Elksourcing：Step by Step Guide for Sourcing from China

How To Import From China

Elksourcing：Step by Step Guide for Sourcing from China

Apr 10, 2021 , by 露露

Sourcing From China can be a daunting task, especially for small businesses and first-timers who might not have the means and global resources to establish full-scale overseas operations the way big businesses do. That’s where other sourcing tools come into play.

Here is a step-by-step guide that can help businesses like yours get an idea about the various options available out there in the market, and zero-in on the right suppliers to meet your sourcing needs.

1) Look for suppliers

Use various sourcing tools to get an overview of the options available in the market.

An internet search on sites like Alibaba, Google, etc. can generate great sourcing leads on reliable suppliers.

Sourcing magazines & trade shows are also vast sources of information on wholesale distributors, manufacturers and suppliers of products. While social media cannot be used in isolation to identify suppliers or for product sourcing, it can be very useful to get feedback on particular suppliers.

2) Short-list suppliers

Visiting a company personally is the best solution for verifying its authenticity, of course.

When that’s not logistically possible, turn to reputable third party QC companies that do a series of verification checks, such as due diligence, factory audit, etc.

Get samples from the suppliers, review the function, appearance and packages, do test at a lab when necessary. Compare the quality of samples from various suppliers.

3) Negotiate with suppliers

Once you have pinpointed the supplier you wish to deal with, then comes the need to negotiate a mutually-beneficial deal with the supplier. This would involve negotiating the price, payment terms, delivery schedule and contingency plans for unforeseen situations. 

At this point, you could also make inquiries about drop-ship product services as these may be drop-ship suppliers as well.

Alternatively, there are local third-party sourcing agents who can represent your firm in all negotiations, easing the process for you. This ensures that there is no miscommunication due to language or cultural differences, and it also reduces the risk of unscrupulous suppliers taking you for a ride!

Common issues like packaging, shipping, taxes, payment terms, etc. should all be clearly spelled out at this stage to avoid later disputes.

4) Establish a long-term relationship with suppliers

Even in business, establishing a long-term personal relationship is very important to the Chinese; hence it should be to you too, to ensure that your sourcing is smooth & hassle-free over the long term.

The cultural, language and business expectations of the East and the West are vastly different and you need to respect these differences in order to maintain a healthy long-term relationship with your supplier.

While factory visits and product QC are key, building ‘Guanxi’ (a relationship) with your Chinese supplier takes personal time & commitment. But it will definitely be worth your while!

How To Import From China

Elksourcing：A Cost Down Guide for Product Sourcing in China

Apr 10, 2021 , by 露露

Cost down your product sourcing in China is half success of your importing business. As a first-time importer, you need to test your market first with smallest capital at beginning, and put your investment in more important things: marketing & sales. Below is a cost down guide summarized from my experiences of China sourcing business.

#1 Start with sourcing one product at a time

You can easily find many successfully proven cases that just start with one or handful products, and per the response of the market to decide the next step afterwards. Expanding a product line needs a single product to be proven at the beginning.

If you plan to start with a plenty of products, it will be required a lot of time and money to invest. That’s a hard and difficult path to go as a first-time importer or startup.

Investing in one product is a good option to cost down and lower risk for your first step of China sourcing journey.

#2 Find a professional supplier who specialized in your target product

If you focus on single category that you would like to put on a long-term consuming involvement, to work with a professional supplier instead of a vender who provides a vast range of products.

Do some research about the supplier to check if it’s a specialist in the field of your target product before you contact the supplier. And it’s unnecessary to care too much about if they are a factory or trader because a professional trader must have strong advantages of sources that allows them to provide you a still competitive price even lower than a factory.

So, find a specialist as your importing business partner to keep cost down constantly in the future.

#3 Always negotiate price with Chinese suppliers

Remember, anything is negotiable when you dealing with Chinese suppliers.

Thanks to internet, usually it’s easy to find so many suppliers for your products, so, feel free to ask for a lower price once you decide to work with them after compared with different suppliers.

But keep in mind, the seller is a person try to earn money (just like you) – always be respectful. Just don’t be too demanding to lose the quality. Once a Dubai businessman told me he placed an order at a price much lower than the market price, in my opinion, it’s even lower than manufacturing cost, guess what, the supplier disappeared after the deposit was paid!

#4 Try to keep your product design as simple as possible

In the aspect of design, less is more. It will generate a certain cost because most of new products require moulds (metal or plastic) to produce. In some cases, it would even cost more than your total product value. It will be a high risk to invest too much on a new project which is not proven by market. So, don’t pursue a too complex product on design.

