There are many parts to this subject, I will try and bring it all together to make sense. A lot of the products consumed in different parts of the world are manufactured in China.
So, you have identified a viable product you will like to take to market, let us say hair extensions, a food spice, clothing, footwear, makeup, an industrial compoent, anything at all. But the unit production cost is not adding up, considering factory, raw materials, machineries, overhead and labour. What do you do then? You can outsource the product manufacturing to a low-cost manufacturer in China and import it. Let’s get into more details. I Remember few years ago when a certain brand said they were planning to start manufacturing laptops in Nigeria, it didn’t make economic sense to me, which is probably why nothing has happened since then.
Your full range of products and components among other factors will determine whether outsourcing manufacturing is the right call. Your product needs to be mature, with plenty life left in its life cycle. Innovations & prototyping don’t fit this description. I suggest that you start small with a narrow scope. Choose a very well-defined product or component; you’d need up-to-date drawings in some instances, but specifications in all cases.
Another advantage of this is price & competitiveness. There are thousands of hair-extension manufacturers in China for instance, so you know the prices they’re offering is highly competitive.
You know your products best & all that knowledge needs to be communicated to whoever is going to make them. If your drawings are full of red pen comments, get all that into new drawing revisions. Keeping drawings & specifications in great shape is mandatory & will pay dividends in the long run.
Moving on.
Things you should know in advance:
The following categories to help you choose Chinese manufacturers are:
By Scale – Small factory, large factory (depends on the number of workers and number of production lines).
By Production Stage – Raw material factory, mould factory, injection mould factory, assembly factory, electroplating factory, packaging factory, and more.
By Geographic Area – Certain Geographical locations are known for certain product types, find out which locations is yours. Home textile supply industry can be found in Nantong, The sports shoes and business bag pack can be found in Quanzhou, The eyewear industry is in Wenzhou, The underwear industry is in Shantou, USB flash drives, electronics, mobile phones, and earphones industries can be found in Shenzhen, etc.
CONTACTING THE MANUFACTURER:
When you first communicate with the manufacturer, you can briefly introduce yourself and attach the supplier’s product link to explain that the product has similar functions to the product you designed.
Ask the manufacturer if they can make it and express the hope of communicating with them in detail. The description shouldn’t be too long. Short and clear emails will get a higher response.
For customers who have prepared their designs, ask the manufacturer whether they can provide you with a prototype, as well as mass production in future.
For customers who need stock, special neutral packaging, or OEM packaging, clearly ask them if they have any stock or not, and whether they can provide the above services.
Since manufacturers are very busy, they tend to get a lot of mails every day. If the mail is too long, they won’t take a good look at it. And if the mail is too short without stating or expressing your plans and intentions, the supplier will ignore it. This is a normal occurrence. Every manufacturer follows the 80/20 rule.
If you are going to be involved in the invention of the product, after you have briefly introduced the product you designed, ensure that the supplier signs a NNN (non-disclosure, non-use, non-circumvention) agreement first before releasing the drawings, material requirements, and needed technology for further discussions. This is a bit completed, so I won’t get into it further.
ASK FOR A SAMPLE FEE AFTER GETTING A REPLY TO YOUR FIRST EMAIL.
Some customized products require mould costs, special techniques, professional skills, electronic accessories, etc. with the PCB factory. Therefore, samples usually require a cost.
Ask for the sample fee after stating the sample requirements. The sample fee can be refunded when you place an order that covers a certain amount. This should be made clear in advance.
ECONOMIES OF SCALE:
While injection moulding is a very inexpensive way to fabricate large numbers of products, the economies of scale are only in your favour if you can handle Minimum Order Quantities (MOQs) of thousands of units per batch. This is also related to your product type. For instance, if you’re interested in a special type of gasket or component for heavy duty diesel engines or electrical component, you’d need to physically visit China with a complete drawing & specification of the component and finalize arrangements.
