How to pick a China Sourcing company

I had an email from a South African company last week. They were reaching out to me to help them source self-balancing electric scooters, those cool scooters you see when you walk down the street in any major American city nowadays.  It just so happened that the company emailed another sourcing company at the same time and as they failed to bcc the email recipients, I could see the other company. Out of curiosity I looked at their webpage and saw that this is a Chinese sourcing company based in China.  As is so typical with China based sourcing companies, this company promises that the importing process will be cheap, fast and reliable, that is as long as you use their service. The website is full of information but when you read much of it you realize it does not say much.  For example there is a tab on “how to import furniture from China.”  It looks promising but when you click on the tab the gist of the lengthy text is that if you want to import furniture you need to find a good supplier.  And that’s all. There is nothing about the myriad of problems associated with sourcing furniture in China e.g. a factory’s drying facilities, the quality of hardware and lacquers, fumigation certificates  etc etc, a few of the things that come to mind when I think about importing furniture from China. Much of the text is cast in ungrammatical language and when they advise you to watch out for scams they spell it “scums.”  They say they have 6000 suppliers in their data base.  It looks good but how many of these suppliers are active suppliers of theirs they do not say.  I suspect very few. This is the kind of China sourcing company that often comes up when you do an online search.  But it is not the kind of company I would advise someone to use.

The kind of company I would recommend using is a sourcing company that spells out clearly the risks of sourcing from China.  Such a company I came across a couple of weeks ago.  They are located in the Midwest and the owner is a Chinese lady who has been helping US companies source industrial products in China for 20 years now.  There is a tab on the website of this company labelled “essential China advice” and it pretty much spells out the obstacles that one encounters when sourcing in China.  I read through it and I think it is excellent in terms of the advice it offers e.g. anticipate mistakes before they happen so you will be in a better position to deal with them when they do happen, if in fact you cannot circumvent them with adequate foresight; Do not make assumptions about your China partners and/or China orders but be on top of everything at all times; Don’t be in the habit of taking big risks; Play by the rules in China. And much more advice along these lines.  After reading this I come away thinking, wow, doing business in China is costly, challenging and there is no guarantee of success, what I knew all along, but what so many people do not know when they contact China based sourcing company and are told the process is easy. Here is the link to the company Good US based China sourcing company

In short when you are looking for a China sourcing company, don’t go with the people who tell you it will be easy. Go with the person who tells you it will be difficult and that you will need to stay the course, no matter how difficult.  And that you may not always succeed.  Go with the person who tells you that you will sometimes need to show up in China to meet the people who are making your product and helping you grow your business, and not those who tell  you that you don’t need to go to China and that they will manage everything for you.  In other words, when looking for someone to help you with you China sourcing use your common sense.

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The Shanghai Friendship Store

While I was writing my blog post for last week my thoughts suddenly went back to my early days in Shanghai when there was only one store which sold overseas products, The Shanghai Friendship Store, located on Beijing Rd. just off The Bund. The store was established in the 1950s to cater to overseas diplomats and their families who wanted imported goods while living in China. And when I lived there in the early 1990s it was the one store in Shanghai where you could buy a pair of Nike shoes, for example, or a Sony transistor radio, some Gilette razors or just a jar of Skippy Peanut Butter.  The Friendship store also sold a lot of touristy Chinese chachkies and it was a popular stop with large tourist groups who came to China in those early days.

The name, Friendship Store, was hardly eponymous because the service was atrocious, and the clerks glared more than they smiled. But in those days, people in China were not as friendly as they are now.  Yet, the Friendship Store, in spite of its dreary Soviet –era demeanor, mustiness and sulky, sometimes downright unfriendly service had all the cachet of a Saks Fifth Avenue among the Ex-Pats living in Shanghai. If you shopped at the Friendship store, you had money.

