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Sourcing from China: ins and outs

Recession is over, business is back to normal, it is time to import from China again. There are many factors to consider, many knowledge to learn as to how to source from China. We will try to write down all aspects and process of sourcing in China to a single article, which I hope will show you the ins and outs of how to import from China.

Step 1 Choose the right products
If you run established business, this might not be an issue for you. Focus on the products you are familiar with and expand from there. But always open to new product ideas, to win over tough competition, you will need to provide products that your competitors can’t provide. For newly founded import business, do a thorough market research of the product ideas. The best professionals you should use for such a research is people who work in Chinese trading or sourcing companies. They know what products sell well.

Read this article on how to avoid scam before you read step 2

Step 2 Find the right supplier.
Out of numerous trade portals, the most decent trade portals to find reliable suppliers are:
No.1 Globalsources.com
No.2 Alibaba.com
No.3 Made-in-china.com
What makes them different from other trade portals is they charge expensive membership fee and verify the legitimacy of listed suppliers more properly than others. Trade with paid members only.

Search engine is another source to find Chinese suppliers. Vary the search terms and use advanced search command.
For example: you could search door rug, doormat too when you are looking for door mat. Use advanced search command like:
China door mat inurl:cn
Intitle:door mat inurl:cn
By using those search queries, you could get a more accurate search result.

Another useful method is contact the member companies of industry association in China. Attend Chinese trade fair like Canton fair, East China fair and other industrial fair is most efficient and expensive way to find decent Chinese suppliers.

Read China association list and 4 article series on how to verify Chinese suppliers before you go to step 3.

Step 3 Price negotiation
Price negotiation takes 2 things: research and tactic. Without proper research and hard work of inquiring many suppliers, you won’t be able to figure out the bottom price of your products. With proper price negotiation, you will be surprised how much more price bubble you can squeeze out.

Read negotiate price with Chinese suppliers before you read further.

Step 4 Contract negotiation
Don’t use PI(proforma invoice) instead of commercial contract. If you have to go with PI, make sure both parties sign and stamp on it.

Consult legal expert about potential risk and how to avoid the risk by carefully negotiating, drafting and reviewing the contract. Legal system here in China might be quite different from your country.

Read how to negotiate contract with China companies before you read step 5.

Step 5 Production follow-up
Follow up your order, don’t presume that the supplier will take care of everything. Newbie suppliers and busy suppliers often make mistakes. Make sure your instruction and demand is clear, make sure the suppliers fully understand your need.

Hire a QC to supervise in site if the order is big and any mistake will cause serious problem.

Step 6 Quality assurance
Learn from Japanese companies. They almost check every piece of products they ordered. They can fly from Japan to China at cost of 5000USD to inspect 3000USD value products.

Hire a third party quality control company in China to check the product quality before shipment. State the quality assurance clause in the contract if you can. Hire an in-house QC in China if you have budget, as in some cases, factory will bribe inspectors.

Step 7 Shipping solution
Contact 3 to 5 shipping forwarder to get a competitive quote. Shipping forwarders get bulk price from carriers(the shipping companies). If your quantity is big enough(say 20 containers yearly), you could contact carriers directly to get a bulk shipping price.