How to Source Products from China: A Guide for Startups and Small Businesses

Do you want to learn how to source products from China?

Getting products from overseas is an efficient way of keeping your business going. There are many advantages to doing so.

You get to acquire products and technologies which aren’t available in your country.  There are some certain raw minerals only available overseas and products tend to be higher in quality compared to domestic ones.

So, it’s a no-brainer that if you want your business to be successful, you need to learn how to be effective in sourcing products from abroad. Why choose China as your benefactor? Simple: because of the manpower they have available.

Despite taking a big dip in 2012, China’s industrial production is back on the rise. So, here’s a guide that will tell you how to be successful in sourcing products from China.

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Research The Online Market

 

The first step in sourcing products is to do your research. You should check among the top competitors. Check what they sell and find what you need.

Compare which ones are of better quality and offered at cheaper prices. Don’t forget to look into the reliability of the brands.

Some of the top Chinese e-commerce sites should appear. Alibaba, Made-in-China, and Global Sources are among the best platforms out there. They have a list of all the sourcing services available.

While doing research on the different product sourcing services, you may notice some offer different deals than others. This is because there are several types of manufacturers out there.

Trade Companies

 

Companies like this offer a wide variety of categories to choose from while you shop. They tend to be the go-to choice for most small businesses. This is because direct purchases from manufacturers tend to be harder on a business’s budget.

Manufacturers often have a limit on how few products you can buy from them. As a small business taking its first steps, it’s near impossible to match their standards. This is where trade companies come and save the day.

Trade companies allow you to buy fewer units of a product rather than the usual minimal order. But, this is not without a catch. They add their own margin on top of the manufacturer’s price.

So, this is an ideal choice if you only need fewer units of a product. It’s still much better to buy from the manufacturers themselves if you aim to save up.

Manufacturers

 

They are the ones who manufacture and sell the product on their own business sites. Direct interaction with manufacturers tends to be the best choice for most businesses. This is because they offer their products at a cheaper price than trade companies.

As mentioned above, one of the problems with manufacturers is their standards in sales. You need to be able to afford their product to make the most of your buck. Another problem arises when you look for manufacturers.

You will start to notice there are few manufacturers to choose from. Some of them won’t even provide the kind of product you need. This is because most of the other manufacturers have no English-speaking representative.

The language barrier will always be a hurdle in business. So, your choices are to either learn how to speak their language or look for another manufacturer.

Wholesalers

 

You can consider wholesalers as a hybrid between the 2 previous services. They offer bulk purchases like manufacturers, but they add margins like trade companies.

The reason they are successful is that of their convenience. They offer something certain manufacturers don’t have – foreign representatives. This removes the language barrier and allows you to buy the products you need.

Wholesalers may also have warehouses available in an area. This means there is only a slim chance that supplies for a product will run out. This is another reason they’re a popular choice, even more so among American customers.

But, with new tariffs in place for American users, some wholesalers may need to increase their margins to make a profit. This may sound simple, but some products will become too expensive to sell. This is the main reason why Walmart asks to consider sourcing outside of China, instead.

Choosing A Supplier

 

There are thousands of suppliers listed on the popular sourcing platforms. This can overwhelm you if you don’t know how to choose the right supplier for you. This can be a tricky task, but with the right guidance, you should find a great supplier.

You should start off by checking which suppliers have positive reviews. Most platforms allow people to rate their suppliers for their service. A supplier with a high enough rating may be appealing, but you should still do a background check.

This is because they could have used methods to boost their own ratings. For instance, creating different accounts to give positive reviews on their main account. It may be a tedious task, but some people are tenacious enough to do black hat techniques.

A way you can filter through the suppliers is by checking the other sourcing platforms. Some of these platforms have categories like verified suppliers and gold members. Alibaba even has a list of suppliers banned for misconduct.

You can compare the ratings for each user on the different platforms. If you see something inconsistent, it may be a sign they’re not as reliable as others. Keep doing this until you find a consistent record across the different platforms.

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Compare Domestic Prices

 

Once you’ve found a product you’re interested in buying, check to see if there are domestic alternatives. You can do this by doing a quick internet search for the same product you saw. If you find one, compare the options you have.

The first thing you will want to look at is the price. Consider the total price of the Chinese product. Add everything from the total to the shipping fee you may need to pay.

