You have made up your mind. That idea or concept in the back of your mind that has stewed there for some time is ready to come out and become reality. If you are serious about turning that concept into a marketable product, you need to know how to find a manufacturer for that purpose. It makes sense; you do not have the tools, shop and understanding to make the idea into a product.
A quick, cursory search in Google will likely overwhelm you into thinking it is very difficult to find a manufacturer for your products, but this is not the case. It is not you cannot find a manufacturer. You did not go about finding one in the right way. There are steps to this process, just like there are several steps to sourcing products.
Sourcing Nova is going to walk you through how to find a manufacturer for your concept. We are in China and have access to an almost unlimited number of factories more than capable of working with you with us as your intermediary.
China is a very large country, and we are able to work with the provinces that can best create your products. We look at several factors in that process – including availability of raw materials. All we need to get you started are the basics of your products. We will take it from there until the products are in place for you to sell.
What is a manufacturer?
This may seem like an academic question, but it is something to consider. The manufacturer takes the raw material and turns it into viable products. Those products are sold to customers who then sell them to their customers. It is common for retailers to have several manufacturers working on a variety of products for their specific inventories.
What is a supplier?
A supplier and manufacturer are very closely related. In fact, many treat them as the same. However, Sourcing Nova will consider a supplier the company that brings products and inventory to you as a customer. Consider suppliers as everyone in the chain – manufacturers, wholesalers, distributors and the like.
Google has all of the help you need, but you need to know what it is you are looking for. The meaning of supplier will change depending on where the products are in the supply chain. There are three different types of suppliers.
• Manufacturers – Those who build your ideas into products
• Suppliers – Purchasers of existing brands and products
• Dropshippers – Retailers who sell products and fills orders for customers
The supplier is a part of the overall process of starting a business selling products. Finding a good supplier partner can be an almost insurmountable task if done independently. With a Sourcing Agent, however, it is very simple.
Determine what products you can import from China based on your budget
The goal of any business is to turn a profit on selling products or services. This is why you have chosen products from China, there is a significant profit margin to be had. However, consider one very important thing – what is my budget for products?
Around $100.00 and dropshipping
If this is the case, you can easily spend about $29.00 on a Shopify site, make a minor investment in some products and heavily advertise via social media channels.
$2,000.00 and up – Moving up from dropshipping
It is a hope your business will begin to turn nice profits, and you will have the opportunity to expand. If so, you should change from the dropship model into something else as this will raise your profit margins. The average Chinese manufacturer will have an MOQ of $1,000.00 on products. After you cover all of the other fees, including tariffs, duties and taxes on importation, you will incur costs of approximately $2,000.00.
$1,000.00 – $10,000.00 – customized, private label
Products that do not require a mold or development from a prototype, such as candles or straws, anywhere from $1,000.00 to $2,500.00 is all that is necessary for a private label brand. Other products, such as stainless steel tumbler glasses, bottles for cosmetics, plastic products and the like that require a mold or development, will require you to have at minimum $5,000.00 to $10,000.00 for a budget.
$10,000 and up – Traditional wholesaler/retailer
At this level, you may be sourcing products from local, in your home country, suppliers. It is a suggestion to consider Chinese products. It is highly likely Sourcing Nova can find you a much more competitive price with a better profit margin, even with shipping and importation.
If you have this much investment capital for your business, MOQ will not be an issue for you. Sourcing Nova may be able to negotiate better terms on your behalf as well.
Do your research
Sourcing Nova previously compiled https://sourcingnova.com/blog/best-products-to-import-from-china/. This is by no means an exhaustive list, but it is enough to get you started on a product search. Here are a few other tips for you to consider as part of your product search.
Avoid the following
As a new business owner, it is understandable you want to break into what is hot and selling. However, doing so could be disastrous in the long term as you will end up with backstock and unsellable inventory. This will cost you money in terms of storage, taxes and fees.
Trending And Trendy
Markets on some products, particularly certain toys, can be highly fickle. Some products will sell rapidly but for an exceptionally short time (Think fidget spinners – these were red hot in 2017). You will need certain factors to be successful: distribution, advertising and promotion and market insight. If you are new to the world of business, it is highly recommended to avoid these.
Low Value/Large Demand
The most commonly chosen product for low value and high demand – A4 printing paper. Many new business owners consider this to be a highly profitable Chinese import. The shipping fees are very high, and those who do import A4 paper do so in large quantity for a lower shipping fee. The result is high inventory, storage and taxes.
Products to consider
Sourcing Nova has listed some products as we note above. There are still excellent, low cost/high profit items to find and source. Here is what we suggest:
Unique And Daily Use
If you are in a developed country like the U.S., most daily use products are bought at big retailers. If you are looking for something people need and use on a regular basis, you will need to customize and adjust that product to a unique look. This is the only way you will break into the market.