You can go with existing product or just change a little about it, like color, material and packaging. Many experienced brands take this way to test the market as the first step of sourcing in China with a low cost.

#5 Consider to go with appropriate quantity

Try to reach manufacturer’s MOQ as possible as you can. Although it increases your total cost, but will significantly reduce your average product cost.

So, it’s important to consider a suitable quantity to cost down your sourcing result.

#6 Select shipping method by sea, not air

Shipping by air is quick but costly, only use it when you need to check samples, small trial runs, or urgent replenishment.

To cost down your product sourcing result, shipping by sea always is your first choice. 90% of trade is through sea shipping in the world. In many cases, shipping cost is only a few pennies for each product.

#7 Don’t expect the highest quality

You maybe hope your products are made of the best material and at the highest quality, but truth is that 80% of major retailers use normal standard materials which just meet the quality requirement of the market average.

It is profitable to import standard quality product; you only need to focus on better marketing skills. No need to chase highest quality unless your ideal product has generated sales by your target market.

#8 Go with simple packaging for your first time of product sourcing in China

It will consume lots of money and time if you attempt to chase a fancy packaging at the beginning. Don’t do that unless the unique selling point of your product is the packaging design.

Conclusion

Keeping cost down always should be the goal of your China product sourcing journey, however, it’s unnecessary to chase the perfect products at beginning, all above points could be improved along with time when your products generate sustainable revenue.

How To Import From China

Elksourcing：How to Succeed a Smooth Start to Manufacturing in China?

Apr 8, 2021 , by 露露

It’s not easy to start manufacturing your products in China, below are some tips learned from my experiences as a sourcing agent in China.

1. Set-up a mutually beneficial partnership

As a start-up, you may not be taken seriously by the big manufacturers, because the volume of business you bring to their table is not significant. So, it is better to source a small/medium sized manufacturer to create an incentive for the manufacturer to work with you.

2. Check references

Finding the right manufacturer is difficult. Unlike programmers, few manufacturers have a digital presence. Checking for references is paramount.

3. Take baby steps

Start your own manufacturing takes a lot of time and money, you cannot afford mistakes. Depend more on manual labor and low-investment tools in the first few months, gradually increase your investment when your products keep bringing revenue.

4. Research

If you are looking for a manufacturer online, you need to do extensive research before you decide.

5. Have multiple open partnerships

Have multiple reliable options, rather than fully rely on a single manufacturer.

6. Get the legal details sorted out

Once this is done, you can confidently go ahead with investing in moulds and materials for your business.

7. Know the people you work with

Your manufacturers are critical to your business. It is imperative that you know them well before working with them. This is true especially when your manufacturer is in China, far away from your home.

How To Import From China

Elksourcing：Why You Cannot Find a Factory to Manufacture Your Products?

Apr 8, 2021 , by 露露

We hear it all the time from importers sourcing from China, “I can’t find a factory to manufacture my products!”  This is especially so when the product you are seeking to source is unusual: you will not have any difficulty finding factories for white T-shirts or running shoes, this only is a challenge if you are trying to source from China a rare or unique product, something your competitors don’t know about or don’t have yet.  Which, of course, is what gives importers a lead in the market place.

This happens to both large importers who want to stay ahead of the pack and to small importers who are looking to branch out and find uncommon products.  It seems strange that in the “World’s Factory”, as China is often referred to, it is difficult to find factories to source your product.  I mean, in this day in age, you expect to find things quickly.  Thanks to the internet, people are accustomed to finding an instant answer. So, they’re baffled when they come across websites like Made-in-China and Alibaba and they can’t find what they’re looking for. Well, here’s why:

Small Factories: When sourcing from China, rare products are more likely to be made by small factories. Products like green rubber pigs with wings or flasks in the shape of a dice will be hard to find – because specific and special items like this would more likely be made by small factories. And small factories, you guessed it, are not easy to find. In most cases, you will only find small factories like this if you are working with an agent or consultant who has many contacts and has been sourcing from China for a very long time.

Language Barrier: Most small factories do not have the resources to employ people who speak English. Therefore, they cannot target or appeal to companies, like yours, when they cannot communicate effectively. If you can’t get your ideas across to a factory that can’t speak your language, you’re going to end up with a sub-par product, if you end up with one at all. Even if you can find a factory, if they can’t communicate with you, they’re basically useless to you.

