Wouldn’t be great if you could just skip wasting your time on Alibaba.com or trade shows, and go straight to a supplier making goods for Apple or Disney?

Clearly, quality products are manufactured in China. If you could only get hold of a ‘big brand supplier, you’d be set for life. No more quality issues or delays. Quality goods, on time, every time. Just like Apple does it.

At least that’s what many buyers imagine. Reality is actually quite different, as I explain in this week’s article.

But first I’ll show how you can actually identify suppliers of major brands, or spy on your competitors – using online tools and other methods.

1. Official supplier lists

Some brands publish their supplier lists on their websites, while others operate databases with supplier details. Apple, for example, maintain regularly updated supplier lists on their website.

In the Apple Supplier List from February 2018, you can find hundreds of manufacturers located in China, such as:

• AAC Technologies Holdings Inc.
• Asahi Glass Co., Ltd.
• Boyd Die Cut Co., Ltd.
• CymMetrik Enterprise Co., Ltd.
• Daikin Industries Ltd.

However, they don’t provide contact details, or information about which components they subcontract to listed suppliers.

2. Importgenius.com

Importgenius.com helps Importers access US customs shipping records, which reveal the following information:

• Importer (in the United States)
• Supplier (for example, in China)
• Product type
• Volume

In theory, this means that you can identify which suppliers your competitor is buying from – and large companies like Disney and Adidas. However, shipping records only cover goods that are imported or exported.

Big companies often use trading companies, with names that don’t resemble that of the parent company. As such, you can’t find data on many large companies, as they use completely unrelated company names on the importer of record.

As shipping records don’t track domestic transactions, it’s relatively easy for companies to keep their supplier network secret.

Notice that Importgenius.com only provides US shipping records. Hence, you cannot access records in the EU, Australia or other places.

Importgenius.com plans start from US$99 per month.

3. Panjiva.com

Panjiva.com home page

Panjiva.com is similar to Importgenius.com, in the sense that they provide shipping data. However, they go further than that, as they also provide detailed information about suppliers.

Shipment Data

• Bill of Lading
• Cargo Weight
• Container Info (Value, etc.)
• Product Classifications (HS Codes, etc.)

Supplier Info

• Company Info (Revenue, location, etc.)
• Contact Details
• Parent Company & Subsidiaries

Location Info

• Country Data
• Part Data (Port of Loading and Destination)

Panjiva is not only providing US trade data, but also from other countries, including:

• China
• India
• Mexico
• Brazil

Their basic plan starts from US$150 per month.

4. Look for big brand references on Alibaba and Globalsources

Some suppliers listed on Alibaba.com and Globalsources.com advertise that they make products for major brands, such as H&M, Zara and Nike. It’s relatively easy to find such suppliers when sourcing online.

You can also contact suppliers and ask for buyer references. However, manufacturers that are not already sharing customer references on their websites are often reluctant to share such information.

Questions & Answers

Are ‘brand name’ suppliers generally better than others?

Big companies like Apple and Disney have high standards. They don’t buy from suppliers that cannot pass their social compliance audits, or manufacture unsafe products.

In that sense, the average ‘big brand supplier’ is more sophisticated than smaller manufacturers.

That said, many of these manufacturers are part of large international conglomerates, that only work with other large businesses.

You can’t go to Foxconn and pitch an idea for a new electronic widget, if you’re looking to buy a few hundred units. Suppliers of that size will not consider anything but orders counted in the millions of dollars.

Finding a ‘brand supplier’ is rarely even an option for startups and small businesses.

Aren’t there exceptions?

Yes, there are many smaller factories that do get orders from Wal-Mart and other big buyers. But, you are not Walmart.

You don’t have the same quality assurance processes as they do, or the buying power to make the supplier treat your orders the same as theirs.

A common misconception among smaller importers is that everything will work out perfectly once they find that amazing supplier.

But, the outcome is only partly dependent on the sophistication of the supplier. What matters more is, as I just mentioned, the quality assurance processes of the buyer.

A qualified supplier and an organized buyer can achieve great things together. However, even the best supplier will fail to live up to the expectations of a disorganized buyer.

I’ve spent the last few years, covering every angle of manufacturing in China, from a buyer point of view. Today, I turn things upside down, by seeing things from the supplier’s perspective.

After all, China is a top 10 country in terms of readers here on Chinaimportal.com, so it was about time.

I’ve spent almost 8 years in Mainland China, and ever since my first factory visit, I’ve seen suppliers make the same mistakes over and over.

Truth be told, not much have changed since I first set foot in Shanghai back in 2009. Most suppliers are still highly secretive, and believe transparency to be a weakness.

Their mentality also highly focuses on price competition, resulting in very low profit margins.

This may have worked for a while, but something that has changed, is the fact that Chinese factories are no longer as cheap as 10 years ago.

What worked in the past will not work forever.

Luckily, most tips I am sharing in this article are ridiculously easy to implement for most suppliers.

