How to find the right supplier or manufacturer in China
One of the most important steps when setting up your e-commerce business is finding the right supplier. And with the sheer size and volume of manufacturing plants in China, it makes sense that this would be one of your first avenues.
So if you’re wondering how to find a manufacturer in China, read on.
How to find a manufacturer in China
Finding a manufacturer or sourcing a supplier in China is a little more involved than looking for one locally.
Thanks to the booming e-commerce industry there are now plenty of online directories out there where you can search for manufacturers or suppliers in your desired industry. You can find profiles for manufacturers, distributors, and wholesalers, and see reviews to make sure they’re right for you.
Some of the most popular international directories include:
Oberlo is a Shopify-recommended integration that allows you to search for a manufacturing or wholesale partner.
Alibaba is one of the world’s biggest online marketplaces for merchants.
Aliexpress an offshoot of Alibaba, and aimed more at B2C customers - but you’re still able to contact the manufacturers directly.
Tradewheel.com is a popular trading platform that’s growing fast, so may be able to find a supplier who’s just starting out and get in on the ground floor with them.
One issue with an internet search is that you’re searching for an international company while in Australia, so the search results are most likely going to be Australian businesses.
When sourcing a supplier in China, you’ll need to dig a little deeper than the first page of Google. You’ll also need to use the right keywords. Search for companies with ‘wholesale’, ‘supplier’, or ‘distributor’ as a keyword.
While this method might prove fruitful, there are better ways to find the right manufacturer in China.
Referrals will always deliver reliable results. Much like a business, if a colleague recommends a supplier to you, and they’ve had good experiences with them, you’re likely to have similar experiences. This is an endorsement you can trust. So, reach out to your professional connections to collect leads to follow. Ask for recommendations.
You can also get out there and join groups on LinkedIn, Facebook, and other online communities. Use these networks to get in touch with people and businesses in your field who sell similar products, and chase them up to find out who they recommend.
Asking for referrals from colleagues or business partners will deliver better results than going down the Google rabbit hole.
Is this manufacturer legit?
Once you’ve learned how to source suppliers or manufacturers for your products, it’s important to check to make sure everything they do is above board, and that they can deliver on what they promise.
For some initial intel, you can check online reviews, such as Google or Facebook reviews. If you want to dig a little deeper, try giving them a call. Speak to a real person, quiz them about their business.
One way to determine if they’re on the level is to ask about visiting the factory. If they’ve got nothing to hide, they’ll have no problem with you taking a tour of the factory to see where your products are made. If they make excuses or refuse, then this is a big red flag that they might not be 100% legitimate.
Unfortunately, there’s no Chinese equivalent to the ACCC where you can cross-check the manufacturer to confirm whether or not they’ve had complaints filed against them. The closest you’ll get is the user-generated content on SupplierBlacklist.com. This platform allows you to log in and post reviews and complaints about suppliers, which are shared on the front page with the rest of the community.
Requesting and comparing quotes
Like onshore businesses, it’s always useful to compare quotes from your desired suppliers to find who can do you the best deal. There are a few things to consider when looking for quotes.
Check their sample price
Be sure to ask for sample pricing vs production pricing. Sample pricing is the cost to have a few sample products made first, to see the quality of the product you’re shipping. Sample pricing will vary depending on the supplier, and be aware that some manufacturers may not offer sample pricing. Alternatively, some may offer free samples.
Confirm production price
This is how much your products will actually cost when rolling them out for production. Be sure to ask for prices for several quantity sizes. Check to see if they can offer you a bulk order discount—it never hurts to ask.
Check the turnaround time, too. It’s no use partnering with a supplier who takes months to deliver.
Ask your supplier to find out the minimum order quantity available to merchants. This is a critical step; manufacturers typically create products on a mass scale, so the minimum order you’ll make is likely to be in the hundreds, if not thousands.
Confirm that the minimum order is both affordable for you, and going to deliver a solid return on investment. Minimum order quantities will vary from supplier to supplier, so find one that suits your needs.
In some cases, there may even be scope to negotiate a minimum order. To do so, find out why your product costs what it costs. Does the manufacturer prefer working with larger buyers? Is it labour-intensive to make? You might be able to negotiate a smaller production run at a higher price, but still have it fit within your budget.
Confirming your payment terms
Be mindful when diving into a discussion around payment terms. Some manufacturers require full payment upfront (which is what you’ll see mentioned regularly on SupplierBlacklist.com). If you’re a new startup, this can be a sizable outlay.
When confirming payment terms, you can send a simple email to your potential supplier to check the details. Don’t be put off if you don’t receive a response on payment terms. These manufacturers receive hundreds of emails and requests for quotes and payment terms, many of which don’t end up panning out, so some may not even respond.
To ensure you actually receive a response from your manufacturer, keep your initial email simple. Don’t give them your backstory and a three-year plan. Just say who you are, what your business does, and ask pertinent questions about the stock you're after.
Keep it short and businesslike. Only ask about a handful of pricing quantities, the minimum information you need to get your business off the ground. Also, find out what their minimum quote is first. This way you can determine if they’re actually a good fit, and you don’t turn them off by requesting a quote for a quantity that’s outside of their manufacturing guidelines.
Insurance and coverage
There are a number of insurance and liability covers available for importers and manufacturers within Australia.
Getting the right insurance protects you against loss or damage at any point in your supply chain, right from the manufacturing process, through to transport (goods in transit cover), and even once you’re distributing it to your customers.
As an e-commerce business, at a minimum you should consider:
Product liability insurance. This is particularly relevant to ensure you’re safe against any claims against your product by the end-user.
Business insurance. This protects your stock against damage or theft.
As an online business you should also consider coverage against cyber threats, which can include:
Privacy protection insurance
Breach coverage, to protect against any data breaches and recovery, and
Hacker insurance (yes, it’s a thing).
While you can look into this yourself, an insurance broker can work with you to find you the best deal and insurance cover that’s appropriate for your business.
Finding the right distribution partner for your products is critical to your business success. Your manufacturer may be able to refer you to their preferred distribution partner, otherwise, consider asking around for referrals, much like when you were looking at how to find suppliers when you started the process. A good distribution partner will allow you to leverage their networks, and get your products sent and distributed faster.
Airwallex makes working with your supplier easy
An Airwallex Global Account streamlines how you interact with your manufacturer in China.
By setting up a CNY Global Account , you’re effectively creating a bank account from which you can receive and hold funds in Chinese Yuan. You can send money to China directly, in CNY, without the need to pay any inflated conversion fees. Your suppliers can be paid directly in CNY at our interbank FX rate.
With same-day payment, you’re able to pay your manufacturers faster than a traditional bank, improving your cash flow, and strengthening the relationship between you and your supplier.
So once you’ve found the supplier that suits your needs, book a free demo today to discuss how a CNY Global Account will further benefit your business.