When you are ready to source from China, you may be confused or have no idea what to do with the process. After all, China is a huge country with different suppliers producing different products.
You need to know where to find good suppliers, how to communicate and negotiate with them, and the shipping process.
We hope that this guide will provide you with some help and guidance in your sourcing process so that you can be more confident in sourcing from China and getting quality products and services.
Why Should I Source from China?
China is well known as the “World Factory”. Most of the world’s factories are in China. Depending on the products they produce, they are also probably the best in their field.
Here are some reasons why you should consider sourcing from China:
Cost-effectiveness: Sourcing from China can greatly reduce the cost of production due to lower labor costs, which results in lower costs for raw materials, manufacturing, and other expenses.
So, sourcing from China can help businesses reduce costs and improve profitability.
Offer High-profit Margins: Chinese manufacturers sell their products at meager and affordable prices. The profit margins on the products imported from China are as high as 100-1000%.
This means you can get ten times your money back after reselling these products.
Strong Trade Relations: China has strong trade relations with many countries, making importing and exporting goods easier and reducing the risk of trade disputes.
High-Quality Products: Despite lower costs, China is known for producing high-quality products and has advanced manufacturing processes and technologies that result in products that are comparable to those manufactured elsewhere in the world.
Large and Diverse Supplier Base: China has a vast and diverse supplier base and a perfect supply chain, which means you have a wide range of options for products and materials, making it easier for you to find what you need for your business.
Convenient Shipping: With its central location, China is a hub for global shipping and has a well-established transportation infrastructure.
This makes it easier and faster to transport goods anywhere in the world.
Manufacturing Expertise: With a robust infrastructure and skilled workforce, Chinese manufacturers have a reputation for producing high-quality products at scale.
It can be especially advantageous for businesses that require large product volumes, as Chinese manufacturers can typically meet high demand levels.
Which Is the Best Way to Source from China?
There are many ways to buy from China, either online or offline, directly or through a sourcing agent. Here, we introduce you to each way to source from China so you can choose.
Direct Sourcing: You can directly source from manufacturers in China by visiting trade shows, visiting factories, or contacting suppliers directly through websites such as Alibaba.
Sourced directly allows you to have control over the entire supply chain and negotiate directly with the supplier for better prices and better product quality.
Sourcing Online: Online B2B marketplaces, such as Alibaba, Made-in-China, and Global Sources, offer a convenient way to source products from China.
These sourcing platforms allow you to search for suppliers, compare prices and products, and place orders online.
This method can be cost-effective and save time compared to traditional sourcing methods, but it is important to do your due diligence and carefully evaluate the suppliers and their products before making a purchase.
Use Sourcing Agents: A sourcing agent can ensure that the supplier fully understands the product specifications and technical aspects.
Hiring a sourcing agent or trading company can be a good option for those who are new to the Chinese market.
These agents have extensive experience and local knowledge and can help you source products, find reliable suppliers, get the best price, and handle logistics and shipping.
However, you must correctly identify a good one. The right sourcing agent can inspect the production site and have their own office in China.
What Do I Need to Consider Before Sourcing from China?
Sourcing from China can be very simple or complicated. Because of language differences, time differences, etc.
Here are some things you need to consider before sourcing from China:
Find Legitimate Suppliers: Before sourcing from China, it is important to thoroughly research the supplier and ensure they have a good reputation.
Look for customer reviews, check their website, and make sure they are able to provide the products you need in the quantities you require.
Know the Regulations: Be aware of the regulations and laws related to importing goods into your country. This includes customs duties, taxes, and any other fees that may be applicable.
It is also important to familiarize yourself with any product-specific regulations or certifications that are required for the goods you are importing.
Quality Control: It is essential to have a system in place for the quality control process when importing from China.
This may involve inspecting the goods before they are shipped, setting up a third-party inspection service, or having a representative from your company visit the supplier to ensure the quality of the products.
Payment Terms: Negotiate favorable payment terms with your supplier, such as using a letter of credit or using an escrow service to protect your payment until the goods are received and inspected.
This will help to reduce the risk of fraud and ensure that you receive the products you paid for.
How to Source from China in 8 Steps?
In most cases, sourcing from China is not an easy thing to do. It can take your business to the next level if done correctly, and it can kill it if done incorrectly.
So, you must have the right strategy and avoid common mistakes, or you may miss out on the best opportunities.
