When it comes to finding products to sell online, your profit margins are amplified by how low you can drive your sourcing costs down.
For example, the typical retail markup for an online store is 4X. As a result, for every dollar it costs you to source an item, you need to charge 4 dollars!
On the flip side if you can shave a dollar off your costs, then you can potentially mark down your prices by 4 dollars or pocket the extra profit!
Because labor is an order of magnitude cheaper in China, it’s in your best interests to source your goods from Chinese factories.
Today, I will teach you where to find China wholesale suppliers and what to expect when importing direct from Chinese factories.
This post will be broken down into 3 sections
- Where To Find China Wholesale Suppliers
- What To Expect When Importing From China
- How To Prepare Your First Shipment
One of the best ways to find Chinese vendors is by attending the Canton Import And Export Fair.
The Canton Fair is held in GuangZhou, China twice a year (Usually during the end of May and the beginning of November) and is one of the largest sourcing shows (if not the biggest) in the world.
It easily trumps any trade show in the US and it’s so large that they have to split it into 3 phases.
The first phase covers electronics, the second phase covers consumer goods, gifts and home decor and the third phase covers textiles, garments, shoes and office supplies.
To give you an idea of the magnitude of the fairgrounds, the Canton Fair is equivalent in size to 218 football fields. Crazy right?
Now if you’ve ever tried to find a Chinese vendor or factory using an online directory like Alibaba, you probably know how time consuming it can be.
There are many companies to go through and it’s hard to gauge product quality by just looking at photos online.
In addition, language and cultural barriers can make communication challenging over email and text.
The best part about the Canton Fair is that it’s a place where suppliers and factory owners from all over Asia congregate and you can easily find a vendor that either carries what you want to sell or can make what you want to sell.
In addition, all of the vendors bring in samples of what they make so you can touch and feel all of the merchandise first hand before committing to a purchase.
Most of the suppliers at the fair are used to dealing with American and European companies so they have the experience and infrastructure to export products to wherever you live.
The other good news is that a good number of these vendors speak English…not good English mind you, but enough to communicate at a basic level.
If you require an interpreter, you can easily hire one for a very reasonable price (100 yuan = 15 bucks for the day).
Going to the Canton Fair sounds intimidating but it’s actually not that bad and it doesn’t cost nearly as much as you think.
First off, the Canton Fair is free to attend and the cost of living is much lower in China than in the US.
Second of all, I’ve published my full itinerary and a complete guide to the Canton Fair below. If you plan on going, you can simply copy my travel plans.
- My Guide To The Canton Fair – China’s Largest Wholesale Supplier Trade Show
- 187: How To Navigate The Canton Fair And A Recap Of My China Sourcing Trip
Global Sources Tradeshow
Similar to the Canton Fair, the Global Sources Tradeshow is another gigantic fair where factory owners from all over the world congregate twice per year.
What’s nice about the Global Sources Tradeshow is that it takes place just BEFORE the Canton Fair in Hong Kong so you can easily hit both shows during the same trip!
While the Global Sources show is not as large as the Canton Fair, there are a few key differences that make the Global Sources show a must attend event.
First off, while there is some overlap with the Canton Fair in terms of suppliers, many of the vendors that attend the Global Sources tradeshow are unique.
Because Global Sources is a search engine for Chinese vendors like Alibaba, they also have a gigantic searchable database of manufacturers that you can establish contact with prior to attending the event.
In addition, Global Sources contains a much larger contingent of suppliers in certain key categories such as electronics and fashion accessories. So if you plan on selling anything electronic, Global Sources is the best show to attend.
The other key difference is that Global Sources provides a strong focus on education. During their show, they simulaneously run a conference that teaches you how to run a successful importing business.
The content of the event is fantastic and they invite successful ecommerce entrepreneurs from all over the world to speak.
But perhaps the best part about the Global Sources trade show is that there’s a very low language barrier!
Unlike China, everyone speaks English in Hong Kong and it’s generally much easier to get around as a result.
My advice if you decide to travel all the way to Asia is to attend both the Global Sources show and the Canton Fair during the same trip. Canton is only a 2 hour train ride away and it costs $30.
Editor’s Note: Here’s an interview that I conducted with the CIO of Global Sources if you are curious. How To Find Legit Chinese Vendors Online With Peter Zapf Of GlobalSources.com
What To Expect When Communicating With Asian Suppliers At A Tradeshow
Running our online wedding linens business for the past 10 years has required me to deal with many vendors across China, India and other parts of Asia.
