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Whether you’re looking for a manufacturer to make goods to your own specifications, or a range of suppliers to choose new stock for your store, China is the obvious place to start.
China exported over $500billion worth of goods to the US in 2018, and is the world’s largest exporter overall. China is the United States’ largest trading partner, while China was the United States third largest goods export market.¹ Such a broad manufacturing base means that you’ll be able to find a Chinese factory or supplier to partner with, no matter what type of product you want to import back home. Take a look at this handy guide, to find out how.
We’ll also touch on a smart way to pay international invoices, cutting costs and admin time and protecting your profits, using a Wise borderless account for business. More on that later. You can also create and send your invoices by using our invoice generator or the downloadable free invoice templates.
If you run a business in the US you might be interested in either having your own products manufactured overseas, or choosing a supplier based abroad to buy off the rack items for resale. Outsourcing your manufacture and supply can come with a range of benefits in terms of cost and quality - and open up a broad and innovative range of new products to share with your customers.
Considering moving your manufacturing to China? You’ll want to think through the pros and cons before making a decision. Here are some key pointers to get you started.
- Extensive availability and experience - China is the world’s largest exporter, with a wealth of experience in making goods of all types. No matter what you’re looking for, you’ll find specialist manufacturers in China to help
- Scaling opportunities - along with experience comes the opportunity to scale at speed if your product is a success. Chinese factories will be able to cope better than most if you need a quick uptick in production
- Competitive production costs - recent economic initiatives mean that China may not be the absolute cheapest option for sourcing your goods. However, costs remain competitive, with the benefits of strong employee skills and high product quality
- Shipping costs - shipping from Asia to the US comes at a cost. Large manufacturers in China may be able to offer good shipping rates because they transport large volumes of goods, making the costs relative to other Asian factories competitive
- International scope - if you choose to export to markets other than the US, China’s geographical location means you can easily get your products to lucrative and growing markets throughout Asia
- Overcoming language and cultural challenges - outsourcing to China will come with a number of barriers in terms of language and culture. You’ll need to have help if you’re not familiar with the language, and will want to tread carefully to avoid breaking cultural taboos
- Potential manufacturing scams - beware of poor quality production from small and inexperienced factories, which may masquerade as large scale producers. Due diligence checks before choosing a manufacturer are essential
- Higher costs may eat into profits - China is not necessarily the cheapest place to have your goods made, which could be problematic if you’re operating on tight profit margins
- Tariffs, duty and charges - before even considering having your products made in China, check out the harmonized tariff system codes to see what the costs for import to the US will be. Some $34billion worth of goods are now subject to tariffs which mean import costs have increased by 25%
- Minimum order quantities (MOQ) - many larger more reputable factories have relatively high MOQ, which drives down unit price but does require a large initial outlay. Look for smaller specialist factories if you need a low volume production run
- Intellectual property (IP) - China is well known for issues around protecting IP. Get help to navigate the Chinese legal system and ensure your intellectual property is protected
An alternative to having your own products manufactured in China, is to find a supplier there in your niche, and buy off the rack products for import to the US.
Many of the pros and cons of working with a Chinese supplier are similar to those listed above. However, there are also a few specific issues to consider when sourcing items which are made in China.
- Low cost of goods - Chinese made goods tend to be competitively priced, with typically good product quality, especially for goods made specifically for export
- Innovative products - because China manufactures for companies based all over the world, the range of goods available is huge. You may be able to find products which have proven to be a hit elsewhere and bring them to the US for your customers
- Ease of access - using Chinese supplier lists and sites such as Alibaba, you’ll easily find thousands of potential suppliers. It’s worth noting, though, that these lists do not necessarily guarantee the quality or legitimacy of the supplier, and due diligence checks still need to be done
- Cultural and contractual issues - you’ll likely need help to navigate the process of finding a supplier, to overcome the language barrier and ensure you fully understand any contract you’re entering into
- Product sizing and specifications - one common issue with products sourced from China is that sizing and specs may differ from those we expect in the US. Take dress sizes, for example. If you’re not crystal clear on the sizing being used, you may end up with garments fitted for an Asian market, or sizing marked up using European, Australian or any other protocol
- Shipping times and costs - shipping goods to the US from China takes time, leaving your capital tied up in goods you can’t yet sell. If your cash flow is tight, you’ll want to weigh this up against more local supply options
Once you have started to research manufacturing and supply partners in China, you’ll need to carry out a few checks of your own. Here are some points to look at to make sure you find the right option for your business.
