Finding a manufacturer in China can seem like quite a daunting task. Business owners who are intimidated by the enormous task at hand can take heart from (yes!) a Chinese proverb: “The journey of a thousand miles begins with a single step.”
Finding a manufacturer in China can seem like quite a daunting task, especially if you are doing it for the first time. Business owners who are intimidated by the enormous task at hand can take heart from (yes!) a Chinese proverb:
“The journey of a thousand miles begins with a single step.”
This is good advice. If you break up your task into little steps and focus on each one of them at a time, you will be importing your first shipment home from China before you know it.
So where do you start?
You first need to build a shortlist of Chinese suppliers who manufacture the product you are looking for.
The internet: The internet is the default option for many people seeking to source products from China. More than a general Google, Bing or Yahoo search, hitting B2B platforms may be more helpful. These are online sourcing platforms such as Alibaba, Global Sources and Made in China, which connect buyers to Chinese manufacturers. Finding a supplier on these sites is as easy as typing in your requirements in the search bar. It helps if you are specific here. For instance, instead of “brass locks”, you could search specifically for “brass die cast drawer and cabinet locks”.
Since there are thousands of suppliers in China, you could filter them depending on reviews, and the platform’s rating process before shortlisting them.
Alibaba, for instance, gives its suppliers “gold” ratings, which purchasers see as a sign of trustworthiness. Similarly, Global Sources has a “verified supplier” category.
Look for manufacturers, not resellers or traders.
While these resources are useful to draw up a shortlist, it is important to remember that many businesses thrown up by search engines and sourcing platforms may be resellers, not manufacturers. While sourcing from such middlemen may be ok if you are buying products to retail such as toys, clothes or cheap electronics, when you require products that must meet specific technical requirements such as die casting, metal stamping and plastic molding manufacturing it is best to identify a manufacturer and source from them directly. Most importantly, this also reduces costs. You can weed out resellers while verifying suppliers (more on that later).
“Gold” or “verified ratings” are not the last word on trustworthiness. What you also need to remember is that any supplier who pays Alibaba an annual fee for premium membership can get gold supplier status, which increases the vendor’s visibility on the site.
Similarly, tags like “verified supplier” could simply mean that the supplier has been verified by a third party and the company physically exists. It does not necessarily mean that the B2B platform has checked if the company is what it is claiming to be – a manufacturer as opposed to a trader or reseller. It also does not mean that their stated manufacturing capabilities and production capacity have been verified.
These terms are therefore useful in filtering your search results but should not be taken as the last word on the trustworthiness of the companies you find on these platforms.
Industry network: Another useful resource is your own industry network. This could include recommendations from trade bodies, your business contacts in the industry and even other companies.
Trade fairs: If you are up to it, visiting a trade fair in China is an excellent way to find manufacturers or suppliers. But your ability to spend that amount of time and money will depend on the size of your business, the kind of products that you want outsourced and, of course, your budget.
Visiting such fairs will help you understand why China is called the world’s factory. It will also give you a sense of what is available in the market. Some global brands also visit the bigger fairs for the sole purpose of safeguarding their intellectual property, by identifying counterfeits displayed at these events and initiating action against their manufacturers.
China’s largest trade fair is the Canton Fair, which is held in Guangzhou (formerly Canton) twice a year, in April and October. This mega fair attracts close to 26,000 exhibitors and 200,000 buyers from across the world and is a good experience for those seeking to scope out the market, looking for new products to add to their inventories.
The Canton Fair has been described as “the trade show of everything” and this is precisely the reason it is a good starting point for those looking at sourcing from China.
There are smaller fairs such as the China Diecasting fair, an annual exhibition that is being held in Shanghai from July 17-19 this year. It brings together manufacturers, die casting foundries, suppliers of material, equipment and accessories under one roof and usually attracts some 500 die-casting enterprises as exhibitors and 20,000 visitors.
Alternatively, if you don’t want to travel to China, you could look at trade fairs in America that attract manufacturers from China such as The National Hardware Show, which has a section on international sourcing. It is held every year in Las Vegas and its 2019 exhibition dates are May 7-9.
There is also the IMTS or International Manufacturing Technology Show, which is held every even-numbered year in Chicago. It attracts buyers and sellers from 117 countries. Its 2020 dates are September 14-19.
At these exhibitions you could build contacts with exhibitors of products similar to what you are looking to outsource. But do remember, you are likely to find a limited pool of suppliers from China to choose from at such US-based events.
Sourcing agents: Businesses that are relatively new to outsourcing could team up with sourcing agents who will help them identify suppliers and guide them through the process step by step.
Sourcing Allies, for instance, has been helping companies in the US and Western Europe manufacture and source goods from China, India and Eastern Europe for over a decade, and has a proven sourcing process.
Our multicultural team consisting of British, American and Swedish expats living in China for years takes care of a lot of the research and due diligence that buyers must do while looking for a manufacturer in China.
