A letter from a start up that wants to source in China

I had an inquiry from a person in Australia this morning. I get so many inquiries like this so I thought I would publish the inquiry and my reply accordingly. I think it will be useful for others who are experiencing the same frustrations in their China sourcing.

Hi,

I have read quite a number of your blogs and I wanted to ask you for some advice. My name is Robert and I am in the process of forming a startup active wear label in Australia. I have a pattern maker here in Australia so that part is covered but otherwise I am not sure how to progress forward to having my line manufactured. I have found the process to source a quality manufacturer in China who is willing to work with me both time consuming and very difficult. To start my runs will be small as I don’t know what will work for my target market and what wont. Over time this is something I hope to develop obviously, but I see the need right now to work with someone who understands China and how best to bring a product from design to production. I am hoping you can help me out or point me in the right direction.

Any help or tips are most welcome

Thank you

Dear Robert.

The first step before you do anything is to finalize your designs.  Then based on one of your completed designs I would make a special mock design for a prototype and start sending this out to vendors for feedback/ quotes. Please note that you have to be very specific about sizing and material specifications, as well as packaging. Don’t neglect any product detail. In other words, you really have to know your design and product needs inside out (no pun intended). Where most people have problems is that they have not finalized their design, and don’t understand their own product. And then they leave it to their vendor to educate them. Not only does this add considerable time and cost to a project but it tells potentially good vendors that you are an amateur.  That is not the kind of message you want to send to someone whom you are about to enter into a contractual agreement with.   Here is a little synopsis of what you need to do.

1.) Finalize your designs.  Pantones, sizing, material specifications.  Testing requirements if applicable (children’s clothing).  All packaging as well down.

2.) Project your first order QTY and target cost. Remember that the cost of your product will go up with packaging and shipping so be aware of this when you try to come up with a target cost.

3.) Reach out to vendors. Start with 20 vendors.  You can use alibaba for this or I can help you working from my file of vendors, which is substantial and generally does not cover the same landscape as alibaba.

4.) See who gives you the best price and who leaves you with the best impression as far as quality of response/feedback goes.  Watch carefully and eliminate two types of vendors as follows: those who are very slow to reply to you or those whose cost is simply prohibitive for your needs. Aim to have 6-7 vendors after this weeding out process.

5.) Go down to your local discount chain and buy a product that has similar material/packaging specifications as your own. Send pcs aka swatches of this material along with one of your designs to the 5-6 vendors you have targeted.  See what kind of revised pricing the vendors come back with. Once again eliminate vendors whose response is feeble or whose revised cost is simply too high.  At this point, maybe you have 3-4 vendors who look promising.

6.) Request samples but watch out for excessive sample fees. If a vendor overcharges you on a sample it will likely mean that they will over-charge you in production. Stay away from vendors like this.

Good luck !

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Christmas Trees: made in China or Vietnam ?

When I lived in Shanghai I had a friend from Taiwan, Mr Wang .  Mr. Wang owned a factory that made Christmas lights. It was a fairly large factory by China standards and every summer Mr Wang’s business was thriving – getting ready for the annual flood of Christmas orders from Taiwan and the UK. I always think about Mr. Wang around this time of year.  I wonder how he is doing now, because the toy and seasonal gift industries in China have been heavily impacted from external events – the Global Economic Crisis – and internal pressures: rising wages and higher production costs. Of more than 6000 toy and seasonal gift companies in the Pearl River Delta region (where over 80 % of the World’s toys are manufactured, to the tune of $ 1 billion in annual sales) over 3000 business have shut down during the past two years. There is widespread worker dissatisfaction with wages because of successful high–profile walkouts at neighboring Japanese automotive factories resulting in steep wage increases – and this is taking its toll on the manufacturers in the reason. Although most manufacturers can only withstand slight wage increases ( 5-10 %) workers expect much more because they have heard that workers in other industries have had their wages doubled in many instances. In China, rumors spread like brush fires especially among workers who often do not have access to computers and cannot verify the information they are fed. And much of the work force is simply illiterate.

I have visited many factories over the years and I always make a point to talk to workers. They often have interesting stories to tell, they can sometimes tell you things about how the factory is run that the manager himself would not tell you, and, most importantly, they are making your products. If nothing else I just like to make sure they are following the specs and thank them for their efforts, something they always appreciate.  I have noticed in recent years, however, that there is more grumbling than usual about wages. As cities grow and the cost of living rises, workers who are used to making $10.00 day – a standard wage in most rural factories – find that they can no longer afford basic staples.  It is a given nowadays that if you visit a factory and talk to one of the workers you will almost certainly hear a gripe about wages.

The result is that many of these factories – owned by Taiwan and Hong Kong manufactures – are relocating their operations to Vietnam where wages and production costs are still relatively low. Still, as more companies leave, I think this represents a good opportunity for the American buyer in China. China after all has many advantages that Vietnam does not, namely a large number of skilled workers (China, for example, employs more workers in the apparel industry than Vietnam employs in all of its industries). And the costs of inland transportation in China – from factory to port –are much cheaper than they are in Vietnam.

It is also good to remember that many inland provinces in China are as yet underdeveloped. When we read about labor unrest or shutdowns of factories due to high production costs, these are invariably stories from special investment zones or relatively developed coastal provinces like Guangdong, Hainan and Zhejiang. However, much of China remains untapped. Travel to a city like Fuyang, in Anhui province and you will feel like you are back in Shanghai circa 1982. The contrasts are stark. But cities like Fuyang, where wages and production costs are still low, where there is a large labor pool ( Fuyang’s population is almost 9 million) are the future of China and represent a significant opportunity to the buyer. Who knows Fuyang may one day replace Dong Guang as  the artificial Christmas tree capital of the world.