How to Select a Chinese Supplier
If you are in the retail business, there’s a strong chance that your search for suppliers will bring you to China. The suppliers here are able to take advantage of inexpensive raw materials, labor and shipping costs to offer prices which suppliers outside of China simply cannot compete with.
Finding a reliable supplier in China is critical for most retail companies, but for many of them, finding and selecting the right supplier can be a daunting task. There are a seemingly endless number of suppliers to choose from, and communication issues, time differences, physical distance and cultural differences can make the selection process pretty complicated.
In order to help you navigate through the process and make the best possible choice, I've put together the following tips based on my own experience living and doing business in Shenzhen, China. I hope you will find it useful.
Finding the Suppliers
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There are several websites that allow buyers to search for a product and find the suppliers who can offer it. Websites for this function include globalsources.com, made-in-china.com, DHgate.com, alibaba.com and aliexpress.com.
The three Websites I recommend are Alibaba, DHgate and Aliexpress. Alibaba is the powerhouse of this industry, and for almost every product, it will offer the most comprehensive list of suppliers. DHgate and Aliexpress are like scaled down versions of Alibaba, and they are tailored more toward smaller orders. On DHgate and Aliexpress, buyers can purchase amounts as small as just one piece, but on Alibaba, the minimum order for most products is usually about 50 pieces.
When you get on these websites and begin to search through potential suppliers, make a list on Word or Excel of your top 5 to 10 choices. On this list, include the company name, price per piece (if listed), and contact information. With this list compiled, you are now ready to start picking out the winners.
The First Cut
The first step is to simply look at the feedback from their past transactions. As a general rule of thumb, you will want to identify suppliers that have made at least 50 transactions and have a buyer satisfaction rate of at least 90 percent.
Some buyers have unreasonable expectations and will leave negative feedback regardless of the product or service, and sometimes a supplier’s competitor will buy a product just to leave negative feedback on their page. For those reasons, I think 100 percent satisfaction is not required, but a satisfaction rate above 90 should be attainable for a good supplier.
Now, remove the suppliers that do not meet the requirements (50 transactions, at least 90 percent customer satisfaction) from your list.
Guangzhou is home to a lot of factories in China. The locals say, "When the sky is blue, business is bad."
The Second Cut
Now that you have narrowed down your list of prospective suppliers, it is time to contact them. Simple send them an email to tell them you are interested in their products and you would like to ask them a few questions. Ask them if the price they listed is the best price they can offer, and what kind of return policy they have in case of any defective products. Also, ask them how long it would take to have the products manufactured and delivered and any other questions you might have.
These questions are important not only because of the basic information they provide, but also to test the supplier's communication capabilities and level of customer service. If the supplier takes a long time to respond, responds with incomplete information, or has a bad attitude, you can cross them off your list.
After receiving the initial response, wait a couple of days and send them a follow-up question. You could ask them if they are currently selling to other buyers from your country, how many products their factory can produce each month – anything. Communication is critical when doing business overseas, so before buying anything, make sure the supplier is willing and able to answer all of your questions.
Bao'an at Night: Although Shenzhen is a city that never sleeps, the time difference can make communication difficult.
The Third and Final Cut
After removing the poor communicators, your list should be narrowed down to a few finalists – maybe just two or three companies. Now it’s time to order some samples.
Order one or two samples from each of the finalists and evaluate them carefully. Monitor the delivery speed and tracking service, the quality of the packaging, and of course the quality of the products.
At this point, you should have a good idea about each supplier’s level of reliability. After receiving the products, if you judge all of the finalists to be about the same, simply choose the one with the best price. If the prices are also the same, just flip a coin or follow your gut as the tie-breaker, because at this point, there’s probably not much difference between them.
Build and Maintain the Relationship
After receiving your products and selecting your supplier, log back onto the website and give the supplier some positive feedback. Positive feedback is like gold to the suppliers, because they need customer trust in order to be successful. The suppliers will appreciate it, as will other potential buyers.
Then send the supplier an email to say thanks and something to the effect of: “We hope to have a long-term relationship with your company and we look forward to doing more business with you.” This is important because it will improve your chance of getting better prices in the future.
Chinese suppliers place high value on long-term business partnerships, and they will give preferential treatment to their repeat customers. It’s part of the guanxi system, which continues to thrive in modern day China.