Our team guides purchasers through the process of getting quotes from a supplier, reviewing the quotes, evaluating factories in China, resolving any issues that crop up, drawing up payment terms, managing the complexities of communicating your manufacturing requirements, quality control inspections, shipping and transportation, administration and ensure that the goods arrive at your desired location as scheduled.
China is huge and should actually be considered as many different regions rather than a single large one. A good sourcing agent will be able to identify low-cost regions that are the best fit for you. For instance, you will probably be able to find manufacturers that fit your needs in several Chinese provinces, but you will be more likely to find more consumer electronics manufacturers in Guangdong province while die casting and plastic molding manufacturers are found in great numbers in Zhejiang province.
You will need to put in work too, of course, but relying on experience within the sourcing field will help you avoid common mistakes and ensure that your outsourcing project is successful from the start. Once your sourcing partner knows your expectations and needs, the process to outsource your next product or component will be pretty straightforward.
Your initial searches will throw up a number of potential suppliers and you will need to cut this list down further. You can do this by contacting each of them, telling them your requirements such as:
* Details of the components you expect to manufacture – specify whether these components require die casting, metal stamping or plastic injection moulding.
* Whether you need a prototype to be developed, need the manufacturer to help develop your design further or have a mould already. (Experience tells us that factory owners in China are not really keen on “development” projects as these projects consume a lot of time and cost a lot of money with no clear end in sight. Usually endless modifications are needed to tooling and this generally results in delays and additional expense.)
* The material you expect to be used for the manufacture of your component.
* The price per item.
You could also ask them for more information about themselves, which will help you with the verification process (more on that later). This could be details such as:
* Whether they specialise in manufacturing the component you require.
* How long they have been in business.
* Whether they already export to the US or other western countries.
* Their minimum order quantity or MOQ.
* Their business licences.
* Any certifications that they have related to their production capability.
Here’s a pro tip: When you contact suppliers in order to draw up a shortlist, do create a separate email to send out these enquiries as your inbox is likely to be be clogged by the responses many months after you first send them out.
You can shortlist potential manufacturers based on the responses you get. Assess them on a number of points. For instance, pick manufacturers who focus on making the kind of component you are looking for instead of a cornucopia of components, as specialised expertise is always valuable. You could also give preference to manufacturers in China who already supply to clients abroad because they would be acquainted with western quality expectations, nitty-gritty of customs requirements and the complicated logistics of international shipping.
You now need to verify their credentials. While some obvious information is available online and they may have supplied you with some information too, you need to evaluate:
1. Whether they are indeed the factory and not a middleman.
2. Whether they have the technical expertise and production capability to deliver what they say they can deliver.
There are many ways you can do this. Besides asking them for their business licences and other certifications, ask for the factory’s audited accounts, check its Value Added Tax invoice, and ask for product samples. You could also identify the factory’s Chinese name, its location and the local government office under whose jurisdiction it falls. This office will have the factory’s registration records, which you can use to verify the details they have provided to you.
Knowing which Chinese region specialises in the product you want manufactured is also one way of weeding out resellers from manufacturers. For instance, die casting and plastic molding manufacturers are found in great numbers in Zhejiang province. So, if you find that a supplier is based in another province, that company is more likely to be a reseller than a manufacturer and you may want to drop that name from your list.
Many people in the sourcing business would also recommend that you make a trip to visit shortlisted factories in China before you finalise on a manufacturer. It is common for buyers to combine such trips with visits to a trade fair or two so that they get maximum bang for their buck. Alternatively, a good sourcing agent will do this China factory verification for you.
This article was written with the assumption that you have already identified what component or part you want outsourced.
Just in case you are unsure what that is, here is what you must do before you even hit the internet to look for Chinese manufacturers.
First, take a close look at your full range of products and components. Not everything is suited for manufacturing in China or other low-cost regions across the globe.
You want to make sure that the products you want to move have large enough dollar value and quantity to make a difference on your financial statements. The products need to be mature and have plenty of product life cycle left. Prototyping and innovations rarely fit this description. You want the time and effort you put into outsourcing to be worth your while.
I suggest starting small with a narrow scope. Chose a very well-defined product or component with great, up-to-date drawings. You want to get a small, quick win so that everyone in your team stays motivated.
Make sure your product drawings and specifications are up to date. You know your products best and all that knowledge needs to be communicated to whoever is going to make them. If your drawings are full of red felt pen comments, it will be wise to get all of that into new drawing revisions. Keeping drawings and specifications in great shape is mandatory and will pay dividends in the long run.
Make sure that potential issues in manufacturing are identified. Any problems you have now will rarely disappear when being made in a low-cost environment across the globe. Do not get me wrong. There are tons of very capable manufacturers out there, but they need to know what you know and you must highlight potential issues to address them.
Your products do not need to be labor intensive for you to move to a low-cost manufacturing environment, but outsourcing labor intensive products is more likely to have a greater impact on your cost savings. The value-add in your products makes a difference too. For instance, sending an I-beam to China for a few holes to be drilled into it does not make much sense. However, outsourcing the manufacturing of products and components that require extensive machining can provide substantial cost savings.
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