China presents an excellent opportunity when it comes to sourcing products. In order to succeed, the most import thing is to find a good factory in China. However, this is uneasy. Below are some basic steps to follow:
Step 1: Know your product
If you don’t know the specifications (input materials, dimensions, components, packaging requirements), the compliance requirements to sell into your country, along with the quality demands of your market, then it is very hard to determine which manufacturer is right for you. Price should never be your only concern!
Step 2: Research
Trade websites are a great tool for finding factories. However, many professional manufacturers will not advertise through these portals and are instead found through Google, Baidu (the Chinese equivalent) or through industry specific trade shows. Keep up to date as to when and where specific trade shows are held, both in China and in your own country.
Step 3: RFQ
Sending out a request for quote is important as it allows you to gather information about a factory and their capabilities, along with their price levels. It’s also an opportunity for yourself to demonstrate that you are a serious buyer that will bring the factory good business over the long term.
Step 4: Vetting suppliersbased on
Communication, location, size of the factory, specialization, export experience, legitimate operating entity, and the level of interest.
Can you communicate efficiently with the manufacturer? Are they prompt in replying to your calls and email? Are they ok discussing specifications in detail?
Factory location will have a bearing on lead times. It will also impact prices through labor costs, access to raw materials, rent etc. Avoid companies that don’t provide the location of their production facility as they are probably a trading agent or middleman.
Typically, you want to represent 5-30% of the factory’s business during that period. Anything less and you won’t be a priority for the factory, and you’ll have limited leverage with price negotiations. It’s also worthwhile investigating the operation size, production capacity, equipment, and staffing.
(4) What they specialize in:
China’s manufacturing sector is highly competitive. As such, Chinese factories are forced to specialize in production to maximize efficiency. I’d be wary of purchasing from a manufacturer who claims to manufacture a wide range of products. They are probably a trading company.
(5) What markets they sell into:
If your product must comply with strict national standards, it is wise to choose a factory that has experience manufacturing that product for sale into your market.
(6) Legitimate operating entity:
Check the ownership papers of the factory. Also, depending on the value of your order, auditing the factory can be worthwhile.
(7) Level of interest:
Sometimes good factories have no interest working with you. There’s no point pushing.
Step 5: Ask for samples
Request that the supplier sends samples of the product. For off-the-shelf products, the samples should closely match the specifications you supplied to the factory. If the factory can’t match your samples, then unless you are willing to spend time and money on re-tooling and product development, the factory is probably unsuitable.
*it is common to have samples redone and redeveloped in order to reach your desired outcome. Don’t write-off a factory too quickly if the first sample is not perfect.
Step 6: Visit the factory
This is by far the best way to determine if the factory is suitable. By visiting the factory, you can clearly check machinery and equipment, factory’s capacity, working quality of workers, sample room, warehouses, and quality control systems. It also allows you to negotiate pricing directly with the factory boss.