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Chinese Trading Company : Ultimate Guide 2020

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The Chinese market is filled with two types of suppliers. Trading companies and factories. The article will be focusing on the prospects of trading companies in China.

The topics ahead will shed light on how a Chinese trading company works, and how one can interact with them for their goals.

What is a Trading Company?

A trading company is just like a source of multiple goods that have been produced by several factories. These companies will take time to collect difficult to find provide products from difficult to find factories.

In addition, trading companies charge higher rates than the factories as they acquire goods from the factories, and sell them under their name. Moreover, the buyers have less control over the actual production of their goods.

Why You Should Buy From Chinese Trading Companies?

Buying from Chinese trading companies has several perks. Here are a few mentioned:

As highlighted earlier, trading companies source different products from different factories. They do this in order to meet customer demands.

A Chinese trading company will know the customer’s needs better than a factory. Keeping this in mind, they will sell more suitable products based on their selected demographics.

In addition, these companies need to establish their market for staying in the market. For this purpose, they have a competent customer service team.

The reason?

Better the customer team, the more they will be connecting with the customers.

Many trading companies usually sell products from small manufacturers. These manufacturers don’t have the resource for competently selling their products. Trading companies then sell their products to customers.

Some of the factories in the area have set a minimum buying limit, which is often not suitable for small scale buyers.

However, trading companies don’t do that. They buy products that are more in demand and sell them to customers in whatever quantity they need.

Trading companies can only benefit if they sell their products. That is why they promote the products to the customers to ensure sales.

On the other hand, factories don’t promote the products they sell since they know their products will end up selling anyways.

8 types of Chinese Trading Company

The following are the 8 types of trading companies that one can interact with:

1. Hong Kong Trading Companies

Hong Kong was one of the many places used for manufacturing goods. However, after the movement of manufacturing to the Mainland in the 1980s, the trading companies still kept their grounds.

These companies then expanded in forming large manufacturing groups that are operating in a number of places, including China, Malaysia, Cambodia, and Vietnam.

Smaller manufacturers operate a single factory on the Mainland and provide expertise and transparency that is unmatched in the world.

How It Works

For starting a business in the Hong Kong market, you’ll need to set foot in China’s mainland market first. In addition, the registration to obtain a Certificate of Incorporation from the Hong Kong Companies Registry is a must.

Apart from that, one will also be needing import and export licenses that can only be approved by the regulated government.

You must file an import/export Declaration with the Commissioner of Customs and Excise in 14 days. Apart from that, import/export clearance procedures must be dealt with as well.

Advantages

The city has a business-friendly tax and legal system. It also has a growing economy, which invites businesses from around the world. The legal paperwork when done helps avoid any delays that occur during interaction with the Mainland.

Moreover, you can also have access to a growing and robust market in Hong Kong. The market itself is known to be the freest economy for the past 20 years. The market is free from any bureaucratic interferences as well.

The ease of registering your business and finding a strategic location and free trade agreements are some of the additional perks that come with the market of Hong Kong.

Disadvantage

Even with all the perks, you need to be physically present when opening a bank account. Apart from that, you’ll have to think about your residence in the area, since it’s the fourth most expensive place in the world.

If you think that you’re the only one working in the market, then you’re wrong. There’s an increased amount of competition that you need to go through. You’ll find numerous amount of companies that are already registered with their business. Only the ones that can manage such a risk can survive in the area.

2. Factory Group Trading Companies

As evident by the name, these companies are made from the combination of manufacturers. They combine to form a larger manufacturer that facilitates the buyers, simplifies products, and invoices the procedures. Moreover, they also trade through being a single entity.

How it works

The factory group is established when two or more manufacturers join together to form a common entity. This manufacturing entity then holds different products from the factories that are adjoined in the group. It helps create efficiency as the buyer will only interact with one entity for all the groups.

Advantages

The factories can stand on a common platform and sell their products equally. It will also facilitate their buyer to buy goods from one place. The resources can be set and the pricing for the products can also be established by mutual consent.

Disadvantage

In case the production cost is high, the product’s price range will be set via mutual consent. However, if the price of a certain product is set high, other group members can complain since their product prices will be low.

3. Combined Manufacturer & Trading Company

Such type of a trading company will provide the services of both, a combined manufacturer and trading company. These type of firms utilize their resources to both manufacture certain products as well as trade in the products they produce.

How it works

The owner is working in a domain. However, the product that the company is selling has multiple variables that buyers often ask about. If possible, the company owner will invest in manufacturing these other variables to cope with consumer demands.

On the other hand, it can still keep its focus on selling the core products of the brand. This will allow to produce goods as well as seamlessly trade with multiple products.

