The first step in the importation of products is requesting a quote from Chinese suppliers. Sourcing Nova has compiled this article to explain the finding of the best supplier, the quote request process, the information in the quote and the information you provide for the products you want. It is lengthy piece, but it breaks down the request and information process for new businesses sourcing Chinese products.
In previous articles, Sourcing Nova has introduced, in detail, factory standards, product certificates, trade terms (FOB, DDP, CIF, etc.), freight forwarders and customs brokers in the Chinese import and export business. We also introduced how to choose a profitable niche product using B2B websites such as Alibaba, Globalsources, 1688 and HKTDC. This article introduces how Sourcing Nova, a professional Chinese purchasing agent, assists in requesting a quote from Chinese factories, and how we can determine whether that supplier is suitable for processing a request for quote.
With the official listing of Alibaba Group on the New York Stock Exchange on September 19, 2014, global buyers can easily find B2B Chinese suppliers online. Finding a good Chinese supplier is no longer a difficult task – how to find a supplier that is suitable for your products is the task at hand. Many small business owners new to China’s supply and import business are more focused on price and are committed to finding the supplier offering the lowest quote.
Experienced importers also consider quality and lead time while paying attention to price. This is a correct and important step on the road to importing Chinese products, but this consideration is only a part of the entire process. As a professional Chinese purchasing agent, Sourcing Nova has established characteristics to define and measure the perfect Chinese supplier of goods for you.
What are the reference factors for judging the ideal Chinese supplier?
Sourcing Nova believes that a supplier who guarantees your imported products from China is the cornerstone of your success. We believe that to do a good job, first select the right partner. Therefore, we have compiled a checklist of standards that lists all important characteristics as a review before submitting a request for a quote from a Chinese supplier:
- Price: The price must be reasonable. Minimizing middlemen and shortening the supply chain is what every importer expects to make decent profit. Everyone in the Chinese product chain, starting at the supplying agent, realizes proper profits are the guarantee for maintaining healthy operations. Importers should not be too greedy. Wanting too little a price from the factory is not only detrimental to quality but also damages a long-term, stable, cooperative relationship. Labor costs in China are rising, and many young people do not want to work on production lines. Blue-collar workers on production lines in many industries now earn more than office workers, and buyers need to be prepared.
- Quality: The simplest judgment standard is if the Chinese factory holds ISO9001 and BSCI certifications, and whether their products have passed CE Mark certification. If your business is a food related industry, quality depends on whether products have FDA and LFGB certification. Electronics need RoHS and FCC certifications and other industry-related certificates.
- Lead time: Lead time represents the capacity of the factory to make samples and mass-produce products. The delivery time varies from industry to industry, but the most important thing is that the supplying agent should be able to guarantee its product delivery time without undue or unreasonable delay.
- Security: This means mainly business secrets. Good suppliers sign a confidentiality agreement with the buyer, promising not to disclose the buyer’s information to the outside world. This agreement protects intellectual property rights of the buyer. Buyer-designed products are not to be sold to anyone else in the target market. It is worth noting that many products sold on Aliexpress are designed by other buyers. Note: The price of Aliexpress products is very low because there are many of the same products in stock and many recalled products.
- Experience: It is best for the factory to have produced similar products to your own, which can be customized according to the specifications of buyers. Big factories within China usually maintain a certain number of skilled master craftsmen. These employees do not participate in mass production and are only responsible for making and improving samples and prototypes according to customer needs. Buyers doing Amazon FBA must consider this factor.
- Geographic location: If your destination is the United States, Sourcing Nova chooses a factory supplier near the eastern coastal areas of China. If your destination is a European country, we choose a different supplier near a major railway transportation hub. The closer distance to the target country reduces the cost of transportation for Chinese import and export.
