fall. Both are crucial to know for your products.
Build Long-Term Relationships with Suppliers
Having the right people in your corner is crucial to product sourcing. Having the right suppliers is key to success with product sourcing. Many cultures do business differently than those in the west, and China is no exception.
China operates on a cultural norm called “Guanxi” when it comes to business. Guanxi is a difficult word to directly translate, but it refers to the form of relationships, social or business, the Chinese build with each other. To build guanxi with a person in China takes time, trust, and opening up to successfully work. Guanxi can take months or sometimes even years to build. In America we like to do business directly, quickly, and sometimes bluntly.
This approach can make many Chinese factories not willing to work with people, and so a delicate hand is often needed. That is just the approach, it doesn’t include the cultural differences that go all the way down to how business cards are exchanged, and it is much more formal in China.
Successfully sourcing products from China requires careful planning. At Global Trade Specialists, we will handle all of the steps mentioned in this post for you and have decades of experience helping businesses source directly from China successfully and cost effectively.
For more personalized guidance on sourcing products from China, contact us. Our team specializes in connecting businesses with trusted manufacturers and managing the sourcing process from start to finish.