Marketing: The role of a factory is to produce goods. Therefore, they’re, often, not very well versed in marketing. This is especially the case with a small factory. They don’t have the know-how or resources to advertise or market to companies in the West who are interested in sourcing from China, often because of the language barrier previously mentioned. It would be rare to find any factory, much less a small factory, ranking high on Alibaba or Global Sources, because much of the skills used to rank highly on these platforms are similar to those that would be required to rank highly on Google. There are large American companies that haven’t mastered this – we can’t expect a small factory in rural China to figure it out.

Copyrights: We tend to forget when sourcing from China, because there are so many copycat products imported from China every day, that copyrights DO exist. If you’re a serious China importer, copyrights would be #1 on the list, BEFORE researching factories. Thus, because of this, many factories keep the products they are manufacturing a secret in order to avoid copies being made.

Sourcing from China is no simple feat.  We find that the companies that are the most successful in finding these elusive China sources have their own sourcing office in China, or hire a professional sourcing company.

China Sourcing Agent

Elksourcing：What Can a China Sourcing Agent Do for Your Import?

Apr 8, 2021 , by 露露

With international e-commerce booming up recent years, more international buyers import small orders of different goods from various Chinese suppliers, the international shipping cost from individual suppliers is extremely high if all the packages are shipped internationally separately every week.

Small order import is mainly suitable for high-value, low volume/weight goods such as electronic gadgets, flashlights, luxury goods, etc with which the shipping cost occupied only a small portion of the total import cost. Small orders are not suitable for goods like ovens, kitchenware, giveaway and premiums, etc due to the high international shipping cost and thus the low margin space you can keep.

A good China sourcing agent can provide well organized warehouse space to consolidate all the small order boxes and send them all within one shipment within a period of time, the shipping cost will be easily decreased by up to 50%.

Quality control is another big issue, many small order importers don’t take quality into consideration seriously and just buy non-branded goods to sell, this often leads to big loss eventually.

AliExpress for example, is the biggest source for small order purchasing from Alibaba Group, there are millions of suppliers on the platform. From our experience, a very big portion of the products sold over there are not in compliance with the laws and regulations of the importing countries, which can easily cause problems during customs clearance, bring difficulty in marketing and have customer complaints, this includes but not limited to safety (such as CE, FCC, etc), IP (intellectual property), mal-function of products and wrong packaging or labelling.

I’ve been hearing a lot of importers that don’t care about the quality at the beginning just because they were trying to buy small QTY, and later they put the label of “bad quality” to Chinese factories, but quality goods such as iPhones are all made in China! Indeed, Chinese factories can make premium quality products if proper quality control is taken place. Quality inspections cost money, but a reputable and long-term brand deserves.

Basically we strongly suggest our customers to work with manufacturers directly even if the order QTY is small. This should be the right way for importers with long-term strategies. It’s true that most direct manufacturers have much higher MOQ (Minimum Order QTY) for their customers, but in some cases, they can still accept small orders to fill their production schedules if the deadlines of their customer’s orders are not really tight, because they could combine them with other orders. It’s a little difficult to work with manufacturers at the beginning, but it’s still possible to find out. A professional China sourcing agent had a lot more sources that can help to identify the right factories to work with.

International transferring charge is also a big expenditure. In most cases, the supplier would not accept bank charges when the order QTY is small, and this cost may occupy up to 4-8% if you take into consideration of the frequent international transferring in a year, and this even doesn’t count for all the time consumed on these transferring. A reliable China sourcing partner will definitely decrease this cost substantially.

In summary, here is what a reliable China sourcing agent can do for you:

To reduce international shipping cost substantially;

To ensure good quality of the purchased orders and thus create a sustainable and great brand image;

To reduce international transferring cost and improve your fiscal data;

To get constructive support and consultancy on China supply chain management and long-term business development.

Shopify dropshipping

Elksourcing：How to Secure Availability for Peak Periods?

Apr 8, 2021 , by 露露

We in procurement  always claim that the forecasts are always wrong. And always we try to create the buffer in order to secure the unexpected sales. But is the safety stock the only way to secure peak periods?

In this article we will talk about three ways to secure the full supply for the peak periods.

Obviously the safest way to secure the unexpected sales growth is to create the extra stock at your warehouses, at your stores (or wherever you keep the goods before sales). But at the same time we all understand that this is the most expensive way. This means that we should pay purchase price for the goods, all the logistic cost, we should freeze the working capital (which involves some interest rate as well). Moreover, stock possibilities at our own premises can become an issue.