Suppliers that implement these methods can not only acquire (and keep) more customers – but also raise the unit prices above those of the competition, without losing business.

Trust me, I’ve tried this myself.

1. Standardize your product specification sheets

When buyer’s contact a new supplier for the first time, it can take weeks to to understand what the supplier can and cannot do.

Assuming that I’m looking for a watch manufacturer, I need to know the following:

• Can you make 316L stainless steel watches?
• Can you offer sapphire glass?
• Can you provide Ronda movements?

In other words, basic information about the suppliers’ capabilities.

Still, most sales reps have a standard answer to every question. ‘Yes, can make’.

A few weeks later, the buyer will eventually find out the hard way, that their samples are not even close to matching their requirements. Continue Reading →

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You just received a new batch. You did everything right, including clear product spec sheets and a pre-shipment inspection. And still, the supplier manages to mess up your order.

Sometimes, quality issues slip through, and you need to know how to deal with situations that involve returning defective items to your supplier.

In this article, you will learn how the entire process works:

• How to report defective products to your supplier
• Why you should not even ask for a refund
• How to write a ‘product remake action plan’
• How to incentive your supplier to remake or repair the defective items

1. Check your products and report defects immediately

Defective or damaged products must be reported immediately. Preferably within 48 hours of receiving the shipment. The longer you delay, the harder it will be to support a claim that the supplier is responsible.

You don’t need to do a visual check on every single unit, but check at least 10% of the quantity.

If you find any quality issues, that are not in line with the pre-shipment inspection result, you must provide the following:

• List of defects
• List of defective units
• Value of defective units
• Images
• Video

This must be sent by email to the supplier immediately.

Now, keep in mind that I always assume that you have ordered a pre-shipment inspection, and yet discover additional quality issues. An inventory check-up is not a substitute for a quality check. Continue Reading →

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The Chinese New Year of 2018 starts on February 16th, and lasts until March 2nd. While many of us who work in Asia are painfully aware of the Chinese New Year, and the coming disruption to all production, many Importers are caught completely off guard.

As if the rush to get your shipments in time for Christmas is not enough, you now have to make sure that your goods are ready well before your supplier close the shop for CNY 2018. During this holiday, all factories are shut down. Without exception.

While the official holiday only lasts for around a week to ten days, most factories are closed for an entire month. With severe delays to be expected once they open up again in March.

This time is especially risky for products that are due for shipment in the spring and summer season. Think swimwear and outdoor furniture.

Now is the time to prepare, and in this article, I will explain how you can avoid delayed shipments and quality issues during the Chinese New Year of 2018. Continue Reading →

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A Sourcing Company can be an invaluable partner when importing products from China. Or, they can be a useless middleman that offers nothing but delays and higher unit prices.

This is not a regulated industry, so anyone can claim qualifications to manage product and supplier sourcing.

In this article, you will learn what a sourcing company can do for you – and how much you should expect to pay them.

In addition, we also list some of the leading sourcing companies in Mainland China and Hong Kong S.A.R.

Why should I work with a Sourcing Company?

The core function of a sourcing company is to identify qualified suppliers, based on the customer’s needs and technical requirements.

There are no industry standards for how the supplier sourcing process is managed. Some Sourcing Companies have a more relationship based approach, funneling customers to their existing supplier network.

This can be a win win for both you and the sourcing companies , assuming they select suppliers based on the product’s technical specifications – rather than the size of the kickbacks they receive.

I’d say that most sourcing companies put kickbacks before selecting the supplier that is the most qualified to make a certain product.

Most sourcing companies can do a lot more than just, well, sourcing products.

For example, some can help you with factory audits, quality inspections, contracts, quality assurance and day to day administration.

As said, there are no set industry standards, so you need to discuss this with your Sourcing Company.

How do sourcing companies charge for their services?

Previously, most sourcing companies charged a commission based on the order value. However, in recent years, more and more sourcing companies have adopted fixed pricing.

Thus, they charge based on a per project or service basis, rather than a commission.

Of course, the final cost depends on what exactly you want the sourcing company to do for you. Continue Reading →

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Price negotiation is on every importers mind when engaging with suppliers on Alibaba or Globalsources. Yet, it’s misunderstood as the practice of forcing the supplier to squeeze their margins to right above the production cost.

Going to hard on the price negotiation can result in terrible quality issues, and unanswered calls.

In my opinion, successful price negotiation is about finding the right equilibrium, where you pay the right price for the right quality, while the supplier can make enough money to stay in business and pay their shareholders and employees.

That’s not asking for too much.

Keep reading, and learn why you should not haggle your way down to poor quality, how you can prevent your supplier from jacking up the prices – and why you must be ready to stand up and walk away if they try do so.

This is the complete guide to price negotiation with Chinese factories.

1. Accept that the supplier must also make a worthwhile profit

Rather few importers are aware of the (very) low profit margins that most Chinese suppliers struggle with. It’s simply not possible for them to offer a 10 to 20% price reduction, unless the price was way off to begin with.

