How to Source from China in 6 Steps (The Definitive Guide)
How to source from China without going?
If you are thinking of starting a new business, there is no other place better than source products from China. But some of you might find it difficult to source from China because it may be confusing and hectic most of the time.
Before we continue, remember these 3 sourcing from China principles…
(1) It’s a numbers game. More quotes = more information = better decisions.
(2) Don’t be afraid to walk away. As the buyer, you hold all the money.
(3) Compile your data. Checking supplier quotes side-by-side can help you reach a quick conclusion.
In this post, we will talk about 6 steps to start source from China, and 10 tips you should be aware of during this process.
If you follow the steps mentioned below, you will find yourself in a better position to source from China safely.
What you need to be able to commit to when source from China?
If you source from China, you need time to identify all the suppliers, audit the candidate’s factory before negotiating an agreement, evaluate their internal product development capabilities (if needed), and spend time managing the entire project. This will take several hours a day and is a complicated job, as you can see.
Which Source from China Option Is Best For You?
4 Options when source from China
Let us further analyze which cooperation model is suitable for you when you source from China.
1. Buy directly
That’s what 82% of importers are trying to do. They want to control the process and avoid paying commissions to any intermediary or agent.
This may be your best choice if you have sufficient organizational capacity to manage suppliers (see above), and you can meet the vendor’s minimum order quantity (MOQ).
2. Use a China sourcing agent
There are thousands of people in China trying to make a living by providing this service. If they come from the right industry, you can use their network and save a lot of time. They can also act as your Chinese representative.
3. Buy from a trading company
This is a good choice if you can’t meet the MOQ, perhaps as a start-up or an entrepreneur who has been an early target.
Trading companies can place their products in small workshops that accept small ones. Apart from this particular case, I do not recommend working with intermediaries.
4. Use the service company
Some Chinese purchasing agents provide services and charge fees. Everything is transparent (supplier name, a process followed, etc.). This is an investment in your company before you start production, but if you predict a lot of it in the future, it’s a good choice.
Such China agents used to be very rare, but I believe they will become more and more common.
Complete 6 Steps to Source from China
1. Do Market Researching
You simply need to research before setting up your business. As we all know, there is much competition in the market, and if you jump into the crowded marketplace, it will be challenging for you to reach your business at the top.
You have to do more struggle to get your goals. So it is crucial before applying for any business your first step must be complete, compelling research.
The competition in the market is becoming high day by day, and if you want to earn more profit, it is nearly impossible to skip this step. It will be nearly impossible for you to compete with the market and replace the old sellers. Though there is a significant demand for sourcing products from China, you will still find it tough.
While researching, first check out the most demanding product in the market and then source from China.
For this purpose, you can make searches on Amazon to find out the top 1,000 products in any niche. If the product you’re thinking of for business is not in the top 1,000, then you would hardly do not earn your living from it.
Once you are successful in finding that product that fits the desired criteria, select two or three from there that you think to have enough knowledge about them.
if you are good at planting and gardening, you should wisely invest in seeds and related products rather than investing elsewhere. You just have to find a product that people want the most rather than being competitive with the existing markets because it will give you nothing but a wastage of your money.
For this purpose, you can choose a product that you think you are good at and give it your personal touch. Mainly, the only thing you will be going to change is the marketing technique, and this will allow you to stand in a top position.
2. Get In Touch With Chinese Manufacturers
It has been seen many times that people skip the first step. They don’t bother to research. They simply imagine that they will start earning magically soon after throwing up a product.
However, some people don’t like to contact manufacturers for different reasons. It doesn’t mean that they don’t know this, but they are confused about where to start or how to do it.
The process of this is relatively straightforward: All you need to do is go to China wholesale websites like Alibaba (a massive network that connects you with hundreds and thousands of qualified manufacturers from China).
Send messages to at least 10-15 suppliers. You have nothing to lose.
You can have a brief talk with them, chat about different criteria, and take advantage of their experiences.
After that, please select the manufacturer that you think fits best to comply with all your needs and then start working with them and source products from China.
Here are some references for you sourcing products from China online:
|AliExpress||General||Wholesale & small order|
|Made in china||Machinery, Electronics||Directory|
Then share your message with your manufacturer by sending a simple message along with the mentioned below lines:
“Hello, my name is (your name). I’m texting you because I am in dire need of (your product name). Can you please offer me your price and quotations (also tell the number of units you want to order) and an estimated delivery time? Thank you! I would like to highlight one more thing as I’m not only contacting you but also your competitors, so please be kind and reasonable with your quote. Regards, (name).”
But, you have to keep in mind that you have not accepted any offer yet. However, If you noticed that there is no option for ordering a sample yet, you want to test the factory’s responsive rate and communication.
Because it is necessary to maintain quick and clear communication while making your source from China, a little delay in the shipment could make your customers furious because of not getting their orders in time.
For example, supplyia China sourcing agent usually makes a response within 24 hours This problem may result in a disaster and can ruin your whole business even before it gets started.