- Customer service attitude: Some factories are very proactive in finding solutions to customer problems, and they are open-minded in cooperating with importers’ different requests and demands. Some undesirable suppliers are relatively slow and have no willingness or ability to adjust themselves according to customer needs. Customer service is an important reference standard, and one that is often easily overlooked by novice buyers looking for the best in a quote on products. The factories with good customer service cooperate more smoothly and worry-free with their customers.
- Factory scale: This can be judged from several aspects. The number of available products for sale and if products are seen in mainstream countries in the world is a good sign. The quantity and quality of production equipment, plant area and number of employees are another positive reference factor when looking for the best quality supplier. When the factory entered your business niche industry and in production is also a focus for Sourcing Nova.
For many overseas importers, understanding this information is not an easy task. Sourcing Nova assists you in asking for a quote from a superior Chinese supplier in the following ways:
- We have an extensive supplier database, which we solely own and operate, of over 30,000 suppliers. (1) It contains information on exhibitors from previous Canton Fairs. Not every supplier in China can participate in the Canton Fair. Annual sales of 10 million yuan is the minimum entry threshold, so only the best Chinese suppliers participate in the Canton Fair. Participant qualifications include certification by government agencies, specifically the Foreign Trade Bureau, and the Chinese government has a member of this bureau conduct field inspections before being allowed to attend the Canton Fair. This ensures that these suppliers at the Canton Fair are operating legally. (2) The supplier continuously includes and improves information for many foreign retailers and brands. These brands include Target, Home Depot, Wal-Mart, IKEA, Wayfair, Philips etc. These big international brands require strict supply chain management systems and various certification trainings for their Chinese suppliers. Sourcing Nova has more confidence in the quality of these suppliers’ products as a rule. (3) The better supplier includes information for some industry exhibitions. These exhibitors are generally more open-minded and know the trends of the industry – meaning that their products are more creative and not easily out of date.
- We have our own IT system. This translates the supplier’s quotation information in a unified format and allows buyers to log into our system. Importers can easily follow up their products and logistics information in real time. This is very beneficial for international importers. We will explain this system in detail below.
Requesting the best quote from Chinese suppliers – The Process
Before Sourcing Nova starts the quote request process formally, buyers have a few things to consider:
- MOQ: Many importers want to find the smallest MOQ, minimum order quantity, possible. The importers want Chinese suppliers to take on very small-scale customized products. Consider: Suppliers do not maintain inventory. They use a large amount of cash to maintain plant operations. Wholesale and trade companies generally have inventory on hand. Therefore, the MOQ of these two is often lower than that of a supplier. If your products are in stock on the trading company shelves, you can expect a very low MOQ. If your product is customized, some trading companies and wholesalers are willing to provide a smaller MOQ, but this can depend on several different factors. Although a supplier MOQ is fixed, they will keep excess for themselves for other buyers as samples. Suppliers also display or sell excess samples on B2c platforms like Aliexpress.
- Sample: Chinese suppliers generally do not accept requests for free samples. This is standard practice in China, so do not expect a free sample. Many times in the past, scammers acting as buyers obtained samples for free to cheat Chinese merchants, as these scammers had no intention of buying from the supplier. Preferable Chinese suppliers will charge for the sample, but this fee often is deducted when placing large orders in the future.
- Factory address: Most reliable suppliers are willing to provide their own address in China. If a supplier can only provide addresses from Hong Kong, Taiwan or Macau, it is likely that the supplier is a trading company.
- Quotation table format: Almost every Chinese supplier will have its own quotation table format, but their trade terms, MOQ and shipping costs are different. For overseas buyers, it is often difficult to measure different quotes without a uniform standard. It is an apple-to-orange comparison. Buyers need an apple-to-apple comparison for a uniform quote.
- Language barriers: Many Chinese study English in school for a long time; however, the current test-taking education model is not sufficient for most suppliers to understand and communicate in business language. Many smaller suppliers use automatic translation programs to communicate with foreign buyers, so do not be surprised if the email quote request you see seem to come from a seven or eight year old child.