- Check which companies the manufacturer has worked with previously. Factories used to dealing with products destined for the US will have a better understanding of US based customers and their requirements
- Make sure the minimum order quantities work for your business
- Ask to see the business license and have a translator check over both this, the local business register, and the contract before you sign
- Consider your options in terms of IP protection - do you need to have a local expert help you navigate China’s legal system, to make sure your product ideas aren’t stolen?
- If you’re using a supplier listing or site, prioritize verified suppliers. For example, Alibaba features Trade Assurance suppliers. Orders placed through these suppliers are protected so within 30 days of delivery, you’ll get a refund if things go wrong²
- Get samples for all goods you’re considering ordering, to check for specifications, quality and sizing
- Understand the volumes of products available - if your goods are a big hit, will you be able to source more of the same?
- Double check shipping fees and time, and confirm details such as insurance during transportation before you sign a contract
Ready to get started? Here are some great ways to get started sourcing your manufacturer or supplier in China.
If you have the option of heading off to China in person, you can meet factory owners face to face at a trade show such as the Canton Fair in Guangzhou. While this is an investment, it is an opportunity to find and verify suppliers, and potentially view samples all in one trip.
If you’re unable to get to China, the internet is the next stop. Alibaba is world famous - and world leading - for a reason. You’ll find manufacturers, suppliers, wholesalers, importers and more, across all product types.³
With more than 600,000 suppliers listed, and some 1.4 million products available, Trade Asia specialises in B2B sales originating out of Asia, with specific sites for China and Taiwan based manufacturers. Long established organisation with a broad membership offering a range of other services for entrepreneurs.⁴
Online search tool and directory, with market research and seller training options for ecommerce entrepreneurs and dropshippers. Pay an annual fee for access to all the lists and resources available.⁵
MFG states it is the world’s largest custom manufacturing marketplace, connecting factories around the world with buyers and entrepreneurs. You’ll be able to set out your product requirements and have factories submit bids so you can see the options and costs available.⁶
Platform exclusively for Chinese manufacturers, with over 10,000 factories in 20+ industries. Browse products available, or post your specifications for a custom quote from any of the listed factories. There’s also a handy rundown of upcoming trade shows.⁷
Vast range of options from agriculture to gifts, homeware and security systems. Use the search and categorization tools to find factories or suppliers in the niche you need.⁸
As soon as you start working with factories or suppliers based overseas, you’ll need a smart way to manage your money to protect your profits, and cut the costs of overseas transfers.
The Wise business account is a smart way to do just that, and also offers great business friendly perks for busy entrepreneurs. Here’s all you need to know.
Most wholesale site accept USD payments so you wouldn’t have to convert your money to avoid conversion fees. With Wise, you can pay in USD via ACH direct debit, card or wire transfer which is cheaper than a regular international wire through traditional banks.
Wise also offers a multi-currency account where you can hold and send payments in 45+ different currencies including Chinese Yuan. Business customers can use the multi-currency account to receive payments in USD, EUR, GBP, AUD, NZD and PLN for free. That makes it easier to connect to suppliers, customers and employees, so you can grow your business much faster. Opening an account is free, and there’s no minimum balance to worry about, either.
You can open your Wise business account online, with no need to visit a physical bank branch. Simply provide your personal details and copies of your documents online.
Wise use new technology to make it quicker to send secure international payments. This means your money could arrive faster using Wise, compared with your usual bank.
Don’t waste time - and don’t spend more than you need to on excessive bank fees for international payments. Choose a Wise business account to make working with overseas manufacturers and suppliers simple, fast and cheaper than ever before.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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