Advantages

It helps create a better approach to customer retention. As the company will be offering products and variables too, they can retain customers efficiently.

Disadvantage

Producing variable products aside from the main line product will add to the additional resource cost. Moreover, it’s highly probable that the main product may get overshadowed by the variable products.

In addition, the company will need to think about the location for establishing the factory for the variable’s production.

4. A Certain-Filed Trading Company

This type of trading company is focused on a certain niche of products. They have a deep rooted history in the particular segment. They boast their stable business based on the highly mature team. In addition, the experience in the domain is another factor that makes them quite competent.

How it works

Such type of trading companies works in a small number of niche. These companies often work in a manner that allows them to pursue excellence within that niche. It helps their team to be proficient and mature in their workability.

Advantages

One of the many advantages of referring to them is that you’ll get to have a competent team of staff. This team has brilliance in handling a vast supply chain for the certain product they work on.

Moreover, they will also provide competitive pricing better than manufacturing companies.

For example, if you want to purchase motorcycle parts, you’ll visit different outlets. However, with them, you’ll be able to get smart options for the parts you need.

Why?

Because they will hold expertise in the niche and will provide a much competitive insight.

Disadvantage

The only disadvantage of such companies is that they are unable to compete with mass production needs. Unlike manufacturing companies, they are not able to cope up with bulk orders. If you need a thousand disposable cups, you can just refer to a manufacturing firm instead of asking them.

How to find and identify them

You can either find them by searching on Alibaba or by attending trade shows. For online shopping, you need to check whether the product is in stock or not. If a company has a wide range of products, it’s most likely a trading company.

5.  Grocery-type trading company

These types of companies depend upon the factory resources around them. They deal with all kinds of different products. They upload and update their website based on the products that they have nearby.

How it works

As evident, such a company will collect resources from its surroundings. Later they will post them on their website, showing the customers that they have such products. When approached, the company will refer to the producer, acquire the product, and sell it.

Advantages

You can find a vast variety of products on their website. These products are more focused on products that are more commonly used in daily lives. Consumers can get a vast variety of products easily.

Disadvantage

Having a huge sourcing ability means to leap at every product that comes in sight. This type of workability lacks professionalism in the business model. Moreover, such a company will keep on adding products irrespective of their demand.

This makes the website untidy with a bulging flow of products. In addition, such companies also don’t invest in their development cycle. They won’t focus on how the material or the product is produced. Neither will they check for average cost estimation and other elements.

Where to find them

Such companies can easily be found on e-commerce platforms such as Alibaba and Dhgate. They don’t attend trade fairs as it costs around $4500 for the annual fee. They don’t have enough revenues, and showing unrelated stock is not a good trade show.

6. Hot-Selling Type Trading Company

As evident from the name, these types of trading companies focus on hot-selling products in the market.

How it works

Such kind of companies have a keen sense of the market and how it works. They keep a good eye on the products that are selling in the market. They buy those products from the factories and earn profit by selling them in the first 2-3 months.

Advantages

The buyers can easily find trending products from such companies. Moreover, such brands also invest in marketing, promoting the hot-selling products to attract customers. You will also find the products out of stock sometimes due to the high demand. But any HS company will have multiple sourcing options that will restock the commodities.

Disadvantage

Even if they are selling hot-selling products, such companies don’t have long-term plans. They focus on getting the products from the market and selling them instantly to earn a profit. Moreover, they claim to be factories but are in reality just trading companies.

Where to find them

You can find them on various platforms such as Alibaba, Aliexpress, Dhgate, etc. In addition, these companies also lack personal profile and identity. Even a person can operate as a hot-seller. By simply getting hands on such products, and contacting HS companies, one can start their HS business too.

7. SOHO Trading Company

SOHO or small office, a home office is a type of trading company with quite a low amount of people. These people are mostly former employees that found SOHO trading businesses to earn on their own.

How it works

The SOHO owners simply register themselves on Alibaba after obtaining a company registration. Later they gain the trust of people by claiming to be a trading or factory company. The owners can choose to be certain-filed, grocery-type or even HS selling, depending on their expertise.

Advantages

One of the many advantages of SOHO trading is that it costs less operational costs. Since there are a low number of people, it improves cooperation. They can also provide better than a professional trading company by offering the best prices and services.

Since SOHO owners can be seen as entrepreneurs, one can expect them to be hardworking. This is to ensure that the business keeps on moving towards continuous growth. They are especially viable for those who want to import from China as they give better rates.

Disadvantage

As highlighted earlier, such traders are working hard and attending multiple business prospects. In a way, they have a lot to cater to and can leave your requests unattended.

Where To Find Them

You can easily locate SOHO traders on Alibaba, global sources, and on their websites.