Often, you will find the domestic alternative may be cheaper. Since one of the top reasons to source oversea products is to save money, you may want to get the domestic alternative instead and cut out the need for the middleman, the delivery service.

Although, before you decide on anything, you should check the product’s reliability. You may find the cheaper alternative is cheaper for a reason. The product may break easier than the other one, leading to a wasted investment.

You can know if the product is reliable through its brand. Trusted brands will be more durable than the unknown ones. While they may hold great potential, the risk tends to not be worth it when it comes to business.

With such a big investment on the line, no one will blame you for playing it safe. This applies even if you need to spend a few extra dollars.

Making First Contact

 

If you end up choosing a Chinese manufacturing company, then you need to get ready to make a good impression. This is an important phase if you want to source products from China. This will determine whether they will spend their resources in sourcing to you.

In the case of online suppliers, contact your chosen service. You can do this through their information on their listing. They will often have an updated list of their contact information available.

All you need to do is write them an e-mail requesting their services. Remember to look professional in your letter. Most Chinese suppliers only source to those who they think will become a good investment.

You can also make the first contact with suppliers through trade shows. Trade shows often have many business people looking for opportunities to make good investments. This is where you can also meet some high-quality products from the top suppliers.

The key to making the first contact in trade shows is to have a solid proposal. Even if your business is still a small one, having a good idea may sway the suppliers.

Your confidence in your proposal may also help in your chances. Being confident makes it seem like you’re a high-quality marketer. Matching their quality is an important rule in sourcing products, after all.

Negotiating Prices

 

Going through negotiations is never comfortable. You’re always tense that you may slip up and kill your chances of getting a better price. So, how can you negotiate with confidence?

The answer may be to not negotiate at all. While this may sound ridiculous, it can prove to be an effective tactic. All you need is confidence – even false confidence – to sell your proposal with ease.

You need to show that you aren’t asking one company for supplies. This gives them the power to control the prices the way they see fit. Instead, tell them you’re scouting which one among the suppliers is offering the best price.

Remember that in China, it’s not simply about establishing a long-term trade of supply-and-demand between you and the company there. They prioritize building relationships even if the transaction is a one-time deal.

If you do aim for long-term goals, make it a point to visit China. Even a simple dinner with your supplier can go a long way in enhancing the relationship between both parties. They appreciate and value these types of gestures.

Not sure about their product? More often than not, you can ask for samples once you’ve established a relationship. Many suppliers will be more than happy to oblige and send you at least one unit of the item you want so you can physically inspect it.

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Planning Your Orders

 

Once you’ve negotiated your way into a desirable price, it’s time to place an order. After all that work you’ve done to get here, you will want to make sure everything goes well from here. This is when planning your orders becomes important.

There are many things you need to consider when placing an order. The main thing you should consider is the shipping fee. Many businesses come short on their budget because they forget this.

Shipping fees may vary depending on your package. So, if you’re buying heavy-duty equipment, prepare extra funds to cover shipping. There is also another fee which may prove expensive.

The China export clearance may cost you around $100-$300. You need this document if you don’t want to have problems. Chinese customs can charge your suppliers for even more if this document isn’t paid for.

Another factor you should plan for is the weather in China. Sometimes, they may experience typhoons in some places such as Shenzhen. This may cause your deliveries to get to you later than expected.

This becomes an inconvenience if you didn’t plan ahead for delays. Some businesses made no window for error in their startup. So, it’s a good idea to check how the weather is doing in China, as well.

Securing Your Payments

 

After making your deals and planning your orders ahead, it’s time to secure your payments. This may be the easiest step in the process. All you need to do is make sure you have an acceptable payment method for their services.

Take time to consider which payment method is most beneficial to you is up to you. Each of them has a different rate and processing fee.

There is also a special payment method available for Alibaba. If you buy items from this site, you can use Alipay. This payment system allows you to purchase using money from your traditional credit cards.

Other famous modes of payments include Chinese UnionPay cards – both credit and debit – and in some cases you can use PayPal. It’s a rare case but you might have the chance to use your credit card, like a VISA card, without having to go through some loops.

This method ensures that all goes well in an international trade.

Learn How to Source Products From China Today

 

Mastering how to source products from China and create an effective plan isn’t difficult. Simply follow our guidelines above and it should be smooth sailing from here on out.

Do you have any questions B2B sourcing? If so, contact us below! We’ll get in touch with you as soon as we can.