There is normally less competition in a niche product than most places. People shopping niche products will want to spend good money on the best products, so you have an excellent opportunity available for nice profits.
On the other hand, niche products can be very much like fidget spinners – red hot popular one day and dead the next. Some exceptionally hot products earned sellers hundreds of thousands in sales. Now, the ROI, return on investment, on those same products has fallen. The profit margin is simply too slim for many e-sellers.
Make sure you can make a profit, and import those products
Later on in this blog, Sourcing Nova will list products we cannot import to most countries. Other products not covered means you will need to do your own research into the validity and profit margins.
The shipping fees are part of the entire cost but not reflected in unit costs on certain sites like Alibaba. If your international package is greater than 20 kg. (44 lbs.), the shipping fee is approximately $6.00 – $7.00 per kg (2.2 lbs.). Importing products via ocean shipping, Sourcing Nova’s preferred method, is approximately $200.00 – $300.00 per one m³ (36 ft³). Most shippers will have a minimum of two m³ (72 ft³).
Consider: smaller products, such as cosmetics, will require two m³ (72 ft³) regardless of MOQ. This is not a profitable ROI unless combined with other products to reach the required volume. The price for shipping will be the same, so sourcing additional products is strongly recommended.
Other costs to consider include tariffs, samples and duties. It is vital to consider the entire costs, and for that, you must do considerable research. Then, and only then, can you make a determination on the profits and if it is worth importing those products from China.
Where to start looking
If you are clueless on where to start looking for a manufacturer, do not despair. Sourcing Nova has done a good bit of this work on your behalf.
Specific directories available
There are several directories specifically for China and Chinese manufacturers. We mention Alibaba previously, but here are the other major directories.
• Global Sources – GS for short – is second to Alibaba. It has some excellent customer service and rating system. It does not have the same trade assurance that sets Alibaba apart. Use this directory if you cannot find what you want on Alibaba. (Frankly, if you cannot find it on Alibaba, it does not exist.)
• Made-In-China – This directory is great for larger products – think industrial machinery. It does have above average inspection services and reporting.
Google is certainly an integral part of doing anything on the Internet. Most of us have used Google and found what we needed after one or two cursory searches. Some manufacturers and suppliers have kept up with the algorithms and changes like many sites and even build their sites with Google in mind.
Key words like: wholesale, wholesaler, distributor and the like are often synonymous within the algorithm, so be sure to search under each.
Use caution if you choose this method, as the above options are clearly better and will have your specific needs met. What is more than likely to appear in a search are resellers, appropriate for some products such as toys, inexpensive electronics, common clothing and the like. For the more technical and detailed products requiring stamped metal, molded plastic or any heavy engineering requirement, stick to the directories.
Filter the reviews of the manufacturers on the directories for your best results instead.
Trade shows and industry fairs
Trade show, trade fair – both mean the same thing. A large exhibition for manufacturers to show their new and upcoming products to buyers and the public. These are one of the best ways to meet and speak to actual customer service representatives from the manufacturers you may have an interest in working with on your design.
The Canton Fair
China has the nickname of ‘The World’s Factory’ and for good reason. The sheer number of products made and sourced from China is incredible and continues to grow. There are some manufacturers who attend these fairs just to maintain their intellectual property rights and prevent counterfeiting with legal force if required.
The Canton Fair, ‘The Trade Show of Everything,’ is the largest of them all. Held twice a year in Guangzhou, formerly Canton, this fair has over 25,000 exhibits with close to 200,000 buyers from the globe all looking for the newest and best for their needs and their customers.
Booths have examples of completed products as a norm, but there is no reason why you cannot inquire about custom product orders. Free samples are often available as well, thus saving expensive shipping costs.
Each year, the China International Hardware Knives and Scissors Fair is held in Yangjiang. The fair features foundries, raw material, equipment and accessories. About 500 manufacturers and roughly 20,000 visitors attend.
Some importers may elect to go directly to China. If so, selecting the industrial cluster locations is necessary. Most manufacturers making similar products are in similar provinces within China. This means there are more common supply chains and skilled labor. The combination of these two factors could mean better pricing because of lower overhead.
The customer is one of the most powerful of all advertising sources, and it is free. A manufacturer of any repute is always happy to give names of customers and their contact information.
Social media can certainly ease much of the networking pains, but you still need to do a degree of looking and searching on your own. If you find a manufacturer that is not precisely what you want or need, ask if they have recommendations for another.
Those in a similar industry to your own may share some information as well. Just be certain you are not direct competition so the answers you get will be honest and forthright.
Facebook is not popular in China, but it is a good source for information for product design. Use it for what a customer would want in a product but not to find a manufacturer.
Hire a sourcing agent
Most of the manufacturers in China have no access to Google or Facebook as ISPs block these sites. Additionally, large manufacturers do not care for or have any experience with Internet marketing. They lack a website or have one that is exceptionally outdated. Most are apathetic to social media as well.