So what are the alternative ways to secure the availability of goods in the peak periods? In this article we will go through three of them.

1.   Keeping the buffer capacity at suppliers

Keeping the buffer capacity at our suppliers is not for free. And most likely the purchase price for your goods will be affected by securing the buffer capacity. In this case you should also remember about the lead time from supplier to the sales place.

But still for many supply chains this may be a very cost effective set-up.

2.   Keeping the stock at suppliers:

Keeping the extra stock at suppliers is also a very widely used method. You can agree a specific extra safety stock level to be kept at your supplier for you.

This extra stock can be agreed in number of pieces /or pallets/ or trucks, and also in number of days/ or weeks/ or months.

Depending on production lead times, and capacities at your suppliers you can agree to keep the extra stock in following forms:

a.   In the form of readymade products (less risky, but expensive)

b.   Semi-finished products (medium solution)

c.   Components (risky, but the cheap option).

3.   Just-In-Time deliveries

The most advanced way for the companies to manage their stocks (inventory) is Just-In-Time (JIT) deliveries from their suppliers. Such type of corporation can be a standard for some Industries (like car manufacturing, or electronics), but for most of industries it is still a huge task and a big dream to come to the level of JIT cooperation with the key suppliers. And of course JIT deliveries require the same efforts and the responsibility from both supplier (to fulfill the orders with hundred percent precision) and a customer (to provide the most accurate forecasts).

How To Import From China

Elksourcing：Why Buyers Choose to Perform a Factory Audit in China?

Apr 8, 2021 , by 露露

After a new factory is sourced in China, most buyers will choose to perform a factory audit, as it is a cost-effective way to make sure the factory is reliable and offers quality products. Based on the ISO 9001 standard, supplier evaluations include many additional benchmarks, giving you robust insights to the way the factory is managed. Before you place any order, learn why a factory audit can save you from making a huge mistake by choosing the wrong factory.

Verify Supplier’s Legitimacy

Working with suppliers in China comes with risk, but a factory audit from a reputable quality control firm minimizes uncertainties. It’s difficult to verify a supplier’s claims from a distance, in particular without having industry knowledge. A factory audit can ensure that the factory is legal and has all the necessary certification and licenses to be able to sell and export goods.

Confirm Supplier’s Product Expertise

A factory audit gives you an inside look at the factory’s showroom without having to step foot inside. A quality control auditor verifies the machines to find out whether or not the factory has the capacity to produce your product internally. If some parts are missing, sub-contractors may be involved. Even if you’re OK with that, you still have the rights to know how and where your products are produced.

Check the Factory Capacities and Organization

An in-depth supplier evaluation confirms that a factory can indeed meet the production lead-times you initially received from the vendor. The auditor checks the supplier’s storage capacity, which can greatly impact the quality of your goods. For example, products stored outside could be affected by bad weather. If semi-finished and finished products are stored in the same area, they may accidentally be loaded together. A factory audit also tells you how management is organized so you know who makes decisions and solves problems — and most importantly, who you should talk to for negotiations.

Authenticate the Factory Quality Management System

The quality management portion of the factory audit confirms that the factory has the necessary processes in place to ensure the quality of your final product. The auditor checks how your specifications are reviewed and taken into account, the way goods are controlled during production, and how the machineries are calibrated over time to guarantee the same efficiency and quality result. There are key quality indicators for all relevant functions at every organizational level to make sure no detail goes unnoticed.

Verify the Supplier’s Social Accountability

A factory audit provides a thorough review of the factory to make sure that at an administrative level, all documents conform to the local regulations. As per the SA 8000 standards, the auditor reviews HR records and even interviews managers and workers to confirm the factory’s work environment. You’ll receive verified proof that the working environment is clean, and the conditions are acceptable.

Shopify Tutorial

Elksourcing：Advices for Good Negotiations with Suppliers

Apr 8, 2021 , by 露露

Negotiate everything in life, from your diving suit to your wages, from the new car to the flea market shirt… In application to your suppliers you can practice the technics with lower profile suppliers and improve them in big spent suppliers.

There is no negotiation if there is no deal.

