Imagine that you have an idea and a limited capital, but not the way ahead to manufacture the product you require. Setting up a factory from scratch in countries like the US and UK can be by no means inexpensive and often, you don’t even need to. All you require is the end product so that you may use it ahead in producing something else or even sell it as it is.
Now since you’re here and reading this, I believe this isn’t just an imagination but rather a dream you harbor and the solution you’re looking for isn’t very far.
It is a well-known fact throughout the globe that the cheapest labor can be found easily in third-world countries. However, what is also true is the fact that most of them are unskilled. A combination of skilled and affordable labor can instead be sourced from countries like India and China.
In this article, we bring to you a detailed playbook to assist you in searching and selecting the manufacturer in China, that is best suited to your requirements.
As aforementioned, China is a leading name in outsourced manufacturing. While there are numerous reasons for the same, some factors that benefit everyone similarly in this process, regardless of the kind of industry include the following:
A low-cost workforce remains the foremost reason for outsourcing the manufacturing of a product. China, due to its large population has a vast supply of workers who can easily cater to sourced jobs for other countries.
Due to the imbalance in demand and supply, the China markets run at highly competitive prices which in turn reduces the production costs of a company.
The Chinese factories and management are particular about the quality of goods they produce. Thus superior quality products can be manufactured at low costs.
Owing to the fact of being the largest population in the world, the country has an abundance of manpower that can be hired as and when needed. Therefore, accommodating last-minute requests is simpler for them because they have no qualms about the number of people they need to hire.
Since more often than not, the manufacturers here are producing for more than one client, it is easier for them to accept cancellation requests coming in at a later point as they can supply those goods elsewhere.
Finding A Manufacturer In China
Looking for and discovering the manufacturing companies in the province of China is not as daunting a task as it seems at first glance. That is, provided, you know how to go about it, especially when you have no existing contacts in the country.
To find a production partner that suits all your requirements, you can go about the following ways.
Though admittedly there are a number of web-based platforms that are banned in the country, most of them still have websites that are easily accessible. You can simply go to a search engine of your choice and look for the kind of manufacturer you wish to work with. For instance, if I need medical equipment to be produced by them, I can try the keyword “(name of the medical equipment) manufacturer in China”.
However, the keywords you use play a vital role in returning back with the best possible answers for you. Thus it’s advisable that you attempt this process not with just one, but multiple, varied sets of words. This can help optimize your search further, providing you with the most suitable results.
When we say “go online”, it is not restricted to mere search engines. With the advent of digital shopping platforms like Alibaba and Made In China, you can now find a whole new range of products in your required category, from several vendors. Here, you can view, analyze and compare all kinds of goods as well as the manufacturers who are supplying the same.
If you dig a little deeper while looking at an item you like, you can find the manufacturing company’s information listed alongside it. It usually offers the name of the enterprise, basic details about what the company deals in, the rating received based on the quality of their products and subsequent services, and some users’ comments on the same.
Simultaneously though, you also need to beware of the businesses who are simply tagged as “verified” or “gold supplier” by the online portal. All that these tags signify is that either the physical existence of the supplier has been ‘verified’ by a third party or that they are the recipients of additional benefits through the site because they pay a certain annual fee to them. It does not at all mean that the company is an actual manufacturer and not just a trader or someone who deals in products of a similar category.
If you are interested in the company after going through these, you can further look them up through industry networks and search engines.
Almost all the products and services in the world belong to some or the other category and each category is attached to an entire industry that deals in similar or related products. Each of these industries are made up of multiple players in the market and are very rarely monopolized. This means, for every kind of item you wish to produce, there is someone who is already doing it.
This also means that people who have been in that industry for some time now may be able to put you in touch with their contacts overseas that can help you gain access to a trustworthy and suitable manufacturer.
Additionally, your friends and family might also be able to help you out but the referrals coming from your peers should be considered first if your friends or family members do not have a contact of the same or related field.
As we mentioned earlier, there are a number of websites that are banned in the Chinese provinces, and the majority of social media platforms that we know and love today make that list. These include Facebook, Instagram, Twitter, Snapchat, and even YouTube.
Nevertheless, the not-so-old professional connectivity portal, LinkedIn is available to the country’s population who ensure that they do not lose this opportunity to connect to the rest of the world. As a consequence, they remain pretty active on this site and if you wish to look for manufacturing companies for your products, you can quite easily not just find them here, but also get in touch with their representatives.
While some may argue that looking for a manufacturer on a social platform is not possible without their name, we would like to clarify that it really is not that difficult. All you have to do is input the words “(industry name)” with the word “manufacturer” in the search bar, and et voila! The results and their easy availability may end up surprising you after all.