Asking them to lower the price more than 3 to 5% is the same as asking the supplier not lose money on your order.

Yet, many importers are obsessed with price haggling.

If you’re lucky, the supplier will simply tell you to go somewhere else.

If you are not as lucky, they may actually give in and lower themselves to your (unrealistic) target price – but with a nasty twist.

You see, a product can be made using various different quality standards, materials and components.

For example, a zinc alloy watch can be made for less than 5 dollars, while the same design made in 316L stainless steel can cost four times as much – around 20 dollars.

In such a scenario, you have successfully priced yourself out of a good offer, only to pay a premium for a low quality product. Not to mention the number of defective units.

You will also get less attention from the supplier, as they will focus on customers that they can make a worthwhile profit from.

All of this makes sense. Yet, in the west of come from the viewpoint that a ‘deal is a deal’ and that it’s up to the supplier to ‘produce high quality products on time’ regardless of whether or we price them down below the production cost.

Because you have more orders in the future.. And the supplier should for that reason ‘invest’ in you. Because your product is special, and so on.

But the mindset in Asia is different. Don’t forget that they have salaries to pay too, and it’s not like they are swimming in cash to begin with.

Customers that pay slightly better get much better quality, lower defect rates and better treatment. Not always, but often.

Go ahead and try to shave off a few percentage, but don’t become obsessed. In the end of the day, what will a 10% or even 20% reduction on the factory price even do for your business?

Perhaps you should be more focused on cutting costs elsewhere if that is so important.

2. Be clear about your quality requirements before you start negotiating

A product can, as I mentioned, be made using different materials and components. You need to have a ‘fixed’ product specification, and understanding for what makes or breaks the quality of your product.

Otherwise, you can’t say if a price is good, or bad.

18 dollars is a decent price for a stainless steel watch.

11 dollars is a terrible price for a zinc alloy watch.

If you don’t understand the specifications and customization options for your product, you cannot successfully engage in a price negotiation.

3. Price negotiations must be done at the right time

You can’t start negotiating after a supplier has made the tooling and prototypes for you. At this stage, they already know that they got you.

They already know that you will place an order.

Hence, they have no incentive to reduce the price.

What else will you do at this stage? You have spent months, and possibly hundreds of dollars, on samples and molds.

Will you just dump the supplier and spend six months developing new samples elsewhere, for the sake of shaving off a few dollars on the unit price?

No, you won’t, and they know that.

Negotiate the price before you make any commitments to the supplier, not when you are stuck.

4. Walk away if they  try something funny

Now, let’s look at it from the opposite side.

What if the supplier decide the raise the price, just when you are about to place the order?

This happens, and the suppliers tend to have all sorts of reasons. Labor costs went up. Taxes went up. Material costs go up. It’s their ‘most busy season’.

It doesn’t matter. They got you, or at least they think they do.

If a supplier try to rip you off at this stage, you must be ready to walk away.

Yes, even if that means you have to start over from scratch. Or well, at least go back to the product sampling process.

If you let the supplier bully you even before you have placed an order, you are safe to assume that they will continue such behavior afterwards.

5. Stay up to date on raw material costs

You don’t want to make an impression that you are gullible.

When you engage a supplier, you should mention that you have read up on current commodity and raw material prices.

This will weaken the case for the supplier to offer a higher price, or raise the price between orders.

You can, for example, use the following two sources:

• Infomine.com
• Indexmundi.com

Chinese suppliers also cite increasing labor costs and taxes, when providing a context for a price increase.

However, labor costs increases have panned out in recent years, and the Chinese government has been quite diligent in lowering taxes for small to medium sized businesses too.

Ready to import and launch your own product?

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Sending money through telegraphic transfer (T/T), or paying by letter of credit (L/C), is slow and relatively complicated.

The wrong beneficiary name, or even address, can delay the payment for weeks, and there is no effective way to request a refund in case you get scammed by a supplier.

So, why aren’t more importers using payment services such as PayPal, that can send money instantly to suppliers – while also offering the chance of getting the money back if the products are not matching the specifications?

Keep reading, and learn why many suppliers refuse to accept PayPal payments, and what you can do to change their mind.

1. Most suppliers only accept PayPal payments when ordering product samples

PayPal is available to both businesses and individuals in both Mainland China and Hong Kong. Opening an account only takes minutes, and is as easy as anywhere else on the planet.

Yet, many Chinese suppliers, both factories and trading companies, don’t accept payments via PayPal.

Why is that?

First, it’s a matter of old habits.

Most suppliers are accustomed to the established payment methods, such as telegraphic transfer and letter of credit – while they are quick to dismiss newer payment methods.

The suppliers that do accept PayPal payments tend to restrict it to sample invoice payments only. As such, most suppliers don’t accept PayPal payments for larger orders. Continue Reading →