Sourcing on alibaba. Questions you need to ask

What people are saying about Mulberry Fields
“Your blog speaks to the many issues I have experience with when doing business in China”  –  a California company

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Just as I go to Walmart if I need a pair of cheap gardening gloves or some Tupperware, so if I really want to get some quick quotes on a low value added product I will look on alibaba. Alibaba can be very useful for getting an idea of how much a product costs. Even Chinese vendors use alibaba as one of my long-time Chinese friends/associates has told me ( much to my surprise). In fact I know now that if I ask a factory about a project, and one component of that product is outside their area of expertise, then they will most likely try to find a subcontractor, you guessed it, on alibaba.

I am sure there are good vendors on alibaba. But it seems there is a lot of carrot-dangling on alibaba as well. The prices that you see on alibaba are low, to be sure, but they are usually tied to very high MOQs. And my impression is that there are a lot of 3rd tier vendors on alibaba. These are very small vendors who sell primarily on alibaba and who do not attend big trade fairs abroad or in China. In other words, probably not vendors you would want to deal with.

I always think it is useful when you meet vendors on alibaba to ask them two questions:

1.) Do they attend trade fairs. Attending trade fairs is important because it tells you up front that the vendor is an established business with capital to invest, and very likely has some overseas customers. If they answer ‘yes” then ask them which shows. Then go to the websites of the shows they mention to see if they are listed on the exhibitor’s list. “Trust but verify.”

2.) Ask your alibaba vendor if they have a local website. If they do not or they tell you it is “under construction” then I would be wary about doing business with them.

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Doing business in China is easy.

What people are saying about China Tips for Small Businesses

” A very interesting blog..”   – a company in France

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Every so often I have an enlightened moment where all my thoughts on China coalesce and I can see things more clearly than I saw them before. And this happened this weekend. I was thinking about some of my own projects and also about the “China chatter” that I read on other China blogs and Linked In – much of which has to do with how difficult it is to do business in China – and I realized that doing business in China is not difficult at all as long as you practice three things.

Patience
Common sense
Due diligence

If you can do these three things ( and 2/3 is not good enough) you can succeed in China. But what do I mean when I say patience, common sense and due diligence ? Here are some examples.

Patience: Many people try to source in China and after a couple bad experiences with vendors they met on alibaba, but never in person, they swear off on Chinese vendors and Chinese quality. This is not being patient. In fact there are a lot of bad vendors in China but also a lot of good ones. Sometimes you have to spend time, burning through a few vendors before you find one you can work with. It may take you a couple of years. But this is what I mean by being patient.

Common Sense: I have worked for companies and have had among my own clients individuals who just ignored the alarm bells and who insisted working with vendors who were not interested in working with them. Mr. F is a good example. Mr. F really liked the product of a certain vendor in Shandong Province. But the vendor did not seem to be interested in Mr F’s QTYs and felt his target costs were much too low. The vendor was simply not interested in the business Mr. F was offering them and this was quite clear in their emails. But Mr. F insisted on pursuing the vendor because he liked their unique product designs. Common sense, at least to me, says that you do not want to do business with those who do not want to do business with you. Another example of common sense is checking your order before it leaves China. But many people just don’t do this or they allow the vendor to do it. Common sense tells me that vendors are not going to QC your orders like you or an objective third party would.

Due Diligence: I can never get over how many people give orders to China vendors they have never met and know very little about. They trust the vendor because the vendor has given them a good sample and seems easy to work with. And most of all they like the cost. In short, you need to find out as much as possible about the vendors you are going to do business with even if that means paying 3K for a plane ticket and getting on a plane to China so you can meet the vendor yourself. This is an example of due diligence.

 

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China vendor communication – how to evaluate

I have a project now sourcing some BOPP packaging. I have reached out to between 10 -15 vendors with whom I have been communicating over the past couple of weeks. Some of these vendors I have met and some are brand new to me. There are often multiple emails in a day as I have a lot of questions – all part of my screening process. I have noticed that there are certain vendors who are very enthusiastic at first, answering every question I ask of them. But then after a week or two, their replies do not come in as fast. It is as if they have lost some interest in the project – after providing me with initial costs – and they just don’t feel like answering all the questions I throw at them. Other vendors are very good and answer everything. These are of course the vendors you probably want to deal with although there is no guarantee that at some point they also will not become unresponsive. In any case, there is tremendous value in this exercise because in just a few weeks you can get a pretty good idea of which vendors are responsible and which vendors you simply want to eliminate. Those of us who have done orders in China know how important, in fact how critical good communication is.

So I have gotten in the habit of making a list of questions that I ask vendors e.g. shipping terms, printing and mold charges, QC process etc etc. that I like to disperse over several emails, the goal being to drag out the process a bit just to see who are the best communicators among the 10-15 vendors I have targeted. You would be surprised how well this works. As I tell my clients, if it is this difficult communicating with vendor x when just requesting prices, imagine how difficult it will be at production time !

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