Visiting China simply to look for manufacturers without a shortlisted list already in hand might seem daunting. However, if you are up for it, global trade fairs of several industries are organized every year where traders and manufacturers alike participate with the primary aim of networking.
The Canton Fair, which is held bi-annually in Guangzhou is the nation’s largest fair and attracts more than 25,000 exhibitors and 180,000 customers from around the planet.
This not only helps you get in touch with several manufacturing enterprises but also provides you the luxury of gaining a sense of all that the market has to offer.
China’s Manufacturing Distribution By Production Category
As we all know, the World’s Factory is a huge country and each region can differ vastly when it comes to the category of goods produced therein. In such a case, it is preferable if you know beforehand which areas deal with the items you require.
This map was last updated in 2016 and clearly displays an industry-wise diversification. We agree that changes in this distribution must have taken place during the past half-decade, but this diagram still provides a pretty good idea of the same.
Verifying Suppliers From China
Finding a name is just the first step in a long journey of making them your manufacturing partner from simply a manufacturing business. And the second step in this process is a pretty crucial one.
This second rung of the ladder is the verification of the vendor(s) you’ve shortlisted.
The importance of this process is self-explanatory. We tend to rely on the background and reputation of a company even when buying a small, individual product, from a local company, for our personal use. Thus wanting to check the origins, status, and reviews of a supplier with who we wish to enter into a contract for steep amounts is natural.
This authentication can be done through several different methods, the most popular of which are as follows:
Check Business Licenses
Regardless of the country, companies are required to register their establishment for identification and tax purposes with their respective governmental authorities. Similarly, the manufacturing units from China are also supposed to obtain a unique company registration number from their government.
When you wish to verify the existence of your supplier, the best route is to request them to share their company’s registration number. If the vendor is real and legal, they would have no qualms about providing the same. However, if the enterprise isn’t willing to give you these digits, it should raise instant red flags about the genuineness of the seller.
Post receiving the number, you can check it out through their local administrative government’s website or by getting in touch with their local Bureau of Industry and Commerce.
Request A Sample
Asking for a sample of the product you’re about to invest in seems a good way of ensuring the quality of said item. This piece could be free of cost or you might have to pay a small fee for the same, but either way, it is necessary you obtain it beforehand.
Most suppliers would not have any difficulty in providing this exemplar as it builds confidence in their clientele. But if a seller hesitates in sharing the item, it should ring warning bells. Simultaneously, in case you have to pay for the product, insist on transferring the money directly to their bank account. A genuine vendor who’s looking for your business will be happy to allow this exchange.
Ask For References
A business that has been in the industry for some time now is sure to have a few existing as well as past clients. Express your wish to talk to some of these customers and observe if they readily share their information. These buyers can shed light on the company’s track record in providing superior quality goods in a timely manner.
The enterprise’s bank’s reference letters can also be called for to verify their creditworthiness.
Use Third-Party Auditors
There are numerous organizations out there like Sino Inspection for instance, who, in exchange for a small fee, undertake the responsibility of checking up on the financial background of the seller, their product’s quality, business scope, any associated legal hurdles as well as any other crucial information they deem necessary for making an informed decision.
While there are many more such ways like conducting factory audits and visiting the company oneself, each method is as per what suits your requirements best.
The Must Ask Questions
Before entering into an agreement with a potential manufacturer, it is important that you ask all the questions that come to your mind because changing the terms at a later date may not be an easy task to accomplish.
Some such essential queries can include:
Minimum Order Quantity
This poses as one of the most vital enquiries because the more units you order, the lesser is the per unit cost. Additionally, there are many companies that demand that you have an incoming request of a fixed minimum quantity at all times as only then can their production process be utilized optimally. Thus, the answer to this question should have a clearly defined answer before you close the deal.
The least period of time that a manufacturing enterprise requires to complete an order and begin with the next is referred to as the turnaround time. It is crucial that you have an idea of this from the beginning so that you can post your order requirements accordingly. This further allows you to employ another manufacturer as well in case you feel the demand-supply balance cannot be met through one vendor’s services alone.
The price at which a supplier is willing to sell his or her products to your company largely depends on your order quantities, but to avoid any major fluctuations in the future, it is advisable to request a breakdown of said pricing. This can include the cost of the item, cost of packaging, cost of shipping and tariffs, and any other amounts that the manufacturer includes in the pricing for your company.
Terms of Payment
How the supplying enterprise wishes to be paid is a matter of major consideration for any buyer. This involves not just the mode of payment that your seller accepts, but also when they expect to be paid. While many vendors require their remittance in installments, some may need you to pay the entire sum upfront, especially as a first-time customer. They may or may not change this term if you become a regular buyer and this clarification is of utmost importance. Simultaneously, the modes of payment that they accept is also essential information that’ll come in handy while making said transaction or might even be decisive of whether you would be working with a certain supplier.