How To Identify Them

You can check for their differences in the phone numbers. SOHO traders will leave their phone numbers for people to contact them. Another way is to ask them for their company photos, including team photos, logos, office photos, etc.

If they come up with excuses, it’s likely a SOHO. However, finding a reliable SOHO owner will earn you a lot of benefits. These companies are working to earn a name and can work proficiently to give your business the boost it needs.

Eastern China is one such example of a SOHO trading company. Despite not having any company account, it still managed to gain more than $15 million in sales all time.

8. Sourcing Company

This type of company serves as a link between the Chinese factories and importers. They are also a type of trading companies acting as middlemen. They help with product and supplier sourcing needs of the buyers.

How it works

The goal of a sourcing company is to find the right suppliers for the buyers. They know different suppliers in the market. When a customer connects with them, the sourcing company finds a supplier meeting their demands.

Who needs them?

The measure to take is that you need to find the right sourcing company. A reliable sourcing company will be able to cater to your needs proficiently. Even if you need customized products, the sourcing company is responsible for finding you such a buyer.

In addition, importers that have little experience in the market can use them. They will have the chance to get a good fit via sourcing company and will save time on finding one too.

Advantages

One of the many advantages of a sourcing company is that it can be outsourced. It saves time and effort to locate suppliers. Businesses can focus on their management while their suppliers are being located.

In addition, they offer flexible pricing by turning down suppliers so that they may come to the level of demand. You can expect to find suppliers at cheaper rates with them than on your own.

Where to find them

Sourcing companies can be located on Alibaba and via Google. You can also refer to Leelinesourcing.com that will help you see through your requirements efficiently.

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The Difference Between Factories & Trading Companies in china

The important element to understand is the workability and the components of both entities. A factory is most likely to produce a single product.

For example, if a textile factory produces shirts, it will most likely produce only shirts. The factory will outsource string, fabric and other elements of production.

The outsourced products can be other factories that are producing these goods. For complex parts, the factory will need to connect with other factories to prepare the product you need.

On the other hand, trading companies will provide you with a complete product in one go. They will not need to outsource production. Neither they will need to connect with other factories to get the desired product ready.

How to Identify a China Trading Company or a chinese Factory

There are simple ways that you can use for determining whether the supplier is a trading company or a factory. You can simply ask them directly. If the supplier states that they are a trader, then you don’t need to look further for more queries.

However, if the supplier is a factory, then you must invest further. This is to ensure whether the factory is manufacturing the goods that you need or not.

In addition, you will also need to discuss the schedule for the preparation of the goods.

All this information, should be discussed before connecting with a factory.

Should You Use a Factory or a Trading Company?

One can get easily confused when thinking about factories and trading companies. But having known keen facts can help differentiate between them easily.

When interacting with a trading company, you can expect the prices to go high. This is due to the fact they bring products from factories that are perfectly produced. Also, these companies need to generate revenue of their own as well.

You can easily buy products from a trading company on smaller demands too. Some trading companies also offer additional perks such as sourcing, quality inspections, customer service, etc.

However, the problem with china trading companies is that they offer little or no product value. As they are just buying products from factories and selling them to the customers. The products are mostly the same, and customers don’t get any additional value added to them.

On the other hand, you can get value added products from factories. Even if one wants a customized product, factories can communicate the requirements and manufacture accordingly. In case any problem occurs, you can communicate with the respective factory to make amendments.

Moreover, you can also get your desired products at affordable rates than a trading company. Since factories only provide bulk orders, you can get a discount depending on the quantity you want.

In case you want a bulk order, it’s better that you connect with a factory rather than a trader. Connecting with a factory will also allow you to customize your product. Moreover, you can also get a consultation regarding the product’s customization.

On the other hand, if you’re looking for a variety of products but in low quantity, a trader is a viable option. They will provide you with a number of goods to choose from that you won’t get from a factory supplier.

How to Find Manufacturers in China

You must put the effort in locating reliable manufacturers in China. It’s because they tend to make claims and promises, which prove to be a liability in the end. However, there are certain ways and places that you can use to locate a competent manufacturer

1. Local Trade Shows

Also known as trade fairs or exhibitions, these shows are where companies and manufacturers showcase their services. You can easily meet a number of vendors here, ask questions related to your needs, and recruit them.

Before trade shows, one only interacted with such manufacturers via the internet. Now, the sellers can easily connect with manufacturers, and foster long-lasting relationships. Many of the international trading companies and manufacturers visit these trade shows for business ventures.

SaleHoo is a pioneer for local trade shows. They combine the list of the local shows around the world, based on their niche. They ask sellers to join them for interacting with different vendors. You can easily locate these trade shows via Google search and book your place by visiting Chinese trading websites.

