Monday, January 10, 2011

Finding suppliers in China


I was recently emailed this question from a reader of this blog:

I'm looking to source a product in China, do you have any tips of suggestions on the best way to go about doing this?

It's a good question. Finding a good supplier who can provide exactly the sort of product you're looking for is a critical step for an online retail business.

The best way to go about finding a good supplier depends on the type of product you're looking for.

1. Standard product, low to mid range quality
If your product falls in this category there are lots of great options available to you for sourcing. There are plenty of places to go online to source standard, low to mid quality products. www.alibaba.com is the world's largest sourcing website and is a good place to start. There are also a number of trade fairs in Asia where you'll be able to find these sorts of products. The Canton Fair is the world's largest trade fair and is held twice a year in Guangzhou, China. It's absolutely massive with suppliers of just about every standard, low to mid range quality product showing their wares at the fair.

If you're sourcing these sorts of products, even from a supplier on alibaba.com you probably won't need to spend a lot of time in asia with your suppliers, but I'd recommend at least 1 or 2 trips to meet them, build at least a basic relationship and to check and confirm the quality of the goods you're buying.

While sourcing products in this category is relatively easy, of course the downside is that there are probably already a lot of people selling the same or similar products in the market, so marketing might be a little harder for you. You'll need to find a non-product related way to differentiate yourself in the market, but that's a topic for another blog post.

2. Niche product, mid to high quality
Products in this category can be a little harder to find, as they may not be available on websites like alibaba.com or at large, general fairs like the Canton Fair. A good place to start in this category is to do some searches online for product specific trade fairs. For example if you're looking to source high quality furniture, high quality leather shoes or specific pieces of sporting equipment there are a number of trade fairs throughout asia each year where you should be able to find good suppliers.

There may also be wholesale markets in China for these products, where suppliers are permanently based. For example there are large leather and non-leather wholesale handbag markets in Guangzhou where you can source pre-designed handbags or find suppliers to make handbags you've designed.

For products in this category you'll need to spend more time on the ground working with your suppliers. If you're going to be developing your own product you'll need to work on your design with potential suppliers, get samples made and really spend time with your suppliers to ensure the quality is right. It's very easy for a supplier to make a good quality sample, then take shortcuts when making a full run of your products. The only way you'll pick this up is if you're on the ground with them, and inspecting the final product before taking delivery.

3. Highly specific product, high quality (eg. custom women's shoes for Shoes of Prey)
This category is the hardest to source and will require a lot of time on the ground working with suppliers. At Shoes of Prey we needed to find suppliers who could custom make high quality leather shoes. 99% of shoe suppliers require minimum orders in the 100's of each style and colour shoe. We needed to order them 1 at a time. We spent a lot of time on the ground in asia meeting with different suppliers and attending trade fairs to understand the industry, how it worked and who might be interested in working with us. In the end we were lucky that we were sourcing during the Global Financial Crisis. Shoe manufacturers were receiving less orders from their existing customers so some of them were more willing to work with a new and specialised customer.

In terms of spending time on the ground in China, between our three co-founders we have spent a combined 8 months out of the 2 years we've been working on the business, on the ground in China. In addition to that we have our own office and two local employees, Vanessa and Qun who understand our requirements, systems and processes and work day to day with our suppliers to ensure we're making shoes correctly and at a very high quality for our customers.

One of the things I love about sourcing products in China is how hard working and efficient most people and businesses are in the country. We were recently developing a new shoe box so we went and met with a supplier. Within 2 hours of meeting them we'd discussed our ideas, reviewed products they'd made previously, put a design together, selected materials, negotiated the price and organised for a sample to be ready in 5 days time. Attempting to do something similar in Australia would have taken weeks.

If you're looking to source products in China hopefully this information is useful. If you have any experience or thoughts to share, feel free to leave them in the comments.

Cross posted to Startup Smart

9 comments:

  1. Michael,

    Is there a way to get in touch with you? I have a website that is very similar to Shoes of Prey (customization, high-end and caters to women) and is plagued by a low conversion rate just like your website is. I think it would be beneficial to get in touch to discuss as we are in the same boat.

    ReplyDelete
  2. Hi Anonymous, sure - michael at shoesofprey.com

    ReplyDelete
  3. Hi Michael,

    We are experiencing the same problem as you had before. We intend to sell good quality female leather bags on the Internet. Most of our bags are designed for specific customers; as a result, we only produce 1 or 2 bags for each style at a time. When we were in Guangzhou (as it's the main area for producing handbags in China) last month, it's impossible to find any suppliers that is willing to cooperate with us. They all have a minimum order of 30 or 50 bags of one style one colour. I am wondering what size are your shoe suppliers? Would it be easier for us to approach those smaller size suppliers? As most of the big players only take order at a minimum of 100 bags a time. When you finally find the supplier willing to make a pair of shoes for you at a time, how did you approach them and struck the deal? What sort of good point that you brought up with them to change their mind of taking minimum orders?

    Any advice will be greatly appreciated! Thanks a million!

    Regards,
    Sarah and Jessie
    seavaz@hotmail.com

    ReplyDelete
  4. Good points Michael,like you done and stated , it is important that you travel and see vendors before transferring your hard earned cash and it is amazing seeing how hard the Chinese people work. An alternative is to use a China sourcing company to help and have your understand the process. A good sourcing company to check out is www.chinaperformancegroup.com They will reduce the risk of running into problems and do the local running around. The success in china sourcing is creating the relationships necessary to make your business thrive.

    ReplyDelete
  5. Try checking out chinaperformancegroup.com if you need help with finding a supplier in China too. I heard they are good to work with.

    ReplyDelete
  6. I just started on the online retail business selling women shoes and started designing and customizing some. My problem is similar in the sense that because I'm just starting I need more variety of shoes and sites like Alibaba connects you with wholesale suppliers that want to sell you 100 pairs of the same shoe style. Even though I don't need 2 or 3 you guys need, I would love to be able to pick different styles to include on that 100 pairs that they're willing to send me. I don't have the funds to order 300 pairs of shoes, but only have 3 styles to offer the customer. Any idea where the small retailers starting out without any prior experience of Entrpreneurship and negotiating can get started?

    Thanks in Advance
    Divina Moda

    ReplyDelete
  7. Sarah, Jessie and Divina - finding suppliers who will sell to you in small quantities is a challenge and I don't really know of a good way to be able to order smaller quantities of products you've designed. The problem for a manufacturer is they have to invest significant upfront costs in developing your design concept into something they can make by developing a last, moulds and patterns. Once they done this they then need to source the materials. Naturally there is lots of back and forward between you and the supplier during this period which costs them time and resources.

    The supplier needs a larger order to recoup these fixed costs they're incurring. In our experience, in the majority of cases you're going to have to start a little larger than you might have planned. If you can get down to minimum orders of 30-50 bags or 100 shoes per style per colour you've actually done quite well.

    The only alternative is to find a style that already exists and where the suppliers owns the IP and order that, ideally in a run for another customer. The problem there is you're not getting to add your own design input.

    ReplyDelete
  8. So Michael what do you do when a woman order her customize shoe? do you have to order the minimum quantity suppliers request? because shoeofprey is a made to order company. Thank you

    ReplyDelete
  9. Hi Michael, I have a question regarding gifts to Chinese suppliers. We're working with one supplier and when we visited them in August last year, we gave them alcohol (wines, gold label whiskey) and Parker pens as gifts.

    We're planning to visit again shortly so I wanted to ask whether it's customary to continue with the gift giving? Are there any other items which would make appropriate gifts? We're not sure if bringing over more of the same will be frowned upon.

    ReplyDelete