And I’ve discovered that working with Asians is a lot different than working with Americans or Europeans:) Here’s a short list of what you need to be aware of when dealing with Asian suppliers.
Expect A Language Barrier
The key thing to keep in mind when communicating with Chinese suppliers is that they probably studied English in school.
They might not be able to speak or understand English that well, but they can probably read it much better than they can listen.
So when you are visiting your vendors, it helps to have everything written down or typed in English. If you go in there and start blabbing away, chances are that the vendor will only be able to pick up bits and pieces of the conversation.
They might nod and go “uh huh”, but in reality they probably have no clue what you are talking about.
The same goes for taxi drivers and directions. Have someone write everything down in Chinese if possible and if you have to speak, speak slowly and enunciate every word.
Expect Cultural Differences
One of the main cultural differences between the US and China is that Chinese people tend to be non-confrontational.
For example, Chinese vendors will rarely correct you, interrupt you, or let you know that they don’t completely understand you.
It is part of their culture to be polite and accepting. But if you are not careful, this one simple cultural difference can cause you a ton of grief when placing orders.
The biggest obstacle to overcome is that you might think you are communicating when in fact you are not.
For example, I could be discussing something with my vendor and they might be nodding and acknowledging everything that I’m saying but then turn around and do the complete opposite once the conversation is done.
The key is to ask direct questions and make sure that there is no misunderstanding. Ask, clarify and reiterate all of your points as many times as necessary and be sure to write everything down as well.
The important thing to realize is that your vendor is just trying to be polite so you can never assume that anything is clear unless it has been thoroughly discussed.
Contracts Are Not Final
In the United States, contracts are considered final. After a series of negotiations, the final contract is supposed to represent an agreement and acknowledgment of terms.
In Asia however, a contract is almost meaningless. When I deal with Chinese vendors, drafting an official agreement can often seem like a waste of time.
We might spend a day negotiating and agreeing on terms and pricing only to have everything change the very next day.
For example, one time we drafted a written agreement for a large handkerchief order only to have the supplier contact us a week later to tell us that they couldn’t manufacture some of the items we requested.
On another occasion, a supplier tried to raise prices on us after the fact even though we agreed on pricing long ago.
The key takeaway here is that the definition of a contract is different in Asia than it is in the US.
Don’t expect a written document to be the end all and be all of your negotiations. In fact, I would argue that drafting an agreement is just the beginning.
Don’t Make Assumptions – Be Specific
Here’s a general rule of thumb that needs to be ingrained into your head when importing from China. Never assume that the vendor knows what you want.
If it’s not spelled out in a document, then your vendor will get it wrong or cut corners.
For example, we import plain white handkerchiefs and you would think that it would be straightforward to describe.
After all, it’s just a piece of fabric right? But one time we negotiated a lower price and the vendor sent us handkerchiefs with paper thin fabric.
Because we didn’t specify the exact thickness of the material, the vendor met our price by cutting corners on the fabric.
Bottom line, go through your samples and specify every last detail of what you want. Assume that any aspect that is not explicitly spelled out will be made incorrectly.
The Main Benefit Of Going To A Live Tradeshow
Cultural differences aside, the key benefit of going to a trade show like the Canton Fair or Global Sources is that it allows you to make face to face contact with a large number of vendors and establish real relationships.
This is invaluable! By going to the fair, you can easily meet hundreds of factory owners in just a few days.
In fact, your relationship with your vendor is one of the key components to your success and face to face contact is essential.
For example when my wife and I first started our business, we communicated with our suppliers solely through email.
And many of these vendors didn’t give us the time of day until we physically visited them in their home country.
The difference was night and day and the overall demeanor of our suppliers changed once we met them in person.
Miraculously, our product quality improved and they became eager to help us out with special requests and designs.
The other thing to keep in mind is that most of the vendors who attend the tradeshows do not have a web presence so it’s next to impossible to find them otherwise.
While it can be intimidating to travel to China and attend the fair, it’s well worth your time. If you plan on going, then check out my itinerary!
The Online Directories – Alibaba And Global Sources
Alibaba and GlobalSources are search engines for Chinese suppliers and you can instantly have access to tens of thousands of vendors at your fingertips.
Here’s an example of how easy it is to find a vendor using Alibaba.
