Our CEO Renaud was recently interviewed on Proboxx‘s YouTube channel about sourcing and manufacturing in China. They’re a company that helps sellers manage logistics. We’re grateful for the invite! 😉
Specifically, he shares some advice for Amazon resellers and new product developers who are working with Chinese manufacturers.
Here’s the video if you want to dive straight in:
Here is a summary of the key points covered.
- Selecting a poorly-designed and tested product that will not be reliable and fail when in use by customers.
- Choosing a manufacturer who isn’t a good fit, such as one who struggles to work to your quality standard!
- You rely excessively on the supplier to design and develop your own new product, but without questioning them in detail you risk losing control of the project and not getting the desired outcome.
Pre-production samples may look great, but they’re a sales tool and not made using the same processes, staff, equipment, and tooling as in mass production. Don’t give the manufacturer the go-ahead based on this alone without planning for what happens next in the factory and going into detail on tooling and your expectations from products made using mass-production processes.
Going to suppliers with a thorough NPI plan shows that you’re a professional buyer and have the potential to be a better long-term customer, therefore they will likely allocate better resources (such as experienced staff) to your project.
Top tip for sourcing in China for Amazon and e-commerce sellers
Follow the ‘staircase approach.’ Don’t jump from ground level to the first floor, take the stairs one at a time. Giving the manufacturer a very complex and unique product with lots of custom parts increases your risks a lot. A better idea is to consider a several-year roadmap leading up to this point, where you start with a simpler V1.0 product (maybe white-labelling an existing design) to test the market. Once you have market traction and know you can trust the manufacturer, you start to iterate the product to include more unique and complicated features.
How to understand cultural differences and build relationships with Chinese suppliers?
- Face-to-face meetings are very effective in China and now that it’s possible to visit, buyers should consider flying to China.
- It’s important to send them the right signals so they see you as a professional buyer, take you seriously, and will be willing to devote the right resources to your project. That lays the groundwork for building a relationship.
- Part of being ‘professional’ is setting up regular calls rather than just sending emails so they see your face and get regular feedback and you taking responsibility to send information, such as quality standard, etc, to the supplier in a structured document.
- Partnering too closely with a supplier, even if they’re very responsive and you have a good relationship, could be dangerous, because if they work on product design and development, they may assume some ownership over the IP which can be trouble for buyers later on. By all means, build a good rapport, but make the relationship clear.
Navigating the tooling fabrication process in China
- Assess whether you need to work directly with a plastic supplier or not.
- Work with an industrial designer and mechanical engineer to create a manufacturable design and go to the tooling fabricator with precise drawings and information about how the product works, will be used, stored, etc.
- Do your homework on what you need from tooling and be prepared to specify the key details, such as hard steel for durability.
- Research the fabricator, for example, do they outsource the fabrication of the tooling to a different workshop who are not technically proficient?
- Get quotes for the tooling that includes how long it takes, steel type used, number of shots it can provide, cost of the plastic part once produced, etc. If the tooling is cheaper but the unit cost is more, they could be over-invoicing, so be wary of that.
- Once agreed, sign a tooling agreement outlining the project details, who owns the tooling, how the tooling can be removed by you, and steps to be taken for non-performance.
Common tricks Chinese manufacturers pull if they see that a buyer is not doing due diligence
If Chinese manufacturers see a buyer who seems inexperienced and/or isn’t doing thorough due diligence (which may include doing a legal records check, an on-site factory audit, etc), they may play some of these tricks because they feel that you’re too trusting, or even gullible.
- Trading companies may pretend to be a factory and this won’t be noticed unless you do research. Read about the danger of working with trading companies.
- If you only have one point of contact, that person may leave the company and transfer your order/s to another factory without telling you meaning that an unknown factory is producing your goods.
5 things to do for a successful outcome when working with Chinese suppliers.
- Find a supplier that has good systems in place for quality, management, processes, etc. This will ensure you have the best chance of getting good quality, on-time shipments, reliability, safety, and more.
- Source a supplier who pays attention to your needs and wants to do a good job.
- The supplier you find gives you relatively stable pricing.
- You’re given transparency into your supply chain, so you are able to comply with environmental and slave labor regulations, for example.
- Your IP is respected and the supplier doesn’t misuse it or treat it carelessly.
Changes to sourcing and manufacturing in China in 2023
- Zero-Covid is over, so access to China has normalized and buyers can visit fairly easily now.
- The relationship between China and the USA has continued to degrade, causing mainly American companies to explore moving manufacturing out of China. A positive here is that this does free up capacity in good Chinese suppliers for buyers from other countries, however, it also means that some suppliers will go out of business if they lose major customers in this way. Visiting China to check on the ‘health’ of our supplier’s business is important for that reason.
- More automation is being implemented to compensate for increasing staff wages.
- China has been affected by economic disruption post-Covid the same as in the West, so there is a slowdown there.
By the way…Proboxx would also like to extend the opportunity for a $100 shipping discount to Sofeast readers or viewers of the video interview. You simply just need to mention “Sofeast” when reaching out to Proboxx.
P.S. Some related resources you may like…
- How To Find A Manufacturer In China: 10 Verification Steps [eBook]
- The New Product Introduction Process Guide
- An Importer’s Guide to New Product Manufacturing in China [PDF eBook]
- Ultimate Guide To Sourcing From China And Developing Your Suppliers [eBook]
- IP Protection in China when Developing Your New Product [Importer’s Guide]
- Unsure how to get started with sourcing from China? Listen to this podcast mini-series: DIY Sourcing from China Series