- Validity period: Each quotation has a validity period. The cost of raw materials and exchange rate of the products may fluctuate at any time. Generally speaking, importers need to place an order within the validity period to get the price on the quotation sheet.
How does Sourcing Nova help request the best, most accurate quote from Chinese suppliers, and what processes are in place for that quote?
- Select 10-15 potential suppliers: For your purchasing needs, Sourcing Nova will select 10-15 qualified suppliers in our database of Chinese manufacturers for a quote request. We ensure that these companies are active in the Canton Fair or suppliers of major international brands. Suppliers should have ISO9001, BSCI and other enterprise and product certificates. We check company background information, including registered capital, business size and operating history.
- Request for Quotation Form: Sourcing Nova sends the company a uniform format of Request for Quote form. This form gets the company FOB price, MOQ and lead time along with buyer specific requests for manufacture. For overseas buyers, this are the three pieces of standard information. Sourcing Nova then requests the supplier fill out our form and attach their quotation form for comparison.
- Uniform quotation table format: Under normal circumstances, Sourcing Nova may obtain quotation tables for 3-8 suppliers. We will decode the supplier’s quotation form and record the following information: development mold costs, packaging costs, payment terms, inspection fees, sample fees, FOB prices, estimated cargo volume, weight and MOQ prices in a uniform format and currency of the importer. The quotation sheet also includes different price amounts, price breaks, lead time and overdue penalties (usually a certain number of discounts or air shipments), the validity of the quotation form and other remarks by the buyer and seller.
- Buyer Evaluation Quotation Form: Sourcing Nova hopes that buyers evaluate the quality of the quotation form as a whole, instead of focusing on the unit price of the product. In actual operation, many factors affect the purchase cost and not just the unit price. The quotation form also contains the shipping cost of the product, taxes and relevant information from the uniform quotation table format. We believe that it is better for you to use our unified format quotation form. Our form prevents buyers from reading surface data for just the price. The form contains the most realistic cost quote from the chosen supplier. Because many hidden fees will lurk in the quotation sheet, buyers pay a higher price than if they did not look at the overall quotation sheet carefully. For example, some unscrupulous suppliers have a low unit price quote on products, but they do not specify the cost of developing the mold and using the mold. The supplier’s price suddenly spikes when you place an order for production. Other less desirable suppliers make the mold price very low, but the company’s charges for mass-produced quotations spike sharply. This is a common trick: Attract buyers’ attention with a low price based on asking for a quote, and then gradually increase the price while keeping the customer.
Supplier trade terms are also important. Due to the very different responsibilities and obligations of FOB, CIF, DDP and Exw, the cooperative freight forwarding of each individual supplier is also different. A buyer cannot compare the purchasing costs of different suppliers. Sourcing Nova lets the supplier provide an initial quote for FOB based on the nearest Chinese port. The chosen supplier ships the product to the nearest port, and Sourcing Nova ships the goods to the location specified by the buyer. Your price quote from Sourcing Nova includes sea freight, import country declaration and land transportation. Although you signed the FOB contract with the supplier you wanted, you enjoy the services and benefits of DDP terms with us.
How does Sourcing Nova assist buyers in evaluating better supplier cooperation costs when purchasing?
Sourcing Nova believes that in addition to the visible digitized costs on the quotation sheet, there are some invisible and difficult to quantify cooperation costs when purchasing from Chinese suppliers. We include the supplier evaluation in the quotation form to the buyer, which includes the following:
- Supplier response time: A well-prepared professional supplier can provide a quotation within 48 hours, and a smaller equally well-prepared supplier can provide a quotation within 72 hours. If the supplier’s quotation time is more than four days, except for reasonable reasons, then Sourcing Nova thinks that the supplier’s performance in this area is very poor. We see how long it takes the supplier to respond to our request for a quote. If the supplier takes a long time, it means that the supplier is unsure about the price of the product or is possibly trying to determine a price based on other suppliers and their information. A large span of time indicates that there are many variables in the supplier quotation table, and some things may simply be outside of the scope of the factory’s capabilities.