Simply type in what you are looking for in the search bar and Alibaba will return a bunch of suppliers, prices and minimum order quantities.
By clicking a button, you can then send the vendor a message and establish contact. Here’s an example script that I use when contacting suppliers for the first time.
Hi “vendor name”,
My name is “name” and I’m a buyer for “store name”, a store in “your country” that sells “the products you want to carry”. We are interested in carrying many of the items that you have to offer.
Specifically, I would like to get pricing and availability for the following items
“list the items…provide photos if you have them”
“list the items…provide photos if you have them”
“list the items…provide photos if you have them”
If you could send us more info as well as your product catalogs and MOQ requirements we would greatly appreciate it.
Once you’ve established contact, you can ask for samples, place orders etc…
In addition, Alibaba offers a service called trade assurance which acts like an escrow service so you don’t ever get scammed.
Sounds easy right? So what’s the catch?
The biggest caveat is that this process can take a while and communicating back and forth with suppliers requires patience.
For example, the time it takes from initial contact to obtaining samples can easily take weeks.
In addition, the language barrier can make communication challenging because you must describe exactly what you want to manufacture via email and live chat.
The other key difference between using a directory like Alibaba versus going to a tradeshow is that services like Alibaba tend to contain a lot of middlemen.
Because there is such a low signal to noise ratio for vendors on Alibaba, many of the higher quality suppliers don’t list themselves in the directories.
For example, none of our primary vendors advertise on Alibaba or Global Sources.
But that being said, as long you can make a profit with your suppliers, then that’s all that matters!
The Main Difference Between Alibaba And Global Sources
The two biggest online directories for Chinese suppliers are Alibaba and Global Sources. But there are some key differences between the two.
First off, Alibaba has many more supplier listings than Global Sources but it comes at the cost of quality. In my experience, there’s a lot more noise on Alibaba.
In general, Global Sources has a more involved vetting process which allows them to attract higher quality vendors.
In addition, I’ve found that the MOQs (minimum order quantities) for Global Sources vendors tend to be much higher than Alibaba as well.
But bottom line, your mileage will vary depending on what you want to sell. Give both services a try and see where it takes you!
Panjiva And Import Genius
Most people are not aware of this but every single shipment imported by sea is documented on the public record. And if you search this public record, you can easily find out where companies are sourcing their products from.
There are two main companies that allow you to conduct import searches for a monthly fee, Panjiva and Import Genius.
By typing in a business name, Panjiva will tell you every single sea shipment that company has made, where the shipment originated from and the manufacturer.
For example, here’s a sample bill of lading from The North Face that I obtained from Panjiva for free.
So if you see a product online and you want to make something similar, you can easily find out where it was made and reach out to the exact same manufacturer!
What To Expect When Importing And Manufacturing Your Goods In China
While importing your goods from overseas is the best way to obtain quality products at rock bottom prices, there are several logistical issues you have to work out in order to be successful.
Below is a brief overview of what to expect when importing goods from overseas along with some tips on getting your goods to your warehouse.
First off, here’s what you should expect…
Long Lead Times
Most overseas vendors won’t even begin making your products until you actually place an order and put down a small down payment to cover the cost of materials.
Depending on the nature of your items, expect to wait anywhere from one to four months to get your products manufactured.
Very rarely will a vendor carry inventory and most goods are made to order so you must plan ahead.
When we order linens for our online store, the lead times are typically 3 months long so we always have to predict our demand way in advance.
A Large Minimum Order
If you are ordering products to be manufactured overseas, expect to place a fairly large minimum order. Every manufacturer will have their own MOQs(minimum order quantity) but don’t be embarrassed to ask before ordering.
If you are just starting out, make sure that you obtain samples first and validate that your product will actually sell BEFORE you place a large order.
These days, I rarely purchase less than 300 pieces of any new product but you can often negotiate lower minimum order quantities if the vendor believes that you are a serious customer.
Most manufacturers expect to be paid by wire transfer. Also, you usually have to put down some money upfront(usually 30%) to cover the initial costs and then pay the balance once the items are ready to be shipped.
If you are worried about fraud, there are escrow services like Alibaba trade assurance that will facilitate the exchange of goods and services.
But in general, transactions go much faster when there’s mutual trust between you and your vendor.
For example, we pay for all of our orders via wire transfer and our vendors don’t make us put up the initial 30% down payment.
