Why getting a vendor referral may not be the best way to find a vendor in China

What people are saying about Mulberry Fields
I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips”   a company in Utah

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The other day a popular China blogger  wrote that finding a factory through a referral is the best way to find a vendor in China.  This always sounds good in theory but it is in fact very hard to do in practice.  Here is why:

1.)   Just because someone introduces you to a factory does not mean that factory is going to want your business. They might have no interest at all unless your QTYs are large or the person who had introduced you was a very good customer of theirs.  Even then who is to say if they would treat your orders with the same importance.  A case in point: a couple of years ago I got  a vendor referral from a friend of mine but when I approached the vendor I got no response. The vendor in question was a huge apparel factory outside of Shanghai that obviously did not need the business I was prepared to offer them for they never replied to me even after two or three emails and a phone call.  Even had they eventually replied to me I probably would not have not have pursued the business with them based on their feeble response.  And this has happened a few other times that I can remember.   I would argue that it is preferable to work with a responsive vendor whom you found on your own at a trade show than with an non-responsive vendor you had been introduced to by a third-party even if that vendor came with a good recommendation.  

2.)    If you work with a China agent who introduces you to a factory, they are most certainly getting a commission from the FTY to do so.  This is SOP in China. This is not then an objective referral based on the factory’s capabilities and your needs.  And the same thing as # 1 above. The factory may really not want your order to begin with but may just be taking the order as a favor to the agent.  But you have no way of knowing this.

3.)    If you work with a US based sourcing company, once again you may be partnered with a factory that may have little or no interest in your order.  They may simply take the order because they have a longstanding relationship with the sourcing company.  Nor will you likely have the opportunity to work directly with the factory.  All your communication will be relayed from the US office to the China office to the vendor.  If you have a design-driven product,  that really demands you sit down with the vendor to discuss, you will have problems.  But if you have a low-value product e.g. promotional goods, simple molded product, certain toys using a factory via a US based sourcing company might not be a bad way to go.

4.)    How many people do you know who are going to refer you to a vendor if it means that the vendor may pay more attention to your orders than theirs?  If I worked with a factory that had a tendency to be behind in their production schedule and late in deliveries, the last thing I would want them to do would be to take on additional orders, unless those were my orders.

5.)    How likely is it that you actually know someone who knows a factory in China that can do your product? Many factories in China have niche manufacturing capabilities. For example, I have been working on a hat project for the last year and have discovered that not all hat factories can do all kinds of hats.  Depending on your product, it sometimes can take a while to find a good vendor.

If you do get a referral for a factory and you want to consider it you should ask yourself three questions:

a.)  How well do you know the person who is giving you the referral ?  And what is your relationship with them ?  If it is someone I have known for a while and trusted I would be inclined to listen to them.  If I didn’t know them well, I would be very cautious.

b.) What is the relationship of that person with the factory ?   Does the person have a longstanding relationship with the factory and are they regarded as an important customer ?  Or have they just done a few small orders with the factory ? If the latter, then once again I would be very cautious.

c.) Has the factory expressed strong interest in your orders ?   Suffice it to say you do not want to give your orders to a factory that is not really interested in your business.  Don’t just assume that this is China and all vendors want orders.  Vendors are very picky nowadays.

Depending on how you answer these questions the referral might be the best solution for your. Or the worst.

In short,  all things considered,  I think the best way to find a vendors in China is to meet those vendors yourself and gauge their capabilities and level of interest in your business.

www.theeastasiaco.com

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