It is also possible that the company does not have a dedicated department to manage email requests for quote requests. One person can do many things at the same time, but this makes the person too busy to focus sufficiently on a single customer. If Sourcing Nova has a question in the future, we may need to wait an unreasonable amount time. Only about half of the selected suppliers will reply to our email requests for product quotes. This may be because the supplier is busy producing large orders, or they may not be able to make the products that buyers are looking for. Therefore, we send 10-15 requests for quotes to suppliers on your behalf, and we usually get 3-8 emailed quote responses from the better suppliers.
- Content of Supplier Response: Our unified format quotation form contains up to 15 items. Under normal circumstances, the supplier quotation form will cover most of the items. Some parts of the quote that may affect the supplier’s profit are deliberately circumvented (such as penalties for delayed delivery). Sourcing Nova follows up on these circumvented clauses. If the supplier is still unwilling to answer positively, this is a warning sign for us and this supplier.
- Supplier qualification: This is not visible on the quotation sheet. Sourcing Nova needs to know the supplier’s enterprise size, production equipment, business scope and when they start. We do this by checking their registration information, and the time the company entered this industry with government departments and other third-party channels. Sometimes, we also need to check various certificates provided by guanxi to confirm that the certificates are genuine and valid. We will also ask the suppliers to provide the factory address. If necessary, we visit the supplier in person on behalf of the importing customer.
- Communication channels for suppliers: For foreign importers, email is the main communication channel with suppliers. Sourcing Nova is a Chinese sourcing agent. We can call suppliers anytime, regardless of time difference. We can communicate through WeChat, a Chinese instant messaging system. We communicate with suppliers several times a day on our customers’ behalf if necessary. This quick communication opportunity greatly reduces the waiting time caused by time difference.
Sourcing Nova communicates with importers in English and suppliers in Chinese – Mandarin and Cantonese. Our team has Americans who can ensure that buyers and suppliers are talking about the same thing and minimize interpretation errors due to cultural differences.
- Person in charge at the supplier: In Chinese culture, people have a tendency to show others an “I am the person in charge” image. Therefore, each sales consultant will be a sales manager, even if they just joined the company after graduating from school. The real person in charge is the department head. Sourcing Nova gets the contact information of the department head and thus ensures smooth communication channels on behalf of the buyer. Although most of the daily work is handled by ‘sales managers,’ we want the department head for help when necessary.
- Supplier’s product quality: In the quotation form, Sourcing Nova finds that some preferred suppliers’ prices are higher than others. Sometimes it is because these suppliers are middlemen, or their companies have high expectations for profits. This is not what we expect for our customers. Sometimes there are price differences because the supplier has stricter control over the quality and process of the product. This could be because the appearance of the product is more refined and the materials used are more environmentally friendly.
If this is the case, Sourcing Nova may ask for a bill of materials (BOM) or samples to see if the products are really superior to others as described in the self description. If the supplier being considered does has a reason to quote higher prices than others, we think it would be worthwhile to conduct business with them on the buyer’s behalf.
- Supplier’s customer reference: If this supplier claims to be a long-term supply partner to IKEA or a major brand such as Philips, then we have reason to believe that their product quality is guaranteed. If product quality control is relatively stable, that product will be less prone to major quality problems and defective products.
Sourcing Nova also has methods to check whether what the Chinese supplier says is true. Some suppliers are very hush-hush about leaking such information because they consider this information to be a trade secret. Some suppliers feel foreign buyers are not well-known global companies, and the supplier has concerns about competition taking away their customers. We check the supplier’s customer market coverage. If the supplier has overseas markets for a long period of time, their product quality will be more stable than those of the suppliers that also serve the Chinese market.
In China, the product quality certificate is CCC certification, and the standard of this certification is much lower than the European CE certification. If the supplier does the domestic market often, then the supplier may create products with lower quality requirements. Therefore, suppliers that only make foreign trade orders tend to have more a reliable product quality, and Sourcing Nova recommends these suppliers over any other.
