China’s LED industry is huge, and the market is incredibly crowded. Small garage traders try to compete with manufacturers employing thousands of workers, on their seemingly endless assembly lines. That said, most LED manufacturers are somewhere in between.
Finding the right LED manufacturer in China takes quite a bit more than a search on Alibaba.com. The stakes are high, and if you select the wrong one, you running a serious risking of losing your entire investment. In this article, we explain what really matters when sourcing LED suppliers in China, and other Asian countries.
Why you should avoid Chinese LED wholesalers
Before we get started and I begin explaining the inner workings behind selecting the right LED manufacturer, I must clarify why going for an LED wholesaler is not the right path – at least not for buyers in the United States, Europe and Australia.
Many small businesses are aware of the rather high minimum order quantity (MOQ) requirements, set by Chinese suppliers. Many Chinese suppliers set the MOQ requirement at 500 to 1000 units, per model. As most businesses want to offer more than one or two models, the total MOQ quickly adds up to thousands of units. The solution? Buy small volumes of off shelf products from Chinese LED wholesalers, rather than buying from a manufacturer.
But it’s not that simple. Buyers in the US, EU and Australia are legally required to ensure that their imported items are compliant with all applicable regulations (e.g. the Ecodesign Directive). Importing non-compliant LED lighting is illegal, and may result in a forced recall, or a refused entry by the customs authorities. But how is this related to Chinese LED wholesalers? I’ll explain.
Most Chinese LED lighting suppliers trade items made for the domestic Chinese market. As ensuring compliance with strict western regulations comes at a cost, LED products made for the Chinese market are not compliant with US, EU and Australian regulations, and therefore not legal import and sell. Ensuring compliance with the applicable regulations is not the responsibility of the Chinese supplier. It’s the sole responsibility of the importer.
Important factors when selecting an LED manufacturer
All LED manufacturers in China are not created equal. There are thousands of suppliers, ranging from small traders operating out of street stalls, to large manufacturers turning out tens of thousands of units on a daily basis . Most suppliers are somewhere in between, with a majority being closer to the lower end of the spectrum.
But as you sit in your home or office, browsing suppliers on Alibaba.com, it’s not all that easy to determine which are reliable LED manufacturers, and which are minor traders. The type of supplier you choose is critical. Selecting the wrong one could spell disaster for your business. Keep reading, and I’ll explain what you must look for when making a supplier selection.
1. Compliance with US, EU and Australian electronics regulations
As mentioned earlier in this article, ensuring that the items are compliant with all applicable electrical safety regulations and/or standards (e.g. UL STANDARD) is critical. However, it’s certainly not safe to assume that all manufacturers are compliant, even though the compliance rate is much higher compared to wholesalers.
Most Chinese LED manufacturers are not able, or willing, to manufacture LED products in compliance with foreign standards. Thus, confirming that the suppliers have a previous compliance track record is critical when importing LED lighting from China.
But compliance is not black and white. Even if a supplier has a strong compliance track record, you cannot assume that all their products are compliant by default. Most suppliers cannot show compliance documents (e.g. a Certificate of Conformity) for more than a fraction of the models they have on offer. Thus, you must not only verify the supplier’s previous compliance documentation, but also verify which products are compliant.
This is, however, assuming that you already know which regulations and/or standards apply. If not, you better get help from a professional to confirm all applicable regulations and standards that apply in your country.
2. Quality Management System
Manufacturing is not a science. Considering that even multinationals like Toyota run into serious quality issues, you can be safe to assume that Chinese suppliers are no better. It’s rather the opposite, to be honest. When buying from China, quality issues are certain to appear to a various degree. The question is whether the number of defective units is limited to a small fraction of the order, or large enough to ruin the entire batch. In most cases, the defect rate is somewhere in between.
This is also where a Quality Management System (QMS) is relevant. The purpose of a QMS (e.g. ISO 9001:2008) is to monitor the quality of the products throughout the various production phases. Generally, this includes, but may not be limited to the following:
- Incoming materials and component inspection (e.g. test LED chips)
- During production testing (e.g. functional testing and separation of defective units)
- Post production testing (e.g. ageing testing)
Most Chinese LED manufacturers are not certified according to any QMS whatsoever. While a supplier can still implement a QMS without being formally certified, I have found that to be very rare (even though basic quality checks may be present). QMS application is critical in electronics manufacturing as defects are not visible by the naked eye. Without a QMS, defects can easily multiply and ruin an entire batch of product. This is why, I consider the QMS as the 2nd most important factor when selecting an LED manufacturer in China.
Chinese LED manufacturers make up the outer layer of the industry. They are not component makers. Instead, they purchase components from both domestic and foreign LED component suppliers, such as CREE, Nichia LED and Silan LED.
Depending on the usage, your quality requirements and pricing range, you need to decide which LED components (e.g. chips) to look for before you set out contacting manufacturers. While some suppliers mainly use high quality components from Japan, others are exclusively using domestic components.
4. Company size
Size matters in manufacturing, especially in the Chinese electronics industry. At the lower end of the spectrum, there are the traders. Some of which are trading in their own living room, or a small street shop. After reading this article, you know a whole lot more about LED products than these guys do. In other words, they have no clue about American or European product regulations and quality management systems.
What you need is an organized manufacturer, with a previous compliance history and an implemented QMS. These factors very often correspond with the suppliers scale of operations. Medium to large size manufacturers are more often reliable, compared to the smaller ones.
There are two ways to estimate a Chinese manufacturers scale of operations. You can jump on a plane and check out their production facilities yourself. Another option is to look at the suppliers registered capital, which is specified on the supplier’s business license, a document possessed by all legally registered companies in China. A low registered capital (e.g. less than RMB 5,000,000) indicates that the supplier is a small operation, or even a trader.
5. Minimum Order Quantity
Last, and least, the Minimum Order Quantity. There’s a reason I put this at the very bottom of the list. Many importers make the LED supplier selection largely based on their MOQ requirement. This is only reasonable, if the supplier match the other 4 requirements set out in this guide. A low MOQ requirement is completely irrelevant if the supplier is not able to manufacture LED products in compliance with all applicable regulations in your country, and implements a QMS.
That said, there are suppliers that are indeed matching these requirements, and still offer a slightly lower MOQ. But don’t expect them to go lower than 100 to 200 pcs per model.
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