Trade shows in China

China, the world’s largest manufacturer, invests a lot in trade shows. If you’re visiting China, you can personally visit these trade shows to meet different manufacturers easily. The Canton Fair, The Yiwu Commodities Fair, and the East China Import and Export Commodity Fair are some of the many famous trade shows in China.

Trade shows in the USA

The US industry arranges multiple trade shows every year. The M+A Expodatabase is a great source of finding a list of trade shows that are being organized in the area. One appealing element is that each show is organized based on the industry niche.

You don’t have to visit every show if they don’t offer the product you need. But, if you need an American made products seller, then these shows are a great way to start from.

2. Alibaba.com

It’s the world’s largest supplier directory owner with more than 279 million active buyers and 8.5 million active sellers. The B2B service allows you to locate your products easily. Manufacturers have a minimum order quantity or MOQ that you need to consider before buying.

If you’re a verified buyer, you can easily gain access to a detailed supplier directory. This will help in seeing background records, experiences, and other useful information. You can use this information to choose a reliable supplier accordingly.

3. HKTDC

The Hong Kong Trade Development Council or HKTDC is Hong Kong’s international marketing arm. It aims to provide a huge directory for buyers looking for Hong Kong based suppliers.

From electronics to jewelry to toys, you can find dozens of product suppliers here. But you must invest time in knowing whether the supplier is verified before contacting them. You can also check for references from third parties or go for recommendations too.

4. Global Source

MFG.com is the eBay of the manufacturing firm industry. It has a global database for manufacturing companies that you can refer to find the manufacturer of your needs.

You can easily get started by making an account and start looking right away. Don’t worry about the platform’s legitimacy; Jeff Bezos is an investor for the company.

5. Leelinesourcing Help You Find Manufactures

You can also connect with Leelinesourcing that also has an extensive database of China wholesale suppliers and manufacturers from around the world. The platform is a great way to start if you are looking to hire manufacturers from China.

3 Tips You Should Know When Working With China Trading Company

1. China Trading Companies Tend To Work With Low-Grade Factories

As highlighted earlier,chinese trading companies need to create a margin for their profit. In order to do so, they work with low-grade factories that are not exporting goods often. Their low-cost structure reduces the price that the traders get.

On the other hand, china trading company uses this as an opportunity to earn a profit. To avoid this situation, you need to ensure that they arrange everything and even coach the manufactures in order to get better products with lowered costs.

2. Chinese Trading Companies Seldom Tell Their Customers About Quality Issues

The quality of the products and how they are made is often not told to the customer. This is done to minimize the risk of a refund from the customer if they find the product faulty. For avoiding such an issue, you, being an importer, should send inspectors for the inspection of the products being made.

Some companies when hearing about inspection often report re-working on the products since their QA system rejected the products made. It shows that the company isn’t reliable.

3. China Trading Companies Often Do Not Have Any Control Over The Factories

A small number of trading companies have stakes in factories. They do this so to present themselves as factory owners. When things go wrong, they simply move aside. However, in order to avoid such a situation, you should invest directly with the factory supplier.

Make sure to communicate and focus on inspections so that the trading companies that have invested in the factory, stay away.

Faq About Chinese Trading Companies

Do Chinese Trading Companies Offer Lower Moqs Compared To Factories?

Yes, trading companies offer lower MOQs than the factories. Since factories produce specific products, they need to have bulk orders to support production needs.

Whats The Difference Between A Trading Company And A Wholesaler?

China wholesaler supplier is a type of trader. A wholesaler buys goods in bulk and then store them in warehouses for some time. Their main customers are retailers and merchants rather than the actual consumer. They sell their products in bulk too.

On the other hand, a trader buys things in bulk and sell them in low quantities to actual consumers.

How To Identify A Trading Company On Alibaba.com

You can identify a trading company via the terms “trading” or “commodity,” which is shown alongside their name. In addition, you can see a variety of unrelated products without any test reports or QA standards. They will also lack ISO standard 9001.

How To Deal With Product Compliance Issues When Buying From Chinese Trading Companies

You need to keep determining the tariff classifications. In addition, opt for screening suppliers based on demographics. You can also get ITAR-controlled goods alongside managing customs.

Conclusion

Choosing a trading or factory supplier depends upon your requirements. Each supplier has its perks and cons that you should consider before recruiting them.

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FOUNDER’S NOTE
LeelineSourcing will always help you buy cheap and good quality goods from China.

sharline leelinesourcing founder

Top 50 Questions You Should Know When Importing From China

This article is a summary of the questions and answers about purchasing products in China.It can offer you a clear understanding of sourcing in China.The questions include product quality, supplier resources, costs and profits of products and so on.

Please read it carefully and you can get the answers for your questions.

