How to Manufacture a Product in China? – Supplyia

Dec 02, 2022 Chapter 2. Supplier

There is no magic formula to manufacture a product in China. There is a way to do this, but it’s not an easy and straightforward way.

Following the right process will most likely take you from “no supplier” to “right supplier”. It would be best if you did your homework, provided the right information, and collected the right data simultaneously. Next, you will know how to get a product manufactured in China.



How to Manufacture a Product in China



Know Before Get a Prototype Made in China.


Following next points, you and potential Chinese suppliers will be in a good position to have a productive relationship.


  • Provide Clear Quality Standards to Suppliers

It’s your job as the buyer. What matters to you (e.g., correct type of finish, very precise dimensions…) is not what other importers need (e.g., the exact color of the logo).

If you articulate this early in the process, and they know it before starting the sampling effort, you improve the odds of getting what you want.


  • Understand the Supplier’s Current Customer Base

Especially the number one customer, if you can get that information (usually it will be clearer after a factory tour). Because it shows that they have been pursuing and optimizing the standards of their organization, even if you pay them handsomely, they probably won’t be able to improve their game significantly.


  • Explore What Quality Systems, Process Controls, etc. They Have

Suppose a factory is disorganized and only does end-of-line inspections without trying to put in place systems to prevent these problems. In that case, it will struggle to deliver high-quality products consistently.


  • Understand How Price Affects the Quality

The lower the price, the less profit the supplier makes, and the less willing he is to go the extra mile to provide you with the perfect product.

Also, in most Chinese (manufacturers, traders, judges…), a buyer paying a particularly low price should not expect high quality, even if it is clearly stated. In their view, this is common sense and basic fairness.


  • Demonstrate Stable Potential Business

Likewise, if a supplier sees a clear benefit, they will invest more time and effort. Influenced by the following factors:


Buy-side communication vision – I’ve seen some suppliers work really hard on a project right after an hour-long meeting with a prospect (obviously a good salesperson).

External sources of trust – you raised $300k on Kickstarter and Indiegogo, you were assigned by 3 famous supermarket chains, you sold to GE, all of which helped.

Experience – If they think you’ve been doing this type of work for years and you know the game well, they’ll think you know how to bring in a lot of orders. A contract can make you look more legitimate.

Business convenience – they should find it easy to communicate with you. They don’t want to suffer very expensive chargebacks, etc. In this case, if the contract is too favorable for the buyer, it will take them out of a lot of motivation.





How to Manufacture a Product in China?

So, for manufacturing a new product in China, you generally consider what issues and steps to follow or managing the production process?

First of all, one of the most frequently asked questions by foreign sellers is: “Are you a factory?”

Secondly, the next question they are most concerned about is: “How much does it cost?”

Then you will calculate the specific manufacturing costs from multiple suppliers. Here are some of the steps you can follow to have a product manufactured in China:



1. Find the Right Suppliers



When you start to get a product manufactured in China, you know find some Chinese manufacturers first.

After you contact with some suppliers, you will wonder if you have found a perfect factory? 

“Why did one factory quote $3, while another factory quoted $6?”

There are differences in the quotations of Chinese factories, and the main reasons may be attributed to the following 4 reasons:

  1. There is another cooperative factory behind the supplier
  2. Chinese suppliers think that you don’t know exactly how much you should pay
  3. The factory usually does not produce this product
  4. The quality of the products they have is much lower than the standard level


Once sellers get quotations from Chinese factories, you may need to know why the prices differ between different manufacturers.



2. Check the Supplier Background


  •  Ask For References

Although many good factories will not disclose who they have worked with, if sellers can understand most of the factory’s customer companies’ geographic location, they will have a good understanding of this factory’s quality standards. Because most factories’ products are sold in the United States or Europe, their quality is generally higher than those sold in Asia or Africa.


  • Verify the Business License

Although you may not understand Chinese, you can find someone who understands Chinese to verify and check the Administration for Industry and Commerce of each province in China to see if the company is registered there.



