When you ask people around you, how do you import products from China? Some people may say that of course, it is the Chinese B2B platform. Correct, of course correct, but that was a few years ago. In China, the current situation is not the case. More and more traders, manufacturers registered on B2B platform, in order to receive orders, desperately quoted, A supplier quoted 3USD, B supplier quoted 2.9USD, C supplier quoted 2.5USD, D, E, F. ….., in the eyes of some suppliers, “the price is not the lowest, only lower.” In this case, how do you buy more reliable products and services for your importers or buyers?
Please allow me to tell you a case first:
In 2016, one of my American friends cried with me (not my dental products industry), he was importing electronic products, and at that time he was looking for manufacturers on some B2B platforms. As I said at the beginning, the price range is too Big, I dare not make a conclusion, so he searched for a Chinese sourcing company to help him find a real manufacturer. It was really smooth at the beginning, and also talked about a good price. My friend thought it must be a good manufacturer, the order was finalized, everything went smoothly. Sure enough, when the goods arrived at his warehouse, all that was received was a defective product. This time is already late. When looking for a manufacturer, no one can find it, and the sourcing company can’t find it either. Do you think it is an international lawsuit with Chinese suppliers? Not impossible, it will take time, energy and money.
Maybe you can listen to my analysis and suggestions:
Suppose you come up with product ideas or market channels that you think you have certain products, and you want to find suppliers in China because of low product development costs and low production costs. If you use the B2B platform to search for production, you will find a large number of Chinese suppliers/manufacturers.
6 points to find the right supplier:
1. If you have a website, do some preliminary internet research, including company name, contact information, business size and scope, category checkbox (important) and comments. When you are looking for a Chinese manufacturer, first search for your products mainly in those provinces, or those cities. For example electronic digital products, of course, are Guangdong Province, more specifically Guangzhou, Shenzhen, Dongguan, and other places. Disposable non-woven products, of course, are Hubei Province, more specifically Xiantao City. This way you will be able to filter some of the manufacturers and narrow the scope.
2. Use a search engine to search for information related to your product name. The top 100 results will be the most relevant sites related to the products you care about. You can also find information about your competitors and better understand your market segments and marketing channels. (But there are also quality manufacturers, just don’t use the Internet to promote themselves, need better communication, maybe you can get a surprise)
3. Participate in large-scale exhibitions in China, such as the Canton Fair, Hong Kong Exhibition. Although there are many trading companies now, this does not prevent you from finding reliable manufacturers. Sometimes a reliable trader is better than many of your manufacturers.
4. Field visits. This is of course very good. If you visit the supplier on the spot, it is easy to judge whether his salesman is telling you everything.
5. Find a local Chinese company to help you. Local men know how to check suppliers. Some special business methods are not known to foreigners. Once you have local guides, all your business work will be easy.
6. Reduce the list of vendors you want to use to a manageable amount. At this stage, you may already know what your real needs are and what is available. Connect with the suppliers you want to work with and further develop relationships with them. In the end, you will find one. This process can be a fun and friendly experience.
I affirm that I don’t exclude traders, and I won’t smash traders, because, for myself, some products need to be purchased from other factories. When my customers need other products to purchase together, I will become a trader to purchase customers’ products from the factory.
4 points risk from secondary suppliers
For manufacturers, they also need to have their own supplier system and have their own sub-suppliers. There is also a certain risk to their suppliers.
I listed the main risks buyers take when they let suppliers “own” and hide sub-suppliers:
1. The risk of failure (for example, a critical sub-supplier has problems and cannot find alternatives within 3 months)
2. The risk of bad public relations (for example, when a brand hears that its label is found in a closed factory, even if the factory is not a direct authorized manufacturer)
3. Inefficiency (for example, excessive inventory due to lack of communication, or other suppliers purchasing the same components from the same sub-supplier)
4. Quality issues (for example, changing components without the buyer’s approval and causing failures in the hands of the user)
The most important 3 points, the challenge of the supplier’s operating environment, leading to the buyer’s loss
For Chinese suppliers, there are also some operational environment challenges. Briefly introduce three points:
1. The rule execution suddenly changes, causing the factory to close
In Qingyuan, Huizhou, Guangdong, due to poor waste management, there are serious problems with the two major electroplating plants and the government there. It is unclear whether they must close or severely reduce production.
Most of the problems we hear are related to electroplating paint – this is another highly polluting process. The local government has shut down thousands of facilities using liquid and/or powder coatings. It has had a serious impact on certain industries, such as white goods (home appliances) because brand assemblers have seen many of their suppliers disappear.
An abnormal effect of more stringent control measures is that many “dirty” products occur at night without government inspections. In some areas, some pungent odors will only appear at night – when working under local conditions.
In 2018, cartons are also difficult to source locally. The government closed 90% of suppliers in Guangzhou and Dongguan. So they sometimes have to ship from another city.
There are two things that are particularly annoying to buyers:
Some suppliers are not proactive. They have no plans B. Of course, they never warn the risks. When this happens, the customer should understand that this is a “force majeure” situation.
The government seems to be checking and closing to scare offenders and promote compliance. There seems to be no warning and suggestion phase.
What can customers do? Know your Tier 1, Tier 2 and necessary Tier 3 suppliers and assess risk. This can be difficult or even impossible.
2. Chinese New Year
Once a year, each supply chain is interrupted:
Material and component suppliers stop production
Assembly factory stops working
Before the break, due to time-critical pressure, the quality was affected and some orders were hit for more than a month. After the break, the turnover of the workers is sometimes higher than 50%, which in turn leads to quality problems.