However if you are just starting out, don’t be afraid of wire transfers. If you are apprehensive about sending your money overseas, consider asking to pay by Paypal instead.
Some vendors will accept Paypal if you cover all the fees but don’t count on it.
Quality control will often be an issue and you have to be very specific in telling the vendor EXACTLY what you want. In general, it ALWAYS pays to hire an inspector to inspect your goods at the factory.
After all, once your products get shipped to you, there’s not much you can do if you receive defective merchandise.
For the price of around $300, you can get a statistical sampling of your shipment directly at the factory and know what percentage of your goods are defective.
Catching manufacturing issues at the source will save you lots of headaches. It also keeps your vendors honest.
Below are some of the more popular inspection companies.
Many vendors in Asia do not speak English very well. But as long as you restrict your communication to email and live chat, things will go much smoother.
Most vendors are able to read English much better than they can understand the spoken language. As a result, ask to communicate with your supplier via WeChat and Skype.
Preparing For Your Shipment
Once you’ve ordered your products and they are ready to be shipped, there are two main ways to get your goods into your home country, by air and by sea.
But before you initiate your shipment, make sure you ask for the following documents from your vendor. These will be required in order to clear customs.
- A Commercial Invoice – The declared value of the items
- A Packing List – What you are importing
- A Detail Sheet – Outlines how the products are manufactured so customs can determine the duty classification
- Bill of Lading – A legal document between the shipper of goods and the carrier detailing the type, quantity and destination of the goods being carried.
Note: Are you unsure which shipping method to use and how much it will cost? Do you want a good estimate of your real landed cost of goods? Click here to use my free import calculator
Shipping By Air
Shipping your items by air is by far the easiest option but also the most expensive. Expect to pay between 5-6x more to ship by air versus shipping by sea.
Personally, we use DHL for all of our international air shipments. Our vendors all have accounts with DHL and shipping with them is a breeze because they take care of everything.
Basically, the vendor provides DHL with all of the materials mentioned above and then DHL transports all of your goods directly to the address that you specify. You do NOT need a customs agent!
If this is your first time importing goods from overseas, you will be contacted by customs to provide your social security card or a company id number. Have this information handy once your goods have shipped and you are all set.
DHL will also send you a customs bill so that you can pay any and all duties associated with your imported goods.
Shipping By Sea
Shipping by sea is a much bigger headache but totally worth it if you are importing a large volume of goods. As mentioned before you can easily save between 5-6x compared to shipping by air.
The key to accepting shipments by sea is to hire a good customs agent. This is absolutely required especially if this is your first time importing by sea.
Do not try and do things on your own unless you know exactly what you are doing. This is what the customs agent will take care of for you.
- Customs Documentation – They will take care of any and all documentation required in the entire process
- Customs Entry – They will take care of getting your goods from the port directly to your office
- Customs Duty – They will take care of calculating and billing you for any duties associated with your goods.
- Customs Entry Bond – You are required to buy a bond that acts as insurance with Customs in the event you should default on the customs duties. Your customs agent will take care of this for you .
Of course all of these services come at a cost. Right now, we are using a company called Toll Forwarding as our freight forwarder and customs agent.
For our last sea shipment, we paid about 1800 dollars to transport over 6100 pounds worth of goods to our warehouse and the whole process took about 3 weeks.
To give you an idea of the difference in price, shipping a 35 pound box via air courier costs about $170 which makes it cost prohibitive for large shipments.
In general, it makes sense to ship your products by sea if your shipment exceeds 200lbs in weight. The tradeoff of course is time.
Whereas sea shipments can take over 3 weeks to arrive, shipping by air typically takes 3-5 days.
Because the cost of manpower is so much cheaper in developing countries like China, Thailand and Vietnam, it makes sense to source most goods from Asia.
Any product that requires a lot of labor to assemble like textiles and electronics can often be purchased at a fraction of the price.
As a result, you should definitely consider importing from China as a sourcing strategy. With higher margins, you can focus more of your dollars towards marketing and customer service.
- The Best Way To Find Wholesale Suppliers, Vendors And Products For Your Online Store
- Product Sourcing Nightmares – Bad Experiences We’ve Had With Overseas Vendors
- Where To Buy Wholesale Clothing In The USA And My Trip To The LA Fashion District
- My Guide To The Canton Fair – China’s Largest Wholesale Supplier Trade Show
- 10 Tips On Importing Wholesale Products From China Using Alibaba Or GlobalSources
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