- Supplier customization capabilities: Some suppliers can only produce a fixed number of products, and these suppliers are not capable of customizing products to buyers’ requirements.
- Buyer’s other requirements: The rules of each industry are different. In addition to the above general inspection factors, Sourcing Nova assists buyers in other factors.
The above information cannot usually be displayed in the quotation form, but Sourcing Nova believes that this information is important in the import business of global buyers. Your success depends on a trusted Chinese supplier. Sourcing Nova’s team members are composed of many cross-industry elites. Our experience, technical strength, language communication and network of relationships can greatly help small and medium importers in Europe and the United States. This reduces headaches when purchasing Chinese products and helps the importers find quality products from quality Chinese suppliers.
What information does Sourcing Nova need when preparing a quote request from a Chinese manufacturer for you?
Sourcing Nova believes that the more prepared you are, the more accurate your request for a quote from a Chinese factory will be. Novice import businesses often do not know where to start in the quote process when importing Chinese products for sale. Here are some reference points:
- Payment terms: You have to accept the Chinese market payment terms. Chinese factories generally require 30 pecent advance payment, and then the remaining 70 percent before shipping. If you are a large foreign retailer and your purchase is large enough, these payment terms can be negotiated. If your purchase volume is not large (less than 1 container per quarter) and you expect to pay the balance after receiving the goods, then the excellent Chinese supplier selected will probably ignore you and your request. You want to find the best Chinese suppliers. Similarly, quality Chinese suppliers also want to find quality overseas buyers. You have to be good enough to attract good Chinese suppliers. In China, there are three main factors that factories use to evaluate buyer quality: order amount, order frequency and payment speed. Sourcing Nova has seen too many unreasonable requests from arrogant buyers, and we hope you are not one of them.
- Clearly describe your product needs: The easiest and most straightforward way to describe your product needs is to send samples to the factory. Sourcing Nova knows that your product may still be a concept, and you may not have any physical samples on hand. You may need to prepare 3D renderings. You can find services to create models and realistic renderings on many outsourced platforms like Fiverr.com.
- Estimate your own purchase volume and frequency: Please; truthfully estimate your own purchase needs and do not exaggerate the amount. If you are not honest about your buying capabilities, chosen suppliers will not conduct business with you.
Guanxi is everywhere in China. Bosses in many industries are related to each other. They will not share their high-quality customers with one another, but they will share low-quality customers. Low-quality customers ask for a huge order amount to find the production base price at inquiry but order far less than the amount based on the inquiry. This behavior on the part of the buyer is shared with other suppliers in the same industry. In the future, your inquiry on a product price from another supplier may be ignored.
The average cost of producing 10,000 products is very different from the average cost of producing 100 products. Many buyers want to use the order of 10,000 products to get the purchase price of 100 products. This is an outdated and notorious trick. Sourcing Nova hopes that importers will no longer use this method to obtain a cheaper price on products.
- Buyers need to understand the production process: The more you know about the production process in your industry, the more you can judge the Chinese supplier’s capabilities.
Almost every importer can find Chinese suppliers on Alibaba, which seems to be an easy task to source goods from China. The unit price of a product is not the only criterion for selecting a quality supplier. Sourcing Nova wants importers to consider the cost of purchasing goods in China and the project management cost spent on making a purchase. If you have a clear understanding of your procurement needs and are looking forward to finding the best possible Chinese supplier most suitable for you, please do not hesitate to submit your procurement requirements to Sourcing Nova now. Within 72 hours, we will provide you a detailed purchase report (the supplier needs 48 hours to reply to us, and we need 24 hours to prepare documents). We believe that there is no one best supplier in China, only the most suitable supplier for you and your business.
There was a great deal to read in this piece, but the information included is important for you starting a new business. How can Sourcing Nova assist you in a request for a quote from a Chinese manufacturer?