3. Negotiate the MOQ

Most factories want to produce more products because large orders can bring them more profits. However, if factories trust your brands enough, they are usually willing to start with a lower MOQ.


Provide Enough Order Quantity

This is important for the following reasons:

Large factories (often more consistent quality) reject small orders. Small orders aren’t worth doing much engineering upfront, so typical Chinese factories tend to jump right into production, let problems arise, and (hopefully) find and fix them. This is inherently risky.

In many cases, low-volume work tends to be done in a more manual way and with less consistent quality.

All of these are compounded if you have a supplier that makes a different product than they already make. This should affect the type of suppliers you work with. 



4. Discuss the Payment Method

Most factories’ payment method is 30% before production and the remaining 70% before shipment. In other words, before you actually receive your product, you need to pay 100% of your product.

To better control the product’s quality before shipment, you may visit the factory by yourself or send a quality control team. For large orders, wise foreign sellers usually hire a quality inspection company to inspect before paying 70% of the balance.

After knowing what questions to ask Chinese factories, you still need to learn how to manage production processes.


Note: Test your potential supplier by asking them about money matters to see if you are on the same page. When it comes to money, you will easily tell if your supplier is legit. A good way of testing the supplier is by telling them that your agent will pick the goods and pay on delivery. If the supplier refuses, then he is probably a scammer.

If you are doing wireless transactions, beware of fraudulent suppliers. The common best way to pay Chinese suppliers is through Alibaba trade insurance, TT, or western union.



5. Carry Out a Factory Audit

Pretend to be checking the manufacturers’ audit reports and check his behavior or reaction. If you see him getting all tense, he has a lot to hide, and he is a suspicious dealer. That’s how you verify Chinese manufacturers easily.

You can mention to the Chinese manufacturer that you will conduct an audit before buying their products through an email address. If the supplier gives you lame excuses, you should take it as a red flag. The best tool to verify a supplier’s legitimacy is through a factory audit.



6. Request A Sample


  • Confirm How Long on Average Can the Samples be Made

Most people think that it takes several weeks to make a sample. In fact, for simple apparel products like shirts or hats, samples can be completed in less than a week. Depending on the type of product produced, the sample production time will vary greatly.


  • Ask for Sample

Whenever you are sourcing for products, especially from online Chinese manufacturers, ensure that you have seen a sample before buying. Many disappointments come after sourcing for suppliers, and they deliver poor quality goods.

For instance, when you buy clothes in bulk, you need to ask for a sample because the fabric of a garment posted online may have a different color or texture when you physically see the fabric.

Quality differs; hence, to be sure of the brand you need and your supplier’s one, you have to ensure that they are matching. Quality matters a lot as long as you are in the supply and distribution business. You have to see whether products conform to specifications before making a purchase.

When you notice that a product doesn’t conform to quality expectations, you will source your products somewhere else.  A serious manufacturer will not have issues with providing you with the sample.



7. Explain Product Details 

Generally speaking, sellers know the specific specifications of the products they want to produce, including colors, materials, and logos. When they start discussing with the factory, they can discover the richness of product choices.

For example, you may want to customize the crown’s logo to the entire dial for a watch. Suppose you know the details of the design you want. This can save a lot of time and cost for the factory, including you, because the factory does not want to produce multiple samples because you forget the design details.



8. Follow Up the Production

Once the seller confirms the sample, the next step is the production process. Even if the factory does not spend too much time on sample production, the formal production will also take a lot of time. In order not to fall behind in the production process, you need to be aware of the following two points:


1. The Cooperative Factory Has its Own Supply Chain. Each part of the product produced by the buyer may come from a different factory. For example, for shoes, the laces and soles may come from other factories; for bracelets, the raw materials and gems may come from other factories. 


2. You Are Not the Only Customer of the Factory and May Not be The Most Important Customer. To stay ahead in production, you need to keep in touch with factories and build relationships with them. You need to deal with the sales representatives and start to pay attention to things other than production.