Here are the steps to help you succeed in sourcing from China:
Step 1: Identify Your Product
Determine what product you want to source from China and research the market to ensure its demand and profitability.
Step 2: Research Potential Suppliers
Search for potential suppliers using online resources such as Alibaba, Made-in-China, and Global Sources. Check the suppliers’ ratings and read customer reviews to verify their reliability.
Step 3: Contact Suppliers
Contact the suppliers that you have shortlisted and introduce your company and product requirements. Negotiate with them on the price, quality, and other terms.
Step 4: Evaluate Suppliers
Evaluating suppliers helps to ensure that they meet the required standards for product and service quality.
This can help to avoid potential quality issues and ensure that your business receives high-quality goods and services.
So, if possible, visit the supplier’s factory to assess their production capability and to ensure they have the necessary certifications, such as ISO 9001.
Step 5: Negotiate and Finalize the Contract
After visiting the supplier, negotiate the final terms and conditions of the contract, including the price, payment terms, delivery time, and quality assurance.
Step 6: Place a Trial order
Place a small trial order to test the supplier’s quality and reliability. This will give you a chance to identify any potential issues before placing a larger order.
Step 7: Manage Logistics
Arrange for the shipment of the goods and handle all necessary customs and import procedures. Consider hiring a freight forwarder to assist with the logistics if necessary.
Step 8: Build a Long-term Relationship
After the shipment is received, inspect the goods to ensure they meet your quality standards. Maintain regular communication with the supplier to build a long-term business relationship and ensure future orders go smoothly.
9 Tips for Sourcing from China
There are many works and things to consider when sourcing from China. Here are some tips for you to consider:
1. Dealing with the Right Supplier
Dealing with Chinese companies in the domestic market requires an understanding of the cultural, business, and legal practices in China.
Building relationships with key decision-makers and maintaining open communication are important for success.
Researching the company’s background, and market position and understanding the specific needs of the customer can help establish trust and credibility.
Familiarizing yourself with the laws and regulations, especially those related to intellectual property, can help ensure that both parties are protected in their business dealings.
Additionally, having a local presence through a representative or partner can also be beneficial in navigating the complexities of the Chinese domestic market.
2. Know the Type of Supplier
There are 3 types of suppliers that source from China, manufacturers, wholesalers, and trading companies. It is crucial to know which type is right for your business.
You can hire a sourcing agent to work with your Chinese suppliers/Chinese companies.
They are in a much better position to source products, logistics, and shipping in the domestic Chinese market.
3. Plan Ahead
When sourcing products from China, time is an important consideration. Any of the above mistakes can cause massive delays and disruptions in the logistics chain.
We recommend you start organizing your imports at least 3 months in advance. Transaction times can vary greatly depending on the port and destination you are importing from China.
4. Get Everything in Writing
Insist on written documentation for all agreements and transactions, including contracts, purchase orders, and invoices.
5. Confidence in Negotiation
As we have mentioned, you can negotiate with the Chinese seller.
To be successful in the negotiations and to reach a deal that meets the needs of your business, you must enter with a professional attitude, confidence, and reasonable demands.
Remember that the seller may not accept your first offer, so there may be some back and forth. It will help if you set a price that makes sense for your business.
6. Order Samples
Many suppliers have minimum order quantities (MOQ). However, they know that you may want to see the product in person before buying thousands of products.
Ordering product sample is essential. A physical product can help you determine if it’s right for your business and if you want to invest in mass production.
7. Avoid Illegal Money Transfers
You must choose a legal, secure, and reliable payment method. If you are using an e-commerce site, check Alibaba Trade Assurance.
The key to sending money to China is to follow these golden rules:
Never send money to a personal account. Always ask for the details of the business account of the company you are dealing with. If the other party cannot provide them, do not do business with them.
Draw up a strong agreement. Ideally, before you make any payments to a potential supplier, you must draft strong payment terms in the agreement you sign with them to ensure your benefits.
8. Do Quality Control Checks
While having a good manufacturing agreement is a great way to start your relationship with your supplier, regular quality control checks are necessary to ensure that your products’ quality meets your standards.
Studies have shown that problems found later in the production process are always more expensive than problems found earlier in the process.
9. Use a Professional Freight Forwarder
Finally, look for a professional freight forwarder to deliver your goods safely and efficiently.
Again, you must check the company’s credentials, experience, and work history. It would be best if you understood the basics of the industry to decide who is better to hire.
Remember to keep an eye out for companies with incomplete information, those that claim to do the job quickly, or those that charge meager fees. They are likely to be scammers.