1.Q: Are products manufactured in China of low quality?

A: China offers a wide range of goods at affordable prices due to automation and efficient production system. However, the quality of a product does not depend on the cost but on the qualification of the workmanship.

Through the many years of our presence in China, we’ve built relationships with suppliers and manufacturers who possess the know-how of producing goods to match required quality standards.

2.Q: Do factory compensate for damaged goods?

A: Generally, this is a rare occurrence as there are many redundant inspections performed by the factory, and finally by our staff. If the goods are damaged during shipment then the goods are insured so you can claim insurance.

If the damage is of the nature that the part can be replaced, we will help you in getting a replacement. And in case of an incorrect supply of material we shall get it replaced.

3.Q: Why should I opt China for the sourcing of materials?

A: China is internationally known as the Global Vendor/ Global Supplier. Since China is exporting goods in big volumes all around the world hence the economies of bulk production gives you a huge variety to select from as well as price benefit.

The variety and range available in China is not visible in India, Europe or USA. So to avail the benefit of wide variety at good price you may opt China.

The material available in china, meets international standards. Which helps in enhancing the beauty of any given project at a cheaper price.

4.Q:What happens to the information I provide to you regarding my product?

A:Your privacy and IPR protection is important to us. We often arrange mutually agreeable non-disclosure agreements and IPR protection.

5.Q:Can you provide me with a sample before mass production?

A:Yes, usually our China factories will make samples. Final approval of the product can then be based upon a material sample which will allow for greater trust in our services and capabilities.

6.Q:What Products can you manufacture in China?

A: China is now the workshop of the world. The quality of most Chinese manufacturing is comparable to any developed economy, however it remains crucial to be discerning when identifying Chinese suppliers.

Based upon agreed MOQ criteria we can research the market and define appropriate China suppliers for almost any product.

7.Q: How are you different from other sourcing companies in China?

A: We are genuinely unique. Our team are based out of Chinese city and speaks Mandarin and English.

This is important as westerners who speak the local language and live in the local community have a much better understanding and respect form the factories. Hence products are produced faster and we obtain unrivalled prices.

8.Q:What are the advantages of working with Leelinesourcing?

A: We are highly experienced at facilitating manufacturing in China and do not use agents. Our team based in China visit the factory directly to ensure you get the best price possible.

We convey this information directly to you. This will improve your profit margin; we source products and pass the cost savings directly to you.

You save on management time as all Manufacturing, QC, Clearing, Shipping and Distribution are managed for you. Typically you can expect to dramatically reduce your costs.

9.Q: I realized that two things often happen in China:

The costs of raw materials go up and down, so the supplier tries to play the market and buy his raw materials at a lower cost. If the raw materials keep going up, the supplier may decide to break the contract rather than cut his margin or produce at a loss.

As a Westerner used to dealing with contracts back home that “mean something”, I was totally blown away by this casual attitude in China when I first came here 12 years ago.

These days when I place the PO or give a deposit to start the order, I make it real clear to the supplier that I expect him to purchase the raw materials ASAP and I have my team on site to verify materials have been purchased.

What are the most appropriate policies to deal with changes in commodities prices?

A: You would think the above step would solve things, but….think again.

Even after verifying the materials for my order were in the factory, now and again, I would get a call at the 11th hour stating the supplier couldn’t ship and usually some reason was made up like “power outage”, “lack of workers” and the most common fake reason- “equipment or tooling problems”. 9 out of 10 times, when I looked into it, I learned that another more important buyer twisted the arm of the supplier to use my stock for their order.

If you are buying 10,000 neck ties and Wal-Mart walks in to your supplier with an order for 1 million, you may find the supplier ready and willing to break the terms of your agreement to make more money from somewhere else.

That is why I try to find factories that are an appropriate size where my order will get the respect it deserves. Another tool I use is to build a “goodwill piggy bank”.

I try to maintain good relations through holiday greetings, frequent visits/ meals and even vacation invitations so that the suppliers get to know me as a good friend rather than just PO #.

This goodwill has saved me a few times when my suppliers opted to honor the friendship when the contract alone would not have been persuasive enough.

10.Q: How to get my suppliers to respect the agreed terms and conditions of our contract/purchase order?

A: Contracts are signed in front of a group. Loss of face for breaking one’s word is often more effective than fear of legal repercussions.

Some buyers have a general contract in place with the supplier under which various purchase orders are placed. I do it the other way around and each time I place the PO, I have the contract attached and signed off at the same time. My contract defines the relationship in terms of dealing with Intellectual Property, penalty for late orders and such.

Perhaps the most important thing I do is to make the contract bi-lingual and easy to understand. Getting my suppliers to understand and agree in person to a set of concepts is much more effective than giving them a 40 page document in US legal-speak that doesn’t even get translated by the supplier, let alone reviewed and understood.

