How to Source Products from China – This quick guide covers the basics for you to get started and be successful with your China sourcing efforts
China is an attractive marketplace for Amazon sellers who are looking to establish a profitable business. Once known as the ‘world factory,’ China can now produce high quality and high value goods. Before you start your google search on the best suppliers in China, you need to have a sound China sourcing strategy. This will help you avoid getting scammed, find a reliable supplier and negotiate the best deal.
Business transactions are carried out differently in China and in most other eastern countries as compared to the West. In China, the way business is carried out is through ‘Guanxi’.
Pronounced as ‘gwon-she,’ Guanxi means “connections” or "networks" that facilitate deals and open doors for business transactions. A person with plenty of guanxi is in a better position to grow their business than a person who lacks it. The Chinese term originates in Confucianism with the underlying philosophy of conducting any type of transactions, be it personal or business, is based on hierarchies and filial piety (‘xiao’). In business transactions as well, it is about establishing a relationship on a personal basis with the supplier first using communication channels to build respect and trust. The success of a deal depends on how well you can build a personal rapport with the Chinese supplier. The stronger your foundation, the higher the pay off in terms of an ongoing successful business relationship.
Source from China is a complex process for Amazon sellers who are just starting out. It will take some thoughtfulness, effort and time to find the right supplier who is reliable and can meet your quality specifications.
Here are some of the most common platforms where you can look for suppliers in China:
Alibaba is a good place to start your search due to its sheer size. In fact, its size has prompted many to call it the Chinese Amazon. Founded in 1999, Alibaba had 960 million active customers in 2019 while close to 1.3 billion businesses are on the marketplace. To start searching for suppliers, you need to first create your Alibaba account. The next step is to go to “Sourcing Solutions” where you need to submit your request for quotations by filling in the relevant details. These details include:
The other way to find suppliers on Alibaba is to actively search for potential suppliers on the website. Type the product name in the search bar and Alibaba will throw up dozens of results. All of the results may not match with what you want and you have to spend some time to find the ones that match.
Ensure that it is a manufacturer and not a reseller before you message the supplier. Many resellers also pose as manufacturers which can be confusing to sort out. Although Alibaba is the biggest marketplace, the possibilities of you getting scammed is high. It is important to find legitimate suppliers, which can be challenging for first time Amazon resellers. Here are some tips that you can follow to find a legitimate supplier on Alibaba:
The other platform you can go to is Global Sources. While this is not as huge as Alibaba, it has much better quality as each supplier undergoes a pre-qualification process of vetting which is much more stringent than Alibaba. You can also see the China Sourcing Reports on the site, which provide an in-depth look at different industries.
If you are looking to establish Guanxi, the best way is to head to trade shows and contact the supplier in person. Here are some of the most important trade fairs in China:
This is the largest trade fair in China and is held twice yearly and covers every industry related to physical products. The three phases of the trade fair are:
Phase 1 where you can find building materials, chemical products, machinery and electronics
Phase 2 is about home decor, gifts and consumer goods
Phase 3 deals with office supplies, textiles, health and premium skincare products, shoes and medical products
The entrance is free and you can see the samples that suppliers bring to get an idea of the quality. However, the sales representatives are not well versed with English and you may face problems in communicating with the supplier when you want to explain your requirements and technical specifications. While the Canton Fair is a massive one, the same suppliers take part in the fair each year. You can check the website of the fair in advance to know the location of the booth of the exhibitors you are interested in.
The Yiwu Market essentially is for resellers and trading companies and not for manufacturers. Located in Zhejiang, Yiwu market is open throughout the year and has forty thousand shops.
If you are looking to source shoes, watches, accessories and bags at low prices, this marketplace may be considered. Most products here are targeted towards buyers in Africa and India and do not meet the safety or quality standards set in the U.S. and Europe.
Negotiating is one of the most crucial aspects of sourcing products for your Amazon reselling business from China. The negotiations are not limited to price, but extend to the term of the transaction, quality, negotiate the terms and the type of business relationship you have. Apart from local and federal laws, you can pretty much negotiate on everything else.
When it comes to price negotiations, keep in mind that the supplier, just like you, will have a price threshold set at which they absolutely will not go below. Instead of getting stuck at price negotiations, work out other details. Explore if the supplier will be able to offer a lower price if the order size is increased. The supplier may also give you a discount if the amount is paid upfront. Ask the supplier if a lower price can be agreed upon if you place multiple orders. Instead of only focusing on the price point, evaluating the other areas of negotiation can probably get you a better deal overall. The other reason to not fixate too much on the price point is that there can be negative consequences elsewhere, as in, the supplier may use poor packaging or cheaper materials for your order.
Before you negotiate with a supplier, ensure that you know the market price of your product. You will generally know the prevailing rate when you compile a list of suppliers from your research. Talk to different factories even if you have found a supplier who you think is good. You can use the quotes provided by one of the factories to negotiate with the other one.
One of the most crucial aspects of sourcing from China as an Amazon reseller is knowing how to spot a scam and avoiding getting duped. Here are some ways you can avoid fraudsters:
There is much more to sourcing products from China for your Amazon selling business than searching for suppliers on Alibaba or other platforms and negotiating. From unexpected price increases to shipment problems, communication barriers to poor product quality, a lot of issues can crop up during the business transaction.
The right China sourcing agent can inspect the production site as they have their office in China. By communicating in Mandarin or the specific local dialect, the sourcing agents can ensure the supplier has understood the product specifications and technical aspects fully. They can also work out a backup plan when things go wrong in the last minute and the supplier is unable to deliver.
Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since 2006.
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