Chinese Suppliers: what to expect from any of them
tipos de proveedores
Having visualized the objective for our company, it’s an easy task to select the suitable supplier. When going for the first time to a factory in China it´s really amazing the number of people working, the large buildings full of merchandise, robotic arms, the large industrial warehouses’ plenty of machinery and others full with raw material ready to be loaded in the containers. The quality of machinery, the labor condition of workers and many other details, tell us something about the factory, the level of interest they will give to our order and the flexibility at the time of negotiating with them. Also, there are many chinese suppliers.
Types Of Suppliers
Gargantuan Factories
In general, they are factories with many huge industrial buildings. These factories have over 500 employees. Many times, the factories are part of a consortium that can have one or multiple owners. These factories have all the certifications existing in Europe and the USA and they are suppliers of recognized companies. The problem with these companies is that they are so huge y visible that generally they already have exclusive contracts with some competitor in our local market. But all the same, you need to ask because one never knows.
You can have for sure that these suppliers neither are going to shut down overnight nor they are going to keep your money because they take care a lot about their reputation. For these bigwigs 100 hundred, 500 hundred, a million of USD or even more, it is only a little mouthful. With this kind of factories, it´s very hard to negotiate medium costs and amounts. They establish the conditions and it´s up to you to accept them or not. This doesn´t mean that you cannot ask them to give you discounts.
Of course, it can be done, only that they know to what extent they will accept and beyond that point, there is no arguing. At the end of the day, they have hundreds of orders coming in every month. The prices in this type of companies are very attractive only if you order a good amount. In other cases, these costs are more or less good.
Tip: No matter how big these orders are or how much experience they have on exports. You have to be aware of the details. It´s not to be forgotten to demand quality controls until you have at least received a couple of orders exactly as requested. That´s why it is important to define the type of suppliers.
Medium Size Factories
They are factories between 100-500 employees, located in buildings –or groups of buildings—exclusively for them, perhaps with 15-20 years in the market. They are big companies, provided with good facilities and machinery but without having the dimensions of the huge factories. The same way, these suppliers are not going to disappear overnight only to keep your money. These factories tend to be more flexible when trading and they show more interest in our placing our orders. That´s why costs, amounts, and conditions can be negotiated. The prices in medium factories are as competitive as those of their elder brothers. But they have better conditions, production times may result better than the ones of the big factories. Besides, they are going to pay more attention to our orders.
Tip: No matter how big these orders are or how much experience they have on exports. You have to be aware of the details. It´s not to be forgotten to demand quality controls until you have at least received a couple of orders exactly as requested. That´s why it is important to define the type of suppliers.
Small Factories
They are factories from 30 to 100 employees, which have physical space and adequate machinery for producing the merchandise and with at least 5 years in the market. Many times they have physical spaces larger than necessary, basically to dispose of space enough in order to keep enlarging the production thus not needing to move to another place. These factories are very flexible in amounts, prices, and conditions. Like we mentioned, they have a lot of benefits. But it´s necessary to keep an eye on them because they have their level of risk. Think that, the smaller you are the easier to start all over again. And for this type of companies, it can be easier to disappear than to compensate the client when a problem comes up.
Tip: No matter how big these orders are or how much experience they have on exports. You have to be aware of the details. It´s not to be forgotten to demand quality controls until you have at least received a couple of orders exactly as requested. That´s why it is important to define the type of suppliers.
Workshop
Buying a tiny workshop (a couple of small rooms or an ill-equipped house), with 5-30 workers who perform simple duties, maybe it´s the most profitable when buying in China. You have to consider that those workshops really offer competitive prices although the majority lack of experience import and you have to be to be aware of the details.
Now, the problem is that there is a high level of risk when buying from this type of suppliers. It´s something in which it is necessary to be very careful. That´s why you should give them as little money as possible to start the production. (20% of the total instead of 30%). The merchandise should be inspected many times before being ready to verify that, both the production as the packaging is being done well. Also, one must be very specific. Because, when they lack experience in import, they tend to have many problems, not so much in the products but in the details.
Intermediaries (traders or brokers)
As you will see we don´t recommend working with intermediaries. Not because we absolutely consider them to be swindlers –there are many with bad intentions and lots of intermediaries of integrity. We are sure that most of the people are honest. But, even if we are certain that our intermediary is a person of integrity, we do not recommend buying from him. Basically, because it is not very clear the way in which he earns money and that makes him risky enough.
There will always be the possibility that they try to swindle you. If you choose a production line (set of machinery) it may well be that the important parts are the right ones, just in case you asked for them. But possibly those accessories are not of the same quality you requested or from the same factory that made the important parts.
Another big problem about intermediaries is that it is difficult to establish their profile, if they are stable people, have a good or a bad reputation. When the profile cannot be well defined it´s impossible to know whether they are responsible or at any moment they will run away with our money not assuming any responsibility in case that a big problem comes up.
No matter what type of suppliers you are buying from, never forget that before you place an order, you must know well who is your supplier and give him in detail all the conditions about your products.