Know your own limits and how much you can give in. I remember perfectly how I failed negotiating a last-minute room in a rural hotel. They did not give in price, and we both lost. They lost a customer forever and probably did not recover a room at 08:30 p.m. Saturday evening, but I also lost since I had to drive 80 km. back to town. So there must be always a mutual agreement and be ready to give in sometimes for achieving your targets. In my opinion, people who never give in achieve short time targets only, and have more difficulties in building long-term relationship in negotiations (which is sometimes also positive to achieve longer targets). In terms of suppliers make your own target dates to certain agreements and monitor evolution of the negotiations. And make sure you update your strategy constantly with the market and your own company evolution.

Never start a negotiation without a preparation.

I learnt a lot from the Dutch about working with “facts and figures” since one needs to know the data, how much margin, how much purchasing volume, how big is your negotiator, in which situation you are (weak or strong) in terms of power of negotiation… and then:

Follow your preparation with a good strategy. Set up your own targets, and then benchmark them with your own reality and see if they are realistic. A simple example, if you want to buy your car to 20,000 euros netto when it is worth 40,000 euros brutto without discounts. I can give you recommendations on how to reduce the price but realistic target would be around 30,000. And most important within this value, set up a range, like for example +/- 2,000 euros, that you can accept.

Negotiating is being flexible.

If you work with purchasing volumes, you might be influenced by market, material prices evolutions, etc. Making a strategy for example is to focus in material compensations with negotiating extras, concentrating in sourcing from certain best price countries, by changing volumes. But you must bring your strategy to a lower level in a practical way, which suppliers change or introduce and which time of the year based on which assumptions.

Use a tactic (but applicable to your interlocutor). 

There are millions of negotiation tactics, but not all are applicable to the person in front of you, you need to know the background of the person, cultural, company profile, history from past negotiations, and most difficult during the negotiation catch up with behavioral facts that allow you to understand the other person tactic. That is the funniest part of a negotiation is what I call the “theatre”, like for example play a role that give one impression when the target is achieving the opposite. With suppliers I think it is important not to strictly stick to one contact person depending on the company hierarchy and decision level. Many companies know that and also the possible empathy with the customer and have rotation of sales executives to be more aggressive with the customer. Be careful with your negotiation schedule, starting from zero can be hard sometimes.

Avoid confrontation.

In Business it is very usual that in a negotiation with a supplier about price decreases, supplier might come up with unpaid invoices or directly complain about stretched cost target that create a difficulty in this current negotiation. It is requested as much empathy as possible: only by understanding your opponent you can deal with them. Back to tactics, there are some basic tactics to move forward in negotiations in these situations. But again spend time to listen to your interlocutor.

Listen before fighting.

Keep mental agility in order to avoid forgetting your topics, your poker-card or your argumentation, while listening carefully the story of your interlocutor and his/her argumentation. Listen but do not forget what you wanted to say. Not only people take it very bad the lack of education of interrupting people but also it might force you to show more aggressivity to interrupt and the opponent might take it as a defense/aggressive tactic and difficult any of your moves. Latin countries are good in interruption of conversation; this can be also positive in case of blocking points of discussion or making it more dynamic. Control the times of the negotiation while keep firm and determined intentions (for this I admire a lot Muslim people in negotiations).

Respect the cultural differences from your interlocutor.

It is not the same in business to discuss in Asia, Africa, USA, Middle East, North to South Europe or Turkey. Show respect during introductions, to presentation of the companies, or even their own methods of negotiation. Take some time to analyze their behaviors in the negotiation. But an important point, do not try to negotiate with locals in the local way, they might have done it for years and you are just a newcomer. There is a high risk to lose the battle, so do not reinvent the wheel, make your own wheel adaptation. Use your own tactics and negotiation approach.

Debate.

Make a good argumentation and debate as much as you can, debate, explain, discuss, show motivation to the topic…. and then be ready to summarize it in the least unexpected moment. This requires a lot of mental gaming, you can also take notes of progress done in discussions and when the moment comes then summarize the negotiation. Summary of agreement is key in long negotiations.

Be yourself.

Only by being yourself, the others will feel empathy for you which is an important point in negotiations and business in general. Therefore, with it you would be able to apply your negotiation approach and tactic, for example I change topic during negotiations in difficult moments keeping in mind the difficult point and bring it back when unexpected with a different argumentation; but just because I am really good on it. I show more respect to other tactics which I am not familiar with.

Negotiation in sourcing is 50% individual own skills and 50% learning by doing, by participating in negotiations by reading books and also by trainings. The more you live the more you learn.

And, finally learning from other cultures. In Europe we think we know a lot about negotiations, but my best teachers were clients from Muslim countries.

Good Luck! And always remember that there is no negotiation without a good deal.