At this time, when you have acquired all the vital details, it is time to finalize the company that will be serving you as a manufacturing partner going ahead. You had shortlisted certain names in the first and second steps themselves – now is the time to decide.
To make this decision, however, we realize that you need to compare the semi-finalists against each other and we have compiled a list of factors for the same hereunder to ease your process just that much more.
What you want after all this hard work and subsequent investment is a product of superior quality, made according to your specifications and requirements. There are many small vendors in China who may stand up to all your tests while providing competitive rates, but the production of your requested item might just be a side business for them. In such a case, the goods received run the risk of being of sub-par or even poor quality.
To avoid such a situation, go for manufacturers who specialize in the product line you need to ensure value for money.
As we talked about before, any business which has been in the industry for some time is bound to have a few clients, both past and existing. Requesting reviews and ratings from them based on certain factors can give you a clearer idea of what to expect with a certain vendor.
You can also go online to check said evaluation and comments by users that can guide you further towards an informed decision.
Documentation and Certification
Any supplier, if legit, would not be hesitant about sharing the documents and certificates that you may require to ensure that the supplier is authentic and works within legal boundaries. Such details can include their business license, documents relating to their quality control and assurance as well as any other related certifications.
Manufacturers who have a strong export relationship with your country or countries like the US and UK implicitly display their capability of maneuvering the red tape efficiently to deliver your goods in time, alongside their experience in logistics and international shipping. If the Western countries like the US and UK are importing from a certain enterprise, it can also be assumed that the quality of their product will be superior as will be their compliance to product safety, packaging, and labeling regulations.
How to Negotiate?
Bargaining over the price of an item is second nature to most of us buyers, be it a small item or a huge order. Thus negotiations are an expected act in China as well. However, many individuals and companies tend to go overboard with their negotiations which can result in the loss of a supplier, poor quality goods, and other such adverse effects.
Every discussion towards a settlement should be backed by some basic rules and principles, and some such ideas are enlisted below.
- Do not quote unrealistic prices. Negotiations should be done only when you actually know what is the lower cost at which you can receive said product. If you’re unaware and demand an excessively low costing, the supplier is alerted of the gap in your knowledge and can take advantage of that.
- Accept the fact that your manufacturer cannot make a sale at his or her break-even point. He or she also needs to earn a profit on the operation to successfully run the business. Thus do not bargain for every penny and respect their right to earn as well.
- Make sure that you have clarified your quality requirements before you start negotiating. Otherwise, the seller may just get down the price while adjusting it against a lower quality product.
- The timing behind a negotiation is of vital importance as you cannot start trying to get down the prices in the first conversation itself. Accumulate and analyze all information first before jumping up to bargain on the monetary facet. Similarly, trying to get the price reduced after an order has been put in is also not going to help.
- Always be certain that you have an alternate supplier in case the pricing does not work out with the current one. Letting the company know that you might move to another seller if they cannot adjust the pricing is a good tactic to work as a wake-up call. Though you have to be ready to make this move in case they still aren’t willing, because if you don’t now, you lose all bargaining power for the future as well.
Frequently Asked Questions
In the entirety of the above article, we have tried to answer most questions that come up while trying to find and decide upon choosing a China-based manufacturing company. Nevertheless, there are some more queries that we have witnessed occurring in the past. These concerns include the following:
Do I need to visit the factory personally?
Planning a trip to the manufacturing facility that will be responsible for the production of your goods, while not necessary, might still be a good idea. It allows you to resolve and satisfy all your queries and doubts about the capacity, capability, and quality of the produced items.
Do I need to know what are the drop points available in terms of ports?
Ensuring that the goods you got made reach your country is not enough. They need to be available in the city where inspections and further operations are to be carried out. If the said city has a commercial port, request the supplier to send the shipment there. In case a port isn’t available in that location, look for the closest feasible port city and get the products delivered there.
Why isn’t much information available about Chinese vendors?
The most prominent reason for the same can be the detached nature of their world relations. The China-based manufacturers are not as easily available online because of the numerous website bans in their country that keep them away from the most popular social media platforms.
From finding out about the available vendors to choosing the correct ones, each step in this journey is an essential one. And while we agree that no one piece of content can provide you with all the absolutes of bringing a manufacturer from China into your business, we have made our best attempts to ensure that we encapsulate all the necessary information in one place, for your ease.
The time to wait is now over!
Get up and get going, and we’ll see you on the other side.