I also suggest considering your volume when you select a supplier. I have found if you are a small buyer for a big supplier, your terms and conditions may not be as respected as you would like. I think the sweet spot is to make up about 20-35% of a factory’s output.

11.Q: In China in particular, I have found that sometimes having a target price stated can be to the buyer’s advantage as quality level is often tied to price. And if the supplier doesn’t have a target, sometimes the buyer ends up overpaying on poor quality. Should I give my supplier a target price?

A: In other words, the supplier tries to get the highest price for the lowest quality they can negotiate. While I don’t suggest you tell your potential suppliers during the Request For Quotation process what is your target price, I do suggest that after you narrow down the top potential suppliers, you focus on using the best price from the RFQ research to work with your top supplier to achieve the best price to quality ratio.

12.Q: We are a USA company that wants to set up a 100% owned factor in PRC. We also heard some good reasons to set up a Hong Kong holding company for the PRC entity, but wanted to get your opinion. Please let us know what you feel are the benefits of setting up a HK company as opposed to direct ownership from the USA of the PRC entity.

A: keeping in mind that you should consult with accounting/business formation specialists before you make an investment so they can review the particulars of your specific situation.

Because of the special status of HK to China, setting up a factory owned by a HK holding company takes less time, money and paperwork than doing PRC entity ownership directly from your HQ in USA.

If your USA HQ ever wants to sell the China assets, a potential buyer will place value on having a HK set of audited books. While you may end up running a world class set of books at your PRC factory, buyers tend to place more credibility with HK accounts.

There may be some tax deferral benefits of using HK, but you would need to consult with experts as transfer pricing issues come into play.

There is also the benefit of risk avoidance for the USA HQ.

13.Q: I am looking for an agency in China to help with a purchasing project. Can anyone recommend the right approach?

A: Are they a legitimate company with proper business licensing?

Do they have a clear track record of performance? If they can’t give you some client references, run away. That is a very big red flag.

Are they focused on a certain set of services or do they try to everything for everybody? Yes, even the 3rd party service providers have been known to outsource to others just like some factories outsource production without telling the buyer.

Is their pricing structure and service agreement well defined and transparent?

It is a major pitfall to do business with a 3rd Party service provider without a clear contract in place that outlines the service, costs, time frame and other desired attributes of the partnership.

14.Q: I had understood that there was a structural problem on the Chinese side, that to export you needed a special license which is not easy/inexpensive to get, hence the need to use a trading company. Is that not the case? When to work with a trading company or to go China factory directly?

A: If the manufacturer is newly opened or small scale, they may not have made the investment in time and capital to get their own export license. Also, during the first years of a new company, they are generally classed as “small scale tax payer” and only once they have a track record of paying tax and exporting well, does the government move them to “normal tax payer” status.

Once at normal tax payer status, they can get the full VAT rebate at export. Since the trading company may be mature and at normal tax payer status, it sometimes saves money in the beginning for mfg to outsource the export if the mfg is small or recently opened.

A hand full of sensitive industries are highly regulated and a trading company may be required. But those industries are few and far between.

15.Q: My supplier has some extra stock from my order. They said they would like my authorization to liquidate it and get some money for scrap. Is this a good idea?

A: If the goods are already in their finished form and have more value as a final product rather than scrap, it is a bad idea to allow your supplier to liquidate your stock as they see fit because it may very well end up being sold rather than recycled and that could have gray market implications.

Here are a few suggestions:

Have the terms of your contacts and purchase orders clearly state what will happen to scrap and extra stock. Have an agreement before production even starts!

If you do agree to having it scrapped, you need some proof it was destroyed or recycled. You may need to hire an independent 3rd party if you can’t make the trip yourself.

Very important if you have intellectual property like a famous brand or innovative product to protect.

16.Q:I’m interested in learning if you think a Purchase Order (PO) format for small and large orders can use the same template.

A:I think the case could be made that large orders and small order both need to be taken seriously when it comes to PO and contracts. At the sourcing agency where I work, we use the same PO template for both large and small orders for many years now.

Basically we pulled the best practices from our larger buyers and applied it to the small buyers’ order. In my experience, I have found that the smaller orders are harder to manage because the buyer doesn’t have as much leverage with the seller.

So it is very important for the small buyer to have a well defined and mutually agreed upon PO in place.

It would be very dangerous to think that because the order is small, you don’t need to be as concerned about the PO details. Unfortunately, in reality, the opposite is true.

17.Q: What is the timescale?

A: Different projects will have different timelines, and we begin to work from receiving your order. We will take care of everything including arranging the logistics (the freight from the factory to the port, the shipping to the USA and the delivery from the USA port to your address – including taking care of any duties). 

