The first thing a prospective vendor will look at: Order QTYs.

I had a client a couple of years ago who could not understand why a vendor in China was not interested in his order. I explained to him several reasons which he turned a deaf ear to. He insisted that I keep contacting the vendor saying to me: “They are a business. They want to make money.” Unfortunately it does not work that way in China.

The first thing a China vendor will look at when you run a project by them is the order QTYs. China vendors want large orders because obviously the bigger the order the more money they stand to make. And this is especially the case with low cost consumer goods. For example if you give a vendor an order for 10,000 pcs, let’s say a kitchen utensil, and the vendor’s profit is $ 1.00 per pc. then that is just a $ 10,000 profit. And it may be that after some unforseen costs are added up on the production side the vendor may end up keeping just half of that. Needless to say, an order of this size is hardly worth the effort for a medium or large size factory. If however you have 50,000 pcs on the order and the vendor is making $ 1.00 pr pc then that is a more interesting order for them.

The problem here is that for most small businesses a 10,000 pc order is a big order and sometimes represents a sizeable investment, as it did to the former client I mentioned above. So what we have here is a big disconnect. A large order for a small company becomes a small order for a large factory. What the small company sees as a serious business proposal is regarded by the factory in China as an insignificant inquiry.

The key here is to manage your expectations. If you are a small business just starting out your orders are going to be small. You have to prepare yourself for a lot of rejection when you look for a supplier, whether that rejection is in the form of an unanswered email or a high quote. With those suppliers that are interested in your business ( and make no mistake about it there will be some) you have to proceed carefully. Vendors that accept small orders are likely vendors who do not have a lot of orders – if they did they would not be interested in your QTYs. Vendors who do not have a lot of orders are probably not good vendors, low cost, low quality vendors as I refer to them. With these vendors you can still build your business but you will have to manage them and monitor quality very closely. It may be that every order you will need to inspect in China. At least if it were my business that is how I would do it.

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