There’s a reason why China is considered the ultimate manufacturing destination in the world. You can get virtually any product made here, and that too at a much cheaper rate compared to other countries.
No wonder then, that China boasts of a huge sourcing industry!
In fact, China’s trade surplus stood at around 422 billion U.S. dollars and its exports of goods totaled a record high of almost 2.5 trillion U.S. dollars in 2019. In the same year, China’s export of goods and services constituted 17.4 percent of the GDP.
The bottom line is that sourcing your products from China is a highly profitable strategy. However, to succeed at it, you need a good manufacturer on your side.
Here’s how you can find one.
1. Start with a Well-Planned Search
You may want to use the internet to start finding a manufacturer to make your product. You can use search engines such as Google or Bing or B2B platforms. You can also try your luck at online sourcing platforms such as Alibaba, where you can connect with Chinese manufacturers.
You need to be careful as the search results may include not just manufacturers, but also resellers and middlemen. It is a good idea to avoid middlemen when you have very specific technical and high-end requirements to meet.
Another great way to find a reliable manufacturer is by seeking references and recommendations from your industry network. This could include your contacts in the industry who have done business in China, trade associations, and even your contacts from other companies.
If your budget and schedule permit, you can also visit trade fairs in China to find manufacturers. The Canton Fair, China’s largest trade fair, is held in Guangzhou twice a year, i.e. in April and October.
Further, working with a sourcing company or agent can be helpful for businesses who are looking to source from Chinese manufacturers for the first time. You will not have to worry about processes such as getting quotes from product manufacturers, drawing up payment terms, quality control inspections or shipping as the product sourcing agent will manage it all.
2. Shortlist a Few Manufacturers
Once your initial search is complete, chances are that you will have a long list of product manufacturers with you. You will need to cut this list down by contacting each one and telling them about your requirements. Based on the responses you get, you can shortlist potential product manufacturers.
It makes sense to prefer Chinese manufacturers who are experienced in working with clients abroad. They will be well-acquainted with the global quality standards, the fundamentals of customs requirements, international shipping logistics, and the other important factors involved in providing high-quality products.
3. Reach Out to Them
After shortlisting product manufacturers, you will have to reach out to them with your initial requirements. You can do so via phone calls or emails. The latter is preferable as it will allow you to have a record of the communication. You can also use WeChat, a popular chatting app in China. Other communication tools include Skype and Zoom.
When you reach out to them over a video call, ask them to show you their product samples, if possible. When you order a couple of samples, it can be easy to make quality versions and pass them off as a sample of the finished product. Hence, ask them to send you multiple samples of the final product so you can examine them physically and minimize risks.
4. Make Sure to Verify Their Credentials
Verifying the credentials of the product manufacturers you shortlist before sourcing from them will help you establish that they really are a factory, and not a middleman. You will also find out whether they really do have the technical expertise and production capability to deliver on their promises.
To ascertain their claims, ask to see their business licenses and certifications, factory account audit records, Value Added Tax invoices, and product samples. You can also approach the local government office under whose jurisdiction the factory falls for further verification.
Knowing which Chinese region specializes in manufacturing the product you want can also be helpful. For instance, the Zhejiang province houses manufacturers of die casting and plastic molding products. So, if you meet a supplier of these products, who is located in another province, it is likely that they are a reseller and not a product manufacturer.
5. Discuss Your Terms and Conditions
Before proceeding further, discuss the matter of signing a non-disclosure agreement (NDA) (specifically for overseas manufacturers) with your potential product manufacturers. After this, you can get a request for quotation (RFQ). For this, you will have to send them images of your product prototype with details such as the materials to use, the size and weight of the product, and more.
Make sure to seek the same information from each product manufacturer so you can easily compare your findings. Find out their minimum order quantity (MOQ), sample prices, production prices, time to manufacture, and the payment terms. Ask about future payment terms if you were to become their regular customer.
6. Seal the Deal with a Contract
Before you finalize anything, make a binding contract in writing. The manufacturing contract between you and your Chinese manufacturer should include:
- China NDA or NNN Agreement: A China NDA (written in Chinese and by Chinese law) protects your IP or trade secrets. The NNN agreement is an upgraded version of the NDA and stipulates non-disclosure, non-use, and non-circumvention of your Intellectual Property.
- Product Development Agreement: This applies if you are developing the product with your manufacturer in China. This agreement prohibits the manufacturer from claiming your Intellectual Property as their own.
- Manufacturing Agreement: This agreement states the intricate details of your working relationship as client and product manufacturer, leaving no room for misinterpretation or misuse by the manufacturer. It includes points such as manufacturing facility to be used, obligations and deliverables, pricing and payment terms, quality control inspection schedules and procedures, performance criteria, subcontracting, and more.
Searching for the right manufacturers for your business is a continuous process. There is no one-size-fits-all formula that can help determine the most suitable one. It is important that you do your research and due diligence, and then decide on working with a manufacturer that you find reliable.
Jonble, a leading third-party sourcing company in China, can help you in your quest to find Chinese manufacturers you can trust. If you need assistance, talk to our experts or send us an inquiry. You can also call us at +8613326135867 or email us at firstname.lastname@example.org. We will help you in the best way possible.