Know more: Our Sourcing Agent Services in China

18.Q: What about samples and prototypes?

A: We strongly recommend that our customers get 2/3 samples from the factory before going ahead with the full order.

In fact, for certain products it can be necessary to get multiple samples and you should factor this in the your budget.

Sample cost is factory prescribed but we normally estimate it to be the individual unit cost multiplied by three. Prototyping is part of the sampling process.

19.Q: What quantity do I need to buy?    

A: Really this depends on the factory and the product. Again, as a general rule, about 1000 pieces is the normal Minimum Order Quantity (MOQ).

 However, this is not always the case and can – through our existing relationship with the factory – be negotiated.

20.Q: What kind of products do you source?

A: We specialize in setting up the production of new products, but we also can source pre-existing products. We have sourced a lot of different products over the years and would feel comfortable sourcing or setting up production for most things. Here’s some examples of product ranges we’ve sourced:

Sourcing Top trending profitable products to sell on amazon,ebay,shopify or ecommerce website

21.Q: I’m in the process of paying for my units & the shipment.

The thing is that I asked the supplier if the initial payment would be with 30%. The supplier wrote me this…

Because need to do inspection. Let’s make the deposit 50%.

Ok ?

So that I can persuade our boss. Usually quantity more than 500pcs. We accept inspection. Small quantity doesn’t have much profit and it is troublesome. What you guys think of this?

A: Are you paying through Alibaba with trade assurance?

It sounds like he is being straight with you that its a small order in their eyes.

If everything else seems good and you have trade assurance pay the 50%.

22.Q: My supplier is asking is 8*3cm good enough for barcode size and 8*8cm ok for logo size are these good sizes?

A: Any size is OK, as long as it can be scanned.

23.Q: Does anyone know if this whole endeavor can be put on a credit card entirely? Will suppliers accept credit card?

A: Suppliers can take credit cards with Alibaba Trade Assurance.

24.Q:When you’re ordering samples, how many suppliers on average do you get samples from? Do you order them all at the same time or one by one?

A:Order them all at once and consolidate them to one box! You will be amazed at how much money you can save if this is a weekly or biweekly occurrence. 

25.Q: Did anyone import from China before?

How does this work to make sure that you will get the perfect product and there will be no difference between what you see and what you get?!

Do you deal with a trusted agency there? Especially Shanghai? Or we need to travel by ourselves?

A: Some steps would be to request samples of similar existing products, when you issue a P.O. include in it what will be your quality control plan so they know what to expect (if you hire a QC company to do the inspection they can help you draft a QC plan you can share with the manufacturer).

Request a production sample, hire a QC company – they will come when the production run is complete and open random boxes for inspection.

A report is issued to you before you approve shipment.

Related Content:

8 tips guide of importing process from china for newbies

26.Q: Who do I send my labels/barcodes to? Is it the fulfillment center or my supplier?

A: If you talking about PL definitely you will have to send it to supplier. And UPC codes Amazon can do it for you but they will charge 20 cents per unit. Better to send it to supplier.

Related Content:

How to Labeling your amazon products with fba fnsku or upc stickers

27.Q: If the delivery charge is higher than the goods’ value, how I can do?

A: Some customers may face an embarrassing question that the delivery charge is higher than the value of goods. How can you do?

Here we offer two suggestions.

Firstly, purchasing more items instead of small quantity. Since our company help source many kinds of goods, you can ask your friends or others to share the delivery charge if they have plan to buy things from China.

Secondly, if the quantity is small and you really can’t find someone to share charge with you, we suggest you to buy in your domestic market.

After all, the domestic price may be less than what you pay for buying from China cause the retailers import big quantity one time.

28.Q: Is your price is lower than suppliers from Alibaba or Made in China?

A: It depends on your requirement.

Suppliers in the B2B platforms may be factories, trading companies, second or even third part middlemen. There are hundreds of price for the same product and it is very hard to judge who they are by checking their website.

Actually, those clients who purchased from China before may know, there is no lowest but lower price in China. Without taking quality and service into consideration, we can always find a lower price when keep searching.

However, as our past experience sourcing for our clients, they focus on good cost performance rather than lowest price.

We keep the promise that quoted price is same as the supplier’s and no any other hidden charge. As a matter of fact, our price is middle level comparing with the B2B platform suppliers’, but we offer you a easier way to buy goods from different suppliers who maybe located in different cities.

This is what the B2B platform suppliers’ can’t do cause they normally only focus on one field products. For example, those who sells tiles may not know the lighting market well, or who sells sanitary wares may not know where to find a good supplier for toys.