You needed a foreign passport to enter the store and there were always guards out front checking passports and making sure that no locals slipped past the large Foo Dogs placed at the entrance.  There was probably as much security outside the Friendship store as there was outside the US Consulate on Huai-Hai Rd.  Of course nowadays you can go down any street in Shanghai and find a Tiffany’s or Wayfair, or a Coach outlet store or a McDonalds.  But this is all recent and up until the mid 1990s many foreign goods were simply not available in China. Unless you found them at the Friendship Store.

The Friendship store only accepted Foreign Exchange Certificates (FEC), the currency issued to foreigners living in or visiting China. Up until 1995 foreigners, unless they possessed a Chinese ID or work card, were not allowed to spend the local currency, the RMB, even in Chinese stores. They had to shop only at select establishments that accepted FEC like the Friendship Store or KFC.  If all you had on hand was FEC but wanted some RMB, so you could shop in the local stores with your ID, the first place you would go would be the Friendship Store.  There out front you would find no shortage of money changers who wanted your FEC so they could buy luxury goods.

While writing this I went on Google to see if I could find any images of the old Friendship store. I could not find even one.  Instead I found images of  the new breed of Friendship stores, in Beijing, Shanghai and Guangzhou, glitzy, high end type shopping malls. Everyone is now welcome and all the clerks are smiling.  In other words, the Friendship Stores are now actually promoting friendship.

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When to split a Production Order (PO) between vendors

I had an email today from Chuck over at Supplier Global Resource magazine, a magazine for the promotional products industry. Supplier Global Resource Magazine.  Chuck is doing an article on China and had a question for me as follows:

“The process you describe in your four-post series is pretty thorough, and seems to cover a lot of the bases. But I was curious if, at the end of the process, a company had 2 or 3 Chinese candidates they felt comfortable proceeding with – would there be any benefit to placing an order with more than one manufacturer, possibly splitting a large order, to best determine the qualities of each manufacturer?”

My reply:

Good question. It is a good theory but in practice I don’t think works, at least not for most of the small businesses I assist. And for this reason:  Most companies that source in China have hard orders they have to fulfill and there are expectations from their customers, usually big box retailers, as far as delivery dates, not to mention quality standards and pricing. So most small companies do not have the luxury of time nor the resources to try out hard orders on as yet untested suppliers. They usually have to designate one supplier and hope things go well. If they don’t they salvage what they can and move on to the next supplier.The one exception would be if I had a new product that I was marketing online only, and the scope of my business was small,  Then I might try as you suggest. In this case, I would not have firm delivery dates to meet and could proceed cautiously, maybe trying out multiple suppliers at the same time to see who might be a good long term partner for me.

I will say that I have worked with companies that have resorted to the practice of splitting large orders between suppliers but usually those suppliers are already verified suppliers. And usually there are two reasons they do this.

1.)  They have a big order and one supplier alone cannot meet the delivery dates. Most of the time it is for this reason.

2.)  They have had a problem with one of the suppliers in the past e.g. usually quality or late delivery and are nervous about giving a big order to this supplier. Dividing a production order among 2-3 suppliers ensures that they will have at least some good product to pass on to their customers in a timely manner.

I would add that I have always found it very risky to divide production between suppliers. The reason is this:  Let’s say you have an order for 50,000 promotional shirts for a large US retailer. This retailer has very strict compliance guidelines.  50% of the order you do with Vendor A and the other half with vendor B.  When the shirts come in you find that the shirts from Vendor A are a slightly different color than the shirts from Vendor B and the large sizes from Vendor A’s are also running small.  The result is that your customer is not happy with the  wide variance in quality, issues charge backs and cancels all future orders.  In short variation in production lots from just one vendor can be a major challenge depending on the product.  So when you have more than one vendor producing the same product it becomes a major challenge to maintain product standards and consistency.

In sum: I have always advised people to try to have as few vendors as possible, a major vendor or two and then a couple back ups.  In Chinese there is an expression. 人多手杂。 Trans:too many cooks spoil the broth

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