What does this mean for you?
It means you will not be able to find a decent manufacturing company using these sources. What you will find are middlemen and trading companies.
If you are looking for high quality manufacturers, you will have to find them in other ways. This means Chinese governmental websites, industry informational websites, reviewing national statistics, customs data and 1688.com. There is an exceptionally amount of information on each of these websites with easy to follow links to more information.
The pages are also written in Chinese.
Unless you are fluent in reading Chinese, these sites will be completely useless. This is where a sourcing agent steps in to help you on your behalf. Sourcing agencies, like Sourcing Nova, are familiar with all of these sites and can quickly find all of the information you cannot.
Here is our process. First, we find the industrial cluster of the product. From here, we check the local government and industry association’s websites to find the best manufacturers for your products.
Now that we have narrowed down your manufacturers, we review the size and history of the manufacturers using a variety of criteria. This means we can find exceptional manufacturing companies and create world class products.
As an example, if you are looking for kitchen knives, we have connections to the OEM manufacturers for Zwilling and WMF, two of the leading manufacturers for kitchen knives. This means we can source you a first-class, high quality kitchen knife that will rival the best European brands.
Finally, with a single phone call, we have people on the ground who can connect us to international manufacturers who do OEM major brands.
Once you have vetted your choices down and decided on a few manufacturers, what do you find with their services? Specifically, look at:
• Business description
• Product list
• Services offered
• Brand information
• Countries the manufacturer will export to
• Compliance certifications on certain products
• Major details
◦ Sales volume
◦ Employee numbers
◦ Social media
◦ Other topics you can consider
Choosing a manufacturer
Sourcing Nova has already done a large portion of the information you have read to this point, and we have solid working relationships with many manufacturers to boot. If you are still on the fence about where you want to have your products made, that is understandable.
There is no shame in having a backup manufacturer local to you and your country in case something happens.
Overseas manufacturing – advantages
Again, these advantages are not necessarily tied to China and Chinese manufacturing. There are some great advantages to consider.
• Better profit
• More manufacturers
• Expansive product variety
• High quality
• Low costs across the board
Overseas manufacturing – disadvantages
You cannot have a rose without a thorn, sadly. There are a handful of disadvantages to consider with overseas manufacturing as well.
• Longer wait times
• Chance of sub par quality
• Little legal protection
• Increased shipping cost
• Communication barriers – including culture
• Time zones
Remember, a large portion of the disadvantages cannot be resolved – customs and shipping times/costs – but the rest can with Sourcing Nova and Chinese manufacturers. The majority of the ‘soft’ disadvantages like culture and time zones are not a concern to us.
Communicating with manufacturers
The soft skills of communication are important when dealing with manufacturers and suppliers. This particular blog covers all of these in detail for you.
It is common for you to see the word Incoterms. There are several and will affect your overall quote. Briefly, here are three you are likely to see.
This term means the original product price without shipping costs. This is not the best quote without a freight forwarder or are new to Chinese product sourcing.
FOB includes product price plus shipping. The FOB formula is product cost + shipping to a Chinese port + exportation fees. The manufacturer has no responsibility on your products after this.
The manufacturer will get your products to your country’s port. It becomes your responsibilty after this to get the products to the final destination. Products damaged during shipping will not be covered under insurance. The CIF is original product cost + shipping cost from manufacturer to the port in your country + insurance + exporting process fee.
Ordering a sample
There was a time when many Chinese manufacturers shared samples freely and willingly with potential customers in a sign of good faith business. However, too many took unfair advantage of this generosity. Ordering samples is a necessary part of the manufacturing chain, particularly with a new product. It is not difficult to order product samples.
Most manufacturers, particularly in China, are open to negotiation with you on the MOQ and prices. Sourcing Nova does this for you, in person.
Settle payment terms, and send your initial deposit
Before you send your initial deposit to start the manufacturing process, you will need to have the following in order:
• Pro-forma invoice
• NDA – non disclosure agreement
• Lead and delivery times
• Payment terms and preferred methods
The payment is the most important of all these. There are a four common payment methods for international business.
• Wire or TT transfer
• Western Union
• Letter of Credit
There are several ways to make payments for your Chinese products. Generally, the payment terms are laid out in the pro-forma invoice. A deposit is always necessary before manufacturing begins with the balance due at a time also expressed in the pro-forma invoice.
The final step is to select the best method of shipping for your products. As a general rule, Sourcing Nova uses ocean freight shipping to your country’s port unless rail is an option.
Arrival in your country
Once Sourcing Nova ships your products, you will need to clear customs. Sourcing Nova will clear customs in China as part of the export.
Sourcing Nova has worked with many customers across the globe with finding appropriate manufacturers for their products with a healthy number of positive success stories. We want you to join them. What do you have in mind to make and sell? Send us a comment, and we can help you start that process within 48 hours.