Minimum Order Quantity (MOQ) – Why It’s Required by Chinese Suppliers

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The Minimum Order Quantity (MOQ) requirement specifies the lowest quantity of a certain product that a supplier is willing to sell. If the importer cannot reach the MOQ requirement, then the supplier is not willing to enter production.

Supplier in China, and other low cost manufacturing countries, tend to have fairly high quantity requirements. In this post I explain why so is the case and what you can do about it.

1. Low profit margins demands larger volumes

Most Chinese manufacturers tend to operate on razor thin profit margins. Often as low as 3 to 4%. Low profit margins require the supplier to produce a large quantity of products in order to break even.

2. Your suppliers MOQ requirement is a reflection of the MOQ set by their components and materials subcontractors

The manufacturer is not always to blame for high Minimum order quantity requirements. Chinese suppliers tend to keep a minimum stock of materials and components.

As such, they must buy materials and parts from subcontractors, on an order to order basis. This in turn requires that the factory can satisfy the MOQ of the subcontractor.

This also explains why different items, and different materials (or even colors of the same material) has different MOQs.

With some effort, it is possible to work out how the MOQ can be lowered, by identifying which materials and components the supplier keeps in stock, or can buy in lower minimum order volumes.

There are, however, certain limitations to this approach. For example, materials that are compliant with REACH, or other chemical regulations, must be procured in a larger volume.

As product compliance is not optional, going around the MOQ requirement using ‘standardized materials’ may not always work.


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3. Chinese suppliers often don’t keep stock. They ‘make to order’.

It would be really easy for a factory to sell low volumes, if they only kept ready made units in stock. However, they rarely do. At least not when it comes to products that are ‘export ready’.

Indeed, you can go on Taobao.com and find tens of thousands of suppliers, all with ready made goods.

But, off shelf products in China are manufactured for the domestic market. That is a problem, as such products are, for obvious reasons, not manufactured in compliance with overseas (i.e., US or EU) product labeling requirements and safety standards.

For example, all products in the United States must carry a country of origin label (i.e., Made in China), in English. While some off shelf products may be compliant, you will need to look long and hard for them.

So, let’s get back to the question. Off shelf goods can be purchased in small volumes, the problem is just that you cannot buy such products – and as a result, you are back to “make to order” which means you must meet the suppliers MOQ.

4. Manufacturers often have more than just one MOQ requirement

Many factories present a single MOQ, for all products. However, that is rarely the case.

Let’s take the textiles industry for example. An Apparel manufacturers MOQ often looks like this:

  • Per unit: 1000 pcs
  • Per standard material: 500 pcs
  • Per custom material: 1000 pcs
  • Per standard color: 250 pcs
  • Per custom color (i.e., RAL or Pantone): 500 pcs
  • Per size: 250 pcs

As you can see above, standard materials and colors (i.e., those with higher turnover) are sold with a lower MOQ. The more you customize a product, the higher the Minimum order quantity requirement goes.

You can make this to work in your favour, if you can manage to get this information from your supplier.

In the example above, you must buy 1000 pcs. If you buy a T-shirt in a standard material, in a standard color – you can get 4 different products (SKUs).

On the other hand, a custom material, would only get you one SKU, as the MOQ requirement is the same as for the “per order” MOQ.

This explains why suppliers tend to have higher MOQ requirements for products, while prints and other modifications can be offered with lower MOQs. The same often goes for cutting and other procedures that can be managed by the supplier.

MOQ

5. How you can lower the MOQ requirement

You can negotiate a lower Minimum order quantity requirement from your supplier. Yet, as mentioned in this article, the supplier often has very limited room for reducing the MOQ.

In fact, they may not be able to offer you a lower MOQ than they already do. At least not without taking a loss, or being forced to themselves take a bigger risk by buying more materials and components than are actually used for your order.

Some suppliers may consider offering buyers a lower MOQ, in return for a higher price. But, working out the suppliers quantity requirement structure is often far more efficient.

By doing so, you can design your product, and use materials and parts, that the supplier is able to procure in lower volumes.

You can also work with your supplier to find out how

6. Case Study: Bathroom Carpets

A few years ago, a client arrived in Shanghai to visit manufacturers of bathroom carpets. This client owned two stores in Europe. Big enough to match the suppliers Minimum order quantity, but not for more than one or two products.

That’s a problem, because stocking up 1000 pcs of blue rugs, and another 1000 pcs of the green ones, is not viable for a small business operating two shops.

Hence, the client’s objective was to find out how they could create additional SKUs (i.e., more colors and shapes), while satisfying the manufacturer’s Minimum order quantity.

As said, this can only be done if you find out the suppliers MOQ structure. Luckily, we did, and the result was as following:

  • Per Material: 1000 pcs
  • Per Color: 250 pcs
  • Per Size: 50 pcs

What we found here was that the MOQ was controlled by a subcontractor. The textiles manufacturer.

However, they had more flexibility when it came to the color. Hence, we solved one major issue.

But, an ever bigger deal was the discovery of the suppliers own MOQ per cutting, which was set at 50 pcs.

That makes a lot of sense, as the supplier can control the MOQ per size by itself. Cutting is a simple process, that doesn’t require a huge quantity, per variation.

Hence, the client was able to buy rugs in 4 different colors. Each in 5 different shapes. That’s up to 20 SKUs.

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    22 Responses to “Minimum Order Quantity (MOQ) – Why It’s Required by Chinese Suppliers”

    1. Vania Regina April 5, 2014 at 11:42 pm #

      Dear Fredrik,

      Congratulations for your website.

