Find Chinese Suppliers
There is an abundance of information on the Internet that will allow you to find the Supplier to produce the product you require.
The following websites can be used for locating a Supplier:
- www.yahoo.com.cn (Chinese language)
At ChinaDirect Sourcing, we currently have more than 30,000 Suppliers registered in our company database. However, we also search beyond our database by using local Chinese phone directories and trade directories, and Western and Chinese search engines and websites.
Search engines rankings often display sites with high traffic and long history on the first page, so it’s worth checking which companies come up on page one. That said some good factories we’ve found don’t have a website. It certainly helps to know the Chinese language to find the right information and is why we’ve included the Chinese language search engine, www.yahoo.com.cn above.
As they say: “In China, nothing is impossible but nothing is easy either”.
Learning from various challenges and pitfalls paves the way toward successful sourcing. The main difficulties relate to identifying Suppliers, sorting the good ones from the others and finally, ensuring that selected Suppliers remain as good as they appeared to be when the initial contract was made.
The mere task of identifying Suppliers is not as easy as it would seem to be. Everything changes at high speed in China; this is why Supplier directories you might find often do not cover the most interesting companies. The most informative directories, online or offline, are in Chinese.
Later in this chapter, we will clarify the selection process for Suppliers.
Send Request for Quote to Potential Suppliers
Once you have identified several potential Suppliers who can produce the products that you want and complete the Request for Quote document, it is then time to make contact with them.
In any given project, we usually contact more than sixty Suppliers within China and send the Documents to them for Request for Quote.
In order to get the best results in your tendering process, it is best that you contact a minimum of 10 Suppliers to cover the range. It is wise for you to try different provinces within China and in different categories. Chinese Suppliers sometimes accidentally misplace themselves into incorrect categories, meaning the Suppliers in the category may not be the ideal factory for your needs.
It can become time-consuming to contact this number of Suppliers, however, this first stage is critical for you to find and select the best Supplier. The work will be well worth it in the end, reducing your set-backs and increasing the chances of success.
A related pitfall is that many searches for Suppliers fail because the initial sample of potential Suppliers was too small. In many segments, only 5% to 15% of all existing Suppliers will fully comply with Western standards. Many will have a good enough product but would fail in processes management or reliability. If you start with a small initial sample of Suppliers, the chance of ending up with lower-end Supplier is high.
Obtain Quotes and Evaluate Offers
By this stage of the process, you will have now have received from four to six quotes from a range of Suppliers, and you can start to evaluate their offers.
The best way to summarize all the tenders is to prepare three reports.
The First Report is the Supplier Summary Report, which will give full details of the Suppliers who are interested in your project, including their contact details and website. This is so you can quickly reference their website to see what other products they have available for production.
The template is like the following:
Supplier Summary Report
|No.||Factory Name||Contact Person||Mobile||Phone||Fax||Address||Remark|
The Second Report is Quote Comparison. This is a comparative market report, which is a snapshot of the pricing in China. This is a very powerful tool because through this comparison you will have access to substantial Chinese market knowledge.
In particular, you will have a guide as to what a fair market price is.
The Chinese Suppliers strategy is generally to quote low initially and then have price increases. Having full market knowledge allows you to negotiate a fair price.
There are usually three levels of pricing in China:
- International price
- Good international price, and
- Local price.
This report gives you power, not only initially, but also for down the track when the Supplier inevitably tries it on for a price increase. Suppliers can and will get online and research the type of margin that you are going to make on the product, so they not afraid to go for price increases when they are negotiating with you.
With this report, you will know who else is in the market, and you can use this as leverage in any negotiations with Suppliers.
The Third Report is the Landed Cost Analysis.
The Landed Cost Analysis demonstrates what the product will cost you, after you have factored in all of the on-costs – such as freight, Customs, wharf charges and other relevant investment in this sourcing process.
This report gives you the ability to determine your profit margins, set your prices, approach potential customers to get their interest, complete a sales forecast, and complete the budgeting for the project.
In the Landed Cost Analysis, you will need to give consideration to the following variables:
- The USD Exchange Rate
- Customs Duty
- Customs GST
- Import Adviser Management Fee (if applicable)
- Other costs will be fixed, no matter the quantity or cost of the goods that you are ordering. Keep in mind that when you import from China, these minimum costs will be incurred.
These costs are things such as:
- Port Service Charge
- Terminal handling charge
- LOLO – Lift On Lift Off
- Carrier Documentation
- Port Security
- CMR Fee
- Sea Cargo Automation
- Delivery Order
- Customs’ Clearance Fee
- Fuel Levy
In the below Landed Cost Calculation, I have bundled these into the Clearing Agent Charges.
Import From China (eBook):
How to Make a Million… And Not Get Burnt!
This comprehensive step-by-step manual by award-winning international businesswoman, Lindy Chen is THE tool that will get your business where you want it to be by importing goods from China.
- Discover the types of products you can import
- End-to-End Process of Importing
- Get to know the manufacturing specialties across all of China’s regions
- Separate Fact from Fiction