So, it is a better option only to select those companies that provide the fastest communication and can respond quickly before moving towards the next step.
The main reason for not adding the word “sample” in the above portion is that it might give your manufacturers a severe non-impression.
Every day, these Chinese companies receive so many emails and messages about samples. Sometimes, those people are also asking for samples that don’t have enough money to invest even in the first shipment.
If you place orders for large volumes of products, factories will be able to earn more money as they usually offer low prices. So the more the project, the more they will earn.
Therefore, you have to show the idea that you are planning something big from the start. Once you have finished finding your reliable companies, you can send them the following messages to play with them and get better pricing:
“Hello (company/contact), we are looking forward to placing an initial order just to test the quality. We would like to place orders for (number of units) of (product). What will be your offered quote for this? Must keep in mind that we are receiving plenty of good pricing from your competitors too. But we want to check yours. Thank you!”
Like previously, you can check that no word like “sample” is used above either. It is better never to use that word.
The word sample order is replaced with “initial order” for quality testing of the product. See how your language affects the sentences. By doing so, you will instantly notice the manufacturers and see how seriously they take you.
It will be best to place orders for around 50 or more units for the first time. Ordering for only one to two products will give them the impression that you don’t have enough cash to invest with them and in this way they can’t make more money.
4. Start To Order Samples
After receiving the manufacturers’ quotes, you can now pick the best price among all and order your first round.
Then you need to select the location. It could be a warehouse or maybe your home or business, send them a message asking for payment methods and also about the delivery date.
Now sit back and relax, wait for the ordered product to arrive. Meanwhile, you can work on your website, your marketing strategies, your copywriting, and all the other aspects as well.
When you get your initial order, you have to inspect at least five to ten units to check the quality level and defects. The final thing you would do is to check for damaged or flimsy products. If you are not feeling satisfied, you can contact the factory and ask them for replacements or simply go through for other factories.
How much should you pay? Expect anything from $30-$200, depending on the complexity of your product.
5. Order a Bulk Amount – Buy Wholesale from China
Once you have followed all the steps correctly, you are set to order for a bulk amount. But you have to pay attention to the payment in case face a scam.
What are the standard methods of payment when sourcing from China?
Many suppliers require a deposit of around 30%, and the remaining amount would be paid before shipment.
This means that you are risking your deposits, but you have full control over the remaining balance, which needs to be paid after quality control and lab testing.
Is it an excellent option to pay my supplier after the arrival of goods?
No, it is a must to pay before you receive your parcels. This is your supplier’s choice if he agrees to accept payment upon the release of the bill.
Many suppliers are aware of the fraudulent nature of some buyers (not targeting all the buyers). So, they usually don’t offer payments after delivery, as by doing this, they will end up with no payment by the fraudulent buyers.
Can I get credit from my supplier?
There are some big buyers like Wal-Mart that can offer you free credit lines. For example, they can allow buyers to pay after 90 days of delivery. However, this does not apply to other small buyers.
Can I pay Chinese suppliers in different currencies like Euros, AUD, GBP?
These days most of the Chinese suppliers will accept the payment in US dollars other than any currency. While some of the old suppliers from 2010 can accept the payments in Euros.
What will be the safest payment method while sourcing products from China?
The safety of payments is entirely dependent upon the type of transaction, and its management. For instance, if we talk about wire transfers, they are counted as unsafe ones because they don’t offer any refund.
On the other hand, Letter of Credits offers an extra layer of security, but this could also be highly risky if a third party sets the terms.
Am I supposed to open a USD bank account to pay my supplier?
No, not necessarily, you can convert your local currency whatever it is into USD when transferring payments to your supplier’s bank account. Opening a USD bank account can save your exchange rate risks, and you can quickly source from China.
6. Arrange Ocean Freight or Air Freight.
Usually, there are 5 ways to shipping from China
- Air express
- Air freight
- LCL ocean freight
- FCL ocean freight
- Expedited ocean freight (competitive with air freight lead times)
|Reliability||More Reliable||Less reliable|
|Speed||3-15 days||30-40 days|
|safety||safe||possibility of damage|
|Charge method||weight/dimensions||weight/dimensions/fix price|
How to Source Products from China Tips
When sourcing from China, there are quite a lot of efforts and things to consider. Here are ten suggestions to get you started.
1. Don’t buy the wrong products when sourcing from China
When importing from China, one of the most challenging parts is sourcing the wrong product if you don’t know what product to purchase.
But before you buy anything, you must first investigate the market, products, and customers. Your budget is also one of the things you need to consider.
When looking for the wrong product, here is one thing you should avoid:
If you think that selling counterfeit products for your e-commerce will be good for your business, in terms of profit, think twice. This will only expose your business to the risk of legal proceedings and inspections by customs officials.
If you run an e-commerce business, you may be kicked out and labeled as a red flag store. Amazon and Alibaba have launched an anti-counterfeit campaign and have driven sellers out of stores.