      I’m looking for a sewing factory in China to produce my models clothes. You let me know the minimum quantity required and could direct me to a factory sewing reliably, please

      Vânia Regina
      Brazil – Minas Gerais
      vresouza@hotmail.com

      • Fredrik Grönkvist April 6, 2014 at 5:48 pm #

        Hello Vanla,

        Most clothing manufacturers has an MOQ of 300 – 500 pcs per product, depending on the type of clothing. However, there are certain areas where the MOQ requirement is lower, for example wedding dresses and shirts. Probably because there’s a large number of small tailors offering these products to businesses and individual customers.

    2. Davidson October 12, 2014 at 4:50 pm #

      Hello

      Thank you for providing such valuable information. I am planning to import home and kitchen items for distribution on Amazon. I am well capitalized to purchase inventory but I don’t want to start off purchasing high MOQs for products that might not move. I have read on other websites that you can negotiate a trial order at 10% of MOQ for a sample. Do you suggest this approach or do you think it will lead to an inevitable sacrifice in quality? I plan to purchase your Starting Package for my initial order.

      Thanks

      • Fredrik Grönkvist October 12, 2014 at 7:16 pm #

        Hello,

        Yes, the issue you may face is that the supplier is unable to provide materials and components, compliant with US regulations. This is because most Chinese manufacturers keep a very small stock of materials and components. They must purchase materials and components from subcontractors. This is also the main reason there is an MOQ requirement to begin with.

      • Amanda February 2, 2016 at 9:30 am #

        Hello Davidson,

        Have you find suitable supplier in China?
        This is Amanda from China,we are garment manufacturer,
        and we also do some purchasing for our clients.
        If you need any help just contact with me by amandacostumes (at)hotmail.com

    3. Davidson October 16, 2014 at 3:17 am #

      Thank very much. Following your article, what are some examples of products not regulated in the US?

      • Fredrik Grönkvist October 16, 2014 at 5:14 pm #

        Hello Davidson,

        There are regulations that apply to all products, depending on various factors (e.g. smell, toxins etc). Thus it’s hard to list products that are completely regulated. Take the E-cigarette for example. So far, it’s not regulated by the FDA, but that is not saying no regulations apply at all. Most products are not regulated by a specific standard or legal act, but most, if not all, are regulated indirectly.

    4. Ivan October 28, 2015 at 7:15 pm #

      Hi Fredrik
      Thank you for the article. It was informative.
      However I have a question on a price. Do the chinese suppliers are negociable on their price? And how low they can reduce it? Because I am trying to get with some suppliers, and it seems to me that they can not propose to me as low price as I can get in Turkey. By this I am talking about bedclothes textile. Or maybe the problem is that I am reaching only the intermediaries and not directly the producers? (I am only using the Alibaba to find the suppliers)
      Best regards

      • Eric December 31, 2015 at 3:18 pm #

        Hi Fredrik, please contact me on ergincar(at)hotmail.com. I am from Turkey and I may help u out. Regards. Eric

    5. Alex May 13, 2016 at 2:27 pm #

      hello…I wonder about adult toys.. I visited some wholesale and suppliers webpages and saw some of their prices which seem to be low, this granting some good margin. I intend to set up a start up business here in Romania by importing small quantities. Is something I should know about it? Should I trust? There are some tricks good to know or maybe blacklisted areas/suppliers? What I should keep account and be aware if I try this? Is this advisable? One of my intentions is to ask full branded products (customized boxes, translated instructions, and embossed seal/logo into material). Should I trust? Should I try? Is this a good idea (to import this kind of stuff from china?). Are there any quality problems that you ever heard of?

    6. Ronaldo Tampipi December 28, 2016 at 6:37 am #

      Thanks for this Blog,

      I’d like to ask how can I lower my MOQ if my purchase quantity is specific for 1 unit only given that my supplier is foreign.

      I hope you could help

    7. Zlatko January 18, 2017 at 2:10 pm #

      Hello. I am from Macedonia, and looking for factories that produce furniture fabric, textile and synthetic leather. Can you help me find some factories the require a lower MOQ since i want to start importing these fabrics on lower quantity but with bigger choice of colors and textures?

      Thanks in advance.
      Zlatko.

      • ChinaImportal January 23, 2017 at 2:53 am #

        Hello Zlatko,

        We will contact you by email later today

    8. Manuel Cuello January 29, 2017 at 9:36 pm #

      I want to consult for a purchase from China to send to Argentina, Technology industry. My query is the following, what are the requirements of the customs for this type of product? Are there limits? Thank you very much for the information.

    9. Tinera Mccoy February 14, 2017 at 9:29 am #

      Hello I’m trying to order weight loss supplements from China what are the regulations and steps, thank you

      • ChinaImportal February 18, 2017 at 7:06 am #

        Hi Tinera,

        You need to pay a consultant to get that information. I suggest you submit an enquiry on compliancegate.com

    10. Renault May 16, 2017 at 8:18 am #

      Thank you for the information but is it really true ‘Chinese suppliers often don’t keep stock. They ‘make to order’? As they supplying a large number of products to many of the countries. So quick they are!

      • ChinaImportal May 21, 2017 at 3:28 pm #

        Hi Renault,

        Yes, factories produce on an “order to order” basis

        It is rare that they keep stock

    11. louisa March 27, 2018 at 8:23 pm #

      Hi Fredrik,

      I´m looking for a supplier that make photo albums. I´m only interested of buying the book (clean). I would like to be able to print my own photos in it so, that´s why I only need a supplier that offers plain books in canvas. Do you have any good contacts or know anything about this?
      Thanks in advance.
      / Louisa

    12. Chukwudi July 26, 2018 at 10:55 pm #

      Nice info
      Quite enlighten ,this has been an issue for some importers.
      Thanks for sharing

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