To learn more about how to mitigate these issues and how to manage disruptions? Can contact me info@mfcdental.com
(As far as I know, it is similar to the Mexican “processing plant” on the US border during Christmas. But in China, it may be more far-reaching because local production of all components is also stopped, and Chinese manufacturers tend to order. It is not an order. The more direct meaning is that there is money to arrange an order, and it is impossible to arrange in advance if there is no deposit, and the whole arrangement will be arranged faster.) Obviously, this does not meet MFCdental’s maintenance customer guidelines.
3. Excess energy
Your Chinese supplier may tell you many times that electricity has been cut for one day, environmental safety inspections have been spotted, and production time has been postponed. Again, it is an external factor that cannot be considered in the plan.
It is even used as an excuse to explain the unexpected delay due to force majeure. If the buyer has no other suppliers in the same area, it is difficult to check if it is true!
7 major risks to cooperate with Chinese suppliers
1. Chinese factory lost patience and motivation during new product development
In other words, the factory owner does not believe in business potential. Because most of the bosses are in the 70s or 80s, they don’t have enough motivation. They didn’t say it straightforwardly, but they have a lot of excuses for delays.
Frequency: At least 30% of the time to develop new products in cooperation with Chinese manufacturers. They think that one or two iterations will suffice, but it will take more time and effort before starting production. The only thing they want to focus on is production. No more attention to the quality of the product? How is customer experience?
Example – My product, teeth whitening light, generally requires a wavelength of 460-520 nm for the lamp bead wavelength. Because customers need to match their own whitening gels, specific wavelength ranges are needed to achieve better results. This requires our suppliers to provide different bands of lamp beads for long-term testing, which wavelength is in line with customer-developed gel. In order to achieve the best results for the end customer.
So it takes multiple iterations. After a while, some vendors will not respond to emails, phone calls, and WeChat messages. Over time, progress has become slower and more difficult, and the entire project has been delayed.
2. Production cannot meet the required quality standards
Once the supplier fully understands the meaning of the customer’s quality standards, they will refuse to produce and increase production costs in accordance with the standard.
When buyers have to make high-quality products, if the supplier’s production process cannot consistently meet the standards, they must sort out most of the bad products.
Example – Still teeth whitening light,
The standard quality inspection has the following steps:
- Raw material parts need to be inspected once, for example, the condition of the lamp bead.
- During the injection molding, it is necessary to check the appearance and the condition of the lamp bead.
- Check the appearance, lamp bead, and function during assembly.
- Once the finished product is finished, it will be checked again.
For some suppliers, in order to achieve efficiency and capacity, only the last time will be checked. This will result in a missed inspection, which will result in a bad rate for the customer. The customer experience will suffer serious losses.
3. Priority in the production plan
Some factories are accustomed to larger orders, or the products produced are technically more complex than they usually do.
Example – Some custom charging treasures are produced at the Guangdong factory. They have experience and are large-scale supermarket-approved suppliers. They are making large quantities or relatively simple products, with a focus on low cost, which workers can do all the time without having to stop replacing line products to increase productivity. They are completely uninterested in small and complex orders, although they have always mentioned ‘production as planned’ until the inspection day is not completed!
4. Production costs are out of control, suppliers have the opportunity to raise prices
Suppliers use customer changes, even their own mistakes, to say “you must raise the price because of your XXX.” This increased price is higher than the buyer’s target price.
Example 1 – Electroplating plants in Guangdong Province increase unreasonable labor costs (due to strict inspections by government departments, factories need to produce for a specific period of time, workers wages up to several times the minimum wage) and material costs (far above market prices) ), whether it is produced before or during the period. When they made a mistake, they also asked for full payment on the grounds that the customer’s request was not clear enough and they had to complete it by the deadline. By the first shipment, the price of the product rose by more than 20%.
Example 2 – After the development of the wireless Bluetooth headset (including electronics and software), the manufacturer doubles the price. The buyer’s deposit has completely disappeared. As can be expected, the manufacturer ensures that the software and hardware cannot be copied (the source code or chip cannot be known). This situation leads to a double failure of the manufacturer (no order) and the buyer (investment product development). More important is the waste of time and the missed market opportunities.
5. Unauthorized and undisclosed subcontracts
The buyer is considered to be producing at a factory that is usually reviewed and formally authorized. Then, when the time is right, production is placed elsewhere – usually, in a young factory, it has an immature system, few support staff, and offers low prices.
6. Refuse to pick bad products and reprocess after quality control inspection
The inspector found serious quality problems. Customers are not satisfied and ask them to solve the problem. The supplier took a moment to say that the batch is now acceptable, and the new check shows the same problem.
Most of these things happen to traders, and it is difficult for traders to control a factory without any control. This hurts both the buyer and the trading company.
7. Increased logistics costs due to estimates of the quantity and weight differences (from suppliers)
For some importers, higher transportation costs may mean no profit. Many Chinese suppliers are not very cautious when estimating the volume and weight of a batch of packaged products.
Not only does it affect the cost, but it also delays transportation if the total volume is not suitable for the booked container (or within the aircraft’s allocated space).
For example – our disposable dental products are mainly volumetric calculations. Originally, a batch of goods can be packed in a 20-foot container.
When the container was loaded, the loading could not be completed. Finally, the container could not be loaded, the vessel was missed, and a new 40-inch container was booked in the following week. After a delay of one week, transportation costs increased by 20% or more.