2. Know the types of suppliers when sourcing from China.
There are three types of suppliers for importing from China-manufacturers, small trading companies and purchasing companies. Knowing which type is right for your business is crucial.
If you are a big buyer and can meet the factory’s minimum order quantity, you can purchase products directly from the manufacturer.
If you are not buying a large quantity, but looking for a wide range of related products, then a trading company is a good choice. You can carry multiple products in your niche, and you can import a small amount of each product.
Finally, you can hire a purchasing company to work with your suppliers. They are in a more advantageous position in terms of product procurement, logistics and transportation.
3. Plan ahead
When importing products from China, time is an important consideration. Any of the above errors may cause large-scale delays and interruptions in the logistics chain, let alone two or more errors. Keeping these in mind, always start planning for the extra time to import from China.
We recommend that you start organizing your import at least three months in advance. Depending on the port and destination you are importing from China, the transit time may vary greatly. Also remember the time required for inland transportation.
4. Quality is directly proportional to the cost
Why are buyers all over the world paying attention to the needs of Chinese suppliers? One of the main reasons is the low manufacturing cost. Even with freight and tariffs, it is still cheaper for buyers than purchasing from other places in the West. When negotiating with potential suppliers, it is helpful to remember that all manufacturers usually have a minimum price—the minimum cost required to manufacture the product.
Keep in mind that if a supplier falls below its minimum price threshold, it will impact other ways. It may manifest as a decline in the quality of raw materials or damage to workers’ wages or working conditions. It may also cause suppliers to bypass steps in the quality control process. In the long run, all of these will affect your product and your reputation and may even have legal implications.
5. Write an effective inquiry
After you have collected a list of suppliers, you want to contact these suppliers to negotiate transactions or custom requirements. You need to write effective, clear, and detailed inquiries to ensure that you get what you need.
We recommend including the following information about the source you want:
• Product description and specifications
•Photo (if any)
• Other key points, such as safety, brand, etc.
The more information you include, the more likely you are to attract a seller who can meet your needs.
At the same time, ask some appropriate questions to help you determine whether the supplier is right for you:
•Price per order quantity
• Passed FDA, CE/European or Chinese standard certification
• The origin of the ship
• Shipping terms and costs
6. Have confidence in the negotiation
As we mentioned, you can negotiate with the seller. To succeed in the negotiation and reach a deal that meets the needs of the business, you must enter with a professional attitude, confidence, and reasonable requirements.
If the price of each house is $10, don’t bid $2, or the seller will dismiss you as a not serious buyer. The cost of $7 or $8 may be more reasonable, especially if you order 1,000 units.
Would you please keep in mind that the seller may not accept your first offer, so there may be a little back and forth. It would help if you made sure that the price you set is meaningful for your business.
7. Order samples
Many suppliers have minimum order quantities (MOQs) so that buyers will not try to take advantage of wholesale prices for small orders.
However, the supplier knows that you may want to see the product for yourself before buying thousands of products. Ask the seller for samples. Usually, they will sell you a product sample you want to buy at the retail price.
If the supplier does any custom or private labeling on your products, such as adding your logo or other unique designs, ordering samples is essential.
Owning a physical product can help you determine whether it is suitable for your business and whether you want to invest in mass production.
8. Pay through legal channels to avoid illegal remittances
You can pay suppliers through many illegal channels, but you should avoid this practice at all costs as a good merchant.
Instead, you must choose a legal, safe, and reliable payment method. If you are using an e-commerce website, please check the Alibaba transaction guarantee.
As you can see, this is the safety index for sending money to China.
Send money to China. The key is to follow the following golden rules:
1. Never transfer money to a personal account through any payment method: be sure to ask the other party to provide the details of the business account of the company you are trading with. If the other party cannot provide it, do not do business with them. Don’t make excuses to put money into your personal account, unless you don’t want to see your money or promised goods anymore.
2. Draft a strong agreement: Ideally, before you make any payments to potential suppliers, you must ensure your interests by drafting strong payment terms in the agreements you sign with them. These terms deal with the timing of payment and the choice of payment method.
9. Do quality control checks
Although having a good production agreement is an excellent way to start your relationship with your suppliers, regular quality control inspections are necessary so that you can ensure that the quality of your products meets your standards. This prevents costly mistakes from being made in the future. Studies have shown that late problems found in the production process are always more expensive than early problems.
10. Use professional freight forwarders to handle the goods safely
Finally, look for a professional freight forwarder to deliver your goods safely and efficiently. Similarly, you need to check the company’s certificates, experience and work history. You’d better understand the basics of this industry to decide who better to hire.
Look out for companies with incomplete information, companies that claim to complete the work in a short period, or companies with incredibly low costs.
These companies are probably scammers. Instead, choose a company with a reputation, a reasonable price, and proper timing. Don’t be afraid to ask each of the shortlisted companies these questions and details so that you can make the right decision.
In conclusion, It may take time for you to learn how to source from China. Once you know how to do it, you just pivot above 6 steps to source from China until achieving success. Now, leave your comment if you need source products from China.