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Finding a supplier for your products is a lot like dating. Prospects that look good on paper may not measure up once you start developing a relationship. In some cases, it’s not until the second, or even third date (i.e. shipment), that the cracks start to show and you realize that the person you’re dealing with is not the person you thought they were.
Establishing reliable relationships with overseas suppliers for your products is one of the most daunting tasks a merchant faces. Done correctly, and you gain a reliable source of products. Missteps, one the other hand, can be costly. Finding “the One” is never easy, but you can simplify the process a bit by thinking outside of the box.
Trade Marketplaces
Online directories such as Alibaba and Global Sources are the dating sites of the product world. Sure, they providing a wealth of candidates to choose from, but you face serious risks when using these sites. The problem here, as with online dating, is the tendency for companies to only show themselves from the most flattering angles, such as boasting “Gold Supplier” or “Verified” status while failing to mention that anyone with an account can purchase these certifications.
And it’s not outside the realm of possibility to encounter catfish- suppliers who claim to be manufacturers but are actually trading companies in disguise. These organizations take advantage of unsuspecting buyers with small minimum order quantities, super low prices and promises they don’t intend to keep. Traders will often say “Yes” to everything and seem to offer amazing deals, but you’re being sold a bill of goods (pun fully intended). In truth, these organizations are simply middlemen between you and the actual manufacturer, convoluting a complicated situation:
- Incentives are broken, with both the factory and the trading company squeezing you on price and quality to maximize revenues.
- You have very little control of the supply chain.
- Communications become slow and muddled as the number of parties increases.
And the list goes on. While there are some gems, 99.9% are, honestly, terrible. Legit suppliers and manufacturers have limits and more reasonable pricing. They also usually specialize in one type of product rather than a wide selection.
Trade Shows
Attending trade shows is a lot like going to a singles mixer. They’re busy, offer lots of choices and everyone is looking to hook up. Canton Fair is the largest and most popular one, but there are industry- and product-specific events as well. These gatherings give you access to tons of prospects, allowing you to determine the relative size of each supplier, see samples, gauge professionalism and work out which regions specialize in your product. Plus, trading companies can be sniffed out from a mile away — and avoided. Ideally, all discussions should be followed up with a physical visit to verify what was said.
You don’t always have to visit the trade shows in person, however (although it’s highly recommended). If you’re on a budget or constrained for time, check out the exhibitor list for the event. You won’t find many better roundups of the major players in your industry.
Referrals
Sometimes, the best dates are the ones that your friends set you up on. Likewise, your business network can be a powerful source of information about Chinese suppliers. These connections may include personal associates and fellow professional organization members, as well as social media and other online platform users. The popular Chinese social network WeChat, for instance, offers a number of sourcing groups for U.S.-based buyers that can provide valuable information and referrals.
Any current suppliers are also good sources of information, especially if the products are complementary. Being introduced through a trusted intermediary can also help establish valuable “guanxi,” a Chinese concept of building relationships, between you and the new supplier.
Matchmaking Agencies
Employing the services of a matchmaker can expedite the sourcing process considerably. Similar to their dating-world counterparts, these agencies bring motivated Chinese sellers and interested foreign buyers together, helping you bridge knowledge and cultural gaps. After answering some questions about your current business conditions and future goals, you’ll be matched with suppliers that can best suit your needs. The matchmaker then facilitates meetings between you and prospective suppliers to hash out details. You may also be able to join matchmaking events that occur at tradeshows such as the PT Expo China.
Doing Your Due Diligence
Proper vetting is key no matter where you source your goods. While there are companies that provide Chinese business verification services, you can confirm the authenticity of suppliers yourself by requesting to see a few key documents including a valid Capital Verification certificate and the ability to produce VAT invoices and a business license under the same business name.
You can also search the Chinese Supreme Court database to determine if the company has been in any legal trouble. You can find more information about vetting a Chinese supplier through organizations such as the American Chambers of Commerce in China and the U.S.-China Business Council.
Factory visits are also well worth the time, energy and cost. Being able to see the equipment, processes and capacity will give you a more accurate idea of whether a supplier can meet your needs. Benefits of an in-person tours include:
- Assessing the standards of the production environment and the product.
- Getting a feel for their customer service.
- Determining which of your competitors they supply.
You’ll also be able to confirm that you’re working with a manufacturer rather than a trader. So if their office is in a residential building or miles away from the factory — run like the wind.
Ultimately, sourcing Chinese suppliers and dating both boil down to two main points; always have multiple candidates and if it ever sounds too good to be true, then it is.
But you can certainly find happily ever after if you’re discerning about who you choose and understand the finer points of your partnership.
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Till next time,
Lauren Treadwell
Wyre Sr. Staff Writer