What Are the Online Ways to Source from China?
Today, one of the best options is to source your products online. Here are 5 online ways to source from China, and I will describe the pros and cons of each.
Alibaba is one of the largest B2B e-commerce platforms in China, offering a global range of goods and suppliers.
The platform has a large selection of suppliers, ranging from small family businesses to large manufacturers, offering a variety of price points and product types.
However, suppliers vary in quality and reputation and need to be carefully screened.
- Offers a wide selection of products
- Offers global logistics services
- Competitive pricing
- Inconsistent supplier reputation and quality
- Needs to be screened
Global Sources is a B2B e-commerce platform focused on providing high-quality suppliers and products to international buyers.
The platform has reliable suppliers that offer personalized service and global logistics.
However, as the platform focuses on high-quality suppliers, the number of suppliers and product range is relatively small.
- Provide high-quality suppliers and products
- Provide global logistics services
- Provide personalized service
- Relatively small product range
- Smaller number of suppliers
Made-in-China is a leading B2B e-commerce platform that offers a wide range of product categories and supplier options.
The platform’s suppliers range from small factories to large corporations and can offer a full range of customized services and competitive pricing.
However, the platform also requires supplier screening to avoid unscrupulous suppliers.
- A large number of suppliers
- Offers a comprehensive range of product categories
- Provides a one-stop sourcing service
- Higher prices
- Need to choose suppliers carefully
DHgate is one of China’s leading cross-border B2B e-commerce platforms, offering a large selection of made-in-China goods that support small-volume purchasing and affordable prices.
However, suppliers of inconsistent quality are also present on the platform.
- Offers a large selection of made-in-China goods
- Supports small-volume purchases
- Offers affordable goods
- Inconsistent quality of suppliers
- Need to pay attention to supplier reputation
1688 is a China-focused domestic sourcing site (owned by Alibaba) that has garnered more interest from Amazon FBA sellers.
Studies have shown it to be the cheapest platform in China, but I wouldn’t recommend 1688, especially for beginners.
- A large number of suppliers
- Affordable prices
- Geared toward the local Chinese market
- Requires familiarity with the Chinese language
- Most suppliers only accept payment by domestic bank transfer
Should I Hire an Agent to Source from China?
Hiring a China sourcing agent is a smart choice for businesses looking to source products from China. Sourcing agents are sourcing service providers.
There are several reasons why this is the case, particularly when it comes to finding the best price and receiving comprehensive China sourcing reports.
Finding a good sourcing agent is simply like putting logistics, warehouse issues, production, quality issues, and sourcing in someone else’s hands. It frees up a lot of time you can use to grow your business.
This is a huge benefit. You no longer have to worry about your products having the wrong color or scratches everywhere. The best agent will immediately understand your customers needs.
This is why I often recommend that you find an experienced China sourcing agent that understands the needs of your US/European customers because Chinese and Western customers interpret the word “quality” quite differently.
Source from China FAQ
1. Why Are Products Sourced from China Less Expensive?
Many Chinese factories have access to cheap labor and do not have to focus on finding skilled labor. In addition, they use the most efficient industrial chain to distribute their products worldwide.
These two factors cut the price of products. As a result, sourcing from China has become more cost-effective.
2. Is Sourcing from China a Profitable Business?
Of course, yes! But it depends on your product type and how you source it. You can source good quality products from China and get the best prices.
Some popular product categories include electronics, clothing, and baby products.
3. What Quantity Do I need to Source from China?
It depends on the factory and the product. Again, as a general rule, about 1000 pieces is the normal minimum order quantity (MOQ).
However, this is not always the case and you can ask the sourcing agent to negotiate through their existing relationship with the factory.
4. What Payment Methods Do Chinese Suppliers Prefer?
Chinese suppliers prefer 100% prepayment by bank transfer and are very happy if you do not need to use a contract or PO.
Some buyers are crazy to choose to do business this way, and if something goes wrong, they have no leverage.
Source from China Conclusion
Sourcing from China can be a challenge. You must ensure a stable manufacturing process if you directly deal with suppliers.
Product prices can increase due to production stoppages, higher transportation rates, unplanned shortages, or unforeseen disruptions.
So, the best option to start sourcing from China is to hire a sourcing agent. Leave your comment if you need to source products from China or contact us directly.
Yansourcing is a team of professional China sourcing agents helping Western clients produce and source products from low-cost regions since 2010.