Even they can quote you price for what they find, normally they still find from Alibaba or Made in China Platforms.

For your reference, here are some resources relating to your situation:

Amazon FBA Sourcing Agent Fee

29.Q: How do you search suppliers for our orders?

A: Normally we will give preference to those suppliers who cooperate well before cause they are tested to offer good quality and price. For those products we don’t purchase before, we do as below.

Firstly, we find out the industrial clusters of your products, like building materials in Foshan, toys in Shantou, electronic products in Shenzhen, Christmas products in Yiwu market.

Secondly, we search the right factories or big wholesalers depending on your requirement and quantity.

Thirdly, we ask quotation and samples for checking. Samples can be delivered to you request (sample fee and express charge is paid by your side).

30.Q: What kind suppliers your company contacted? All factories?

A: It depends on the products you require.

If your quantity can reach factories’ MOQ, we surely choose factories as priority.

If your quantity is less than factories’ MOQ, we will negotiate with factories to accept your quantity.

If factories can’t reduce, we will contact with some big wholesalers who with good price and quantity.

31.Q: Is the price you offered more competitive than Alibaba supplier?

A: 80% of the suppliers we are working can offer better prices than suppliers from Alibaba. But if customers still want to buy from suppliers they found from Alibaba, we can help to gather their goods together and do QC, then ship to FBA for them.

In this way, only 5% service fee will be charged. And will make sure your goods arrive at Amazon warehouse safely.

For your reference, here are some resources relating to your situation:

The advantages of the sourcing company

32.Q: Will you give the list of suppliers details to my clients and then they need to choose and contact the suppliers?

Or you will send the final quote to my clients after you negotiate with the suppliers?

A: We will try our best to source several different suppliers for 1 item, and select the best 1-2 of them, then send the quotation to customers.

Normally we don’t offer our supplier’s information to customers, as our working pattern is that customers working with us, and we work with our suppliers.

But the main reason is that most of our suppliers don’t directly work with foreign customers as they don’t have English-speaking staff.

Our 5%-10% service fee is not only charged to source suppliers, but also for, the most important part, negotiating with suppliers efficiently to save time and money for customers.

For your reference, here are some resources relating to your situation:

Why LeelineSourcing For Your Business

33.Q: Do you handle samples checking and then send the final product to Amazon? Or you are not responsible for checking samples?

A: Our service includes: find suppliers and sourcing products from China, and quote to customers the best prices; negotiate with suppliers for samples, production and packaging; customize logo and packaging; quality control; arrange shipping to FBA. (Maybe consolidate goods with other customers to the same destination so that shipping fee will be saved).

Samples checking is free. We will ask for samples from suppliers once customers are satisfied with the quotation. Then, we send them to customers for quality checking, and customers decide whether to purchase it in bulk.

For your reference, here are some resources relating to your situation:

Amazon FBA prep services

34.Q: What if the price you offered is less competitive than the one I find on Alibaba?

Or I want to buy from my own supplier but still want to use your service to coordinate between the supplier and me.

A: There are two different situations for service fee:

For client buying products from his own supplier and he communicates with supplier for all production process, we only help check quality and arrange shipping. If there’s quality issue, we will help client negotiate with supplier. In this case, we charge 5% fee.

We help client communicate with supplier for the whole process, like making samples or producing. In this way, we charge 5%-10% service fee based on product value, regardless of the supplier is found by client himself or us. We also help check quality and arrange shipping.

Although client pays a little bit more service fee in the second service, we can help client save lots of time in communicating with suppliers. If there are quality issues happen, we help you negotiate with the supplier on behalf of you until the problems are fixed.

For your reference, here are some resources relating to your situation:

The advantages of the sourcing company

35.Q: Is it wise to get three or four suppliers send you samples before you choose the final supplier to place your order? 

A: Testing a sample is a must-do before placing the order, actually inspecting some random samples in your order before delivery is also necessary. I would ask for samples from 3 suppliers, the best 3 of them. The most difficult work is to decide which are the top 3.

You need to do some background investigation by checking their websites, asking as many questions as possible, the more you ask, the more you will know.

By the way, don’t let them send the samples separately, that’s not a cost efficient way. Try to make them shipped together.

For your reference, here are some resources relating to your situation:

How to get your best wholesale price from Suppliers

36.Q: Regarding brand name products, the ones that you can find in a store. Does anyone know where I can get them? I’m interested in finding wholesalers and suppliers in USA. Your help is greatly appreciated.

A: Look on the packaging in the store of who the manufacturer is and go from there.

37.Q: How not to lose money when sourcing from China?

A: Sometimes the letter of credit states that funds transfer to the seller upon provision of bill of lading (meaning the goods are on the boat and ready to ship).

However, if the seller shipped you a