In the next step, You generally ask the factory to send photos to update the production progress. You want to know the schedule for the factory to produce each part.





Make Contractual Supply Agreement with Chinese Manufacturer


manufacturing contract in China


When manufacture a product in China, you must be cautious about several tips to enter a legal, contractual agreement.

You may end up in serious trouble in case there are any contractual breaches. Business law has severe repercussions when compared to other types of law. You need to follow several tips when sign contract in China.

How to create a valid Chinese manufacture contract. The tips are:


1. Ensure that You Entered in a Contractual Agreement with the Right Party

Before signing any business contract, you should read it carefully. Check all the financial requirements and resources in the contract because these are the things that may land you in serious trouble.

It would be best if you contracted with a company with sufficient financial resources when things go south. Many vendors overlook this factor because they contract through third-party firms that are unaffiliated by actual CMs.

In case defects are found in the goods, the vendor can report the agents, and the CM will be free from the case.

When signing the contract, look out because several Chinese manufacturers’ businesses go by their Chinese names, making sure that they identify with legal names. The agreement should entail their Chinese and English legal names.


2. Ensure that All Pricing Provisions and the BOM is included in the Agreement

The Bill of materials should be included because it’s usually the list containing materials used in the product fabrication process.

With a BOM, you can get all the information about the product you are procuring, and discretion is required because the manufacturer may have some secret products for competitive advantage.

The BOM is necessary because in case the products become defective, you can substitute them easily.

Pricing provisions are essential because you need to know unit prices, inflation matters, and labor costs. Know all transfer rules and regulations as well as VAT impacts before signing the contract.


3. State Your Quality Specifications, Requirements, Packaging, and Warranty

Ensure that you have included details of your quality expectations and other factors that help in quality control.

During inspection processes, this helps a lot so make sure it’s entailed in the supplier agreement. Please do not go for any products that lack a warranty because they can be defective anytime.

All products need to be sampled upon delivery via inspection; hence, you can ask for the replacement of defective products with your agreement.

If a supplier refuses to give you a warranty, they may be a fake Chinese manufacturer, and the products may be fake. The only way to tell if a supplier has suspicious activities is when they don’t offer quality assurance.

Through warranty, you get an assurance that the products are made of high-quality components; hence they can’t get defective.

Before signing the agreement, check your shipment agreements with the Chinese manufacturer because you may be frustrated on the other side of the bay during delivery. Dates are very important in every contract. When signing a contract, look out for all these factors.


4. Check on Clarification of Ownership Rights of Molds

Look out have a new product in China, because they can easily hold you hostage or tooling. These factors can damage your product easily without their knowledge. Don’t be in a hurry to sign any contractual agreements with those Chinese manufacturer.

Consider all the information on tooling lists and prices included in the transfer agreements. It would help if you had liquidated damage provisions for your safety or ended up stranded in a Chinese court later.


5. Be cautious About Dispute Resolution Matters.

When you resolve disputes in any Chinese contractual agreement, you need to be careful because the resolutions depend on the dispute type.

It’s normal for disputes to arise between contractors and buyers, especially when you are sourcing for goods from Chinese manufacturers. Nobody is perfect; hence some disputes may arise, and the jurisdiction of china’s government will be involved.

 Some disputes that may arise include failure to meet delivery deadlines, product damages, and monetary damages.

Solving such disputes may be hard because you are in international business; hence the supplier may take you in circles.

Be cautious when signing the contractual agreements for your safety as a vendor. It’s essential to look out because when some disputes arise, the Chinese government may not be obligated to recognize or enforce their court judgments in your state government; hence, you will lose.




China Manufacturing Products Conclusion:

If this is the first time for you to get a product manufactured in China, this process might seem very scary. Ideally, When you first start manufacture a new product in China, you will have (mostly) done all of this (mostly) correctly. That’s the goal of this article. But- it can be a long journey.

With no particular confidence in find a reliable Chinese manufacturer, the buyer took precautions. Trust, but be sure to verify. As a product sourcing company, Contact us if you need any help to manufacture a product in China.




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