MINIMUM ORDER QUANTITY
The main factor to consider when investing in a particular production is the minimum order quantity. This is the predetermined quantity required by the manufacturer. It indicates the least number of goods that must be reached when they are ready to manufacture your product.
This may be any number between 100 -1000, depending on the type of product you are making, the size of the manufacturer’s company, and the profitability of the product. Therefore, the supplier’s MOQ is also one of the factors we consider.
MASS PRODUCTION PRICE
When it comes to quotation, it is best that you make careful comparisons. A formal product quotation should include:
Product photo
Product specification
Incoterms (FOB, EXW, or CNF, etc.)
Production lead time
The quantity on which the quotation is based.
There are times when the products are totally new. Therefore, you may not know the price until the prototype is completed. However, you may be able to get a rough idea of the price range from the manufacturer.
ASK FOR SAMPLE LEAD TIME
When you’ve understood and accepted the points above, the next thing to do is to confirm the sample time. Since you are all set for the sample, time is now an essential factor to you. When you have a clear definition of the sample lead time, you’ll be able to handle other things.
MASS PRODUCTION LEAD TIME
As an entrepreneur, you should know that time is money. Therefore, the shorter the lead time, the better. Mass production lead time is often related to production capacity and the production schedule of a manufacturer.
TERMS OF PAYMENT
Different manufacturers have different terms of payment. The most common terms are T/T, Western Union, MoneyGram, and PayPal.
Begin Your Search - The Internet:
These are online sourcing platforms such as Alibaba.com, Global-sources.com, Dhgate.com, and Made-in-China.com, 1688.com, eTradeAsia.com and which connect buyers to Chinese manufacturers. Finding a manufacturer on these sites is as easy as typing in your requirements in the search bar. It helps if you are specific here. For instance, instead of “brass locks”, you could search specifically for “brass die cast drawer and cabinet locks”. If you dig deeper, you’ll be able to get information such as their business licenses, business categories, addresses, etc.
Since there are thousands of suppliers in China, you could filter them depending on reviews, and the platform’s rating process before shortlisting them. Alibaba, for instance, gives its suppliers “gold” ratings, which purchasers see as a sign of trustworthiness. Similarly, Global Sources has a “verified supplier” category. Please note that having a gold badge or verified status does not always mean that Alibaba or the B2B platform has checked if the company is what it is claiming to be. Some of the factories are not real factories even though they are labelled as “Manufacturer.” They usually have absolutely no control over the manufacturing process.
PS: Look for manufacturers, not resellers or traders. This is very important when you require products that must meet specific technical requirements such as metal stamping or plastic moulding. Ensure that you avoid any supplier labelled as a “trading factory” when you trying to find a manufacturer in China.
Social Networks – LinkedIn and Facebook Groups
More Chinese manufacturers are realizing that building a company profile can help them get access to foreign buyers. Therefore, you can search by “industry + manufacturer” on these two social networks to find a manufacturer in China. Doing this may lead you to the profile of the factory you need.
Trade Fairs:
If you are up to it, visiting a trade fair in China is an excellent way to find manufacturers or suppliers. But your ability to spend that amount of time and money will depend on the size of your business, the kind of products that you want outsourced and, of course, your budget. China’s largest trade fair is the Canton Fair, which is held in Guangzhou (formerly Canton) twice a year, in April and October. This mega fair attracts close to 26,000 exhibitors and 180,000 buyers from across the world and is a good experience for those seeking to scope out the market, looking for new products to add to their inventories.
Verifying the credentials of the Manufacturer:
You now need to verify their credentials. While some obvious information is available online and they may have supplied you with some information too, you need to evaluate:
Whether they are indeed the factory and not a middleman.
Whether they have the technical expertise and production capability to deliver what they say they can deliver.
Ask them for their business licences and other certifications, ask for the factory’s audited accounts, check its Value Added Tax invoice, and ask for product samples. You could also identify the factory’s Chinese name, its location and the local government office under whose jurisdiction it falls. This office will have the factory’s registration records, which you can use to verify the details they have provided to you.