How to get started in China sourcing

I had a call yesterday from an old client of mine, a company that sells a very popular line of kids bags ( I see them all around town here). The woman who started the company sent me to China several years ago to attend the Canton Fair on her behalf and now her husband, Richard, has joined the company. This company is typical of many small companies and start ups I have met over the years. They start their business with the aid of a China sourcing agent and the scope is small for the first few years. But then as the product starts to take off the company becomes more sensitive to quality and cost and they begin to outgrow their sourcing agent. And it sounds like this is what is happening with this company.

Richard will be in charge of sourcing and vendor management and he called to pick my brain on China. He said that that the company now uses just one supplier and although that supplier has been pretty good in terms of quality and pricing, there have been issues. One issue is they really know very little about the supplier as the orders are handled by a middleman. I sensed in listening to Richard that this was a typical scenario as I have outlined above; the company is growing and wants to have more control over pricing as their orders get bigger. Using a middleman, however, means they have less control. Still, I advised Richard not to bite the hand that feeds you. This middleman has helped grow the business to what it is now, a very successful company that is on the verge of national brand recognition. But, I said, if the frustrations are growing in the relationship it is time to start looking for other vendors. There is nothing wrong in doing this and, in fact, you never want to limit yourself to one supplier or one agent.

Richard asked me if it was a good idea to put together a list of vendors in China and to make a trip there. This sounds good but it would be hard to make such a list using alibaba and global sources. These sites really don’t tell you much about vendors and you really have no way of distinguishing who is a manufacturer and who is a trading company. I would add that unless you really know China I think it would be hard to draw up an itinerary for a sourcing trip where you are visiting vendors for the first time. One vendor might be in location A and another in Location B. The distance on the map may look close but in fact it may take a full day to get from A to B because of traffic and poor roads. I speak from experience. I used to make itineraries for China trips but they seldom went as planned. There was always the unexpected to deal with, a road that was under construction forcing you to take a lengthy detour, an un-scheduled power outage, the unannounced unavailability of a vendor you had gone to visit, inclement weather esp in the summer. When you travel to China to visit more than one vendor, you should give yourself plenty of time, building in at least 2-3 days per vendor visit, not including travel days. For a first trip to China putting together a list of potential vendors and attempting to visit them would not be the way to go.

Instead I told Richard that he should go to the Canton Fair or the Hong Kong Sourcing fair which are held concurrently twice a year, in April and October. These fairs are the best introduction to sourcing in China for small businesses. The value in attending the Canton Fair, for example, is that you don’t have to trapise all over China to meet vendors. They are all right there in Guangzhou for you. Of course there are many vendors to avoid at these fairs, vendors you just do not want to deal with. But there are good vendors as well. At the very least you get a lot of feedback on your product and you will arrive at a truer understanding of your product design and cost by virtue of talking to so many knowledgeable people about it. You will also be able to see many other products on display which will aid your company’s own product development.

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How to schedule new vendor visits when in China

I got an email the other day from someone who was headed over to China to inspect an order and wanted to find out how they could perhaps meet some new vendors while they were over there. They were not leaving themselves much time as they were set to leave in 24 hrs when they emailed me. I told them that the best thing to do was to line up these visits well before their trip but as that did not happen this time, there were still two things they could do as follows:

1.) Do a vendor search by province and city on the Canton Fair website.  The website allows you to do this and it is very helpful if you want to locate vendors in a specific city, as this person wanted to do.  You can then type in the keyword for your product and you will get some results.  For example, when I typed in “toys” for Dongguan City in Guangdong Province I got 14 results. I think you can do the same on Alibaba.

2.) Work through the concierge at the local hotel. Depending on which hotel you are staying at in China concierges will do everything for you and this would include looking up factories that might be of interest to you. Of course they won’t be able to do much beyond giving you a name and number, but really that is all you need to begin. If the vendor has booked the hotel for you then you don’t want to ask the concierge for help with a project of this nature. The reason is that the hotel would most likely report to the vendor that you were looking for other vendors and your vendor would not be happy. I have seen this happen before. Vendors get possessive with their customers, especially if your orders are big, and they always want to keep an eye on you to make sure you are not running off to the competition on your off day. However, If you have booked the hotel yourself it is probably safe to ask the concierge to help you locate other vendors while you are in China. You can also perhaps ask someone in the hotel business center to do this for you but you would probably have to pay them for this.

Finally, it is a good idea if you are spending any length of time in a city or going back repeatedly to get to know some locals, perhaps a student who is looking for some translator work. This person can then help you on inquires of this nature and may be able to do things for you such as booking hotels and transportation. In fact when you go to the Canton Fair you will see hundreds of students outside the main hall looking for translator work during the fair. Knowing locals like this can be extremely helpful as you develop your business in China.  Just remember that if you do hire someone to help you out on a regular basis then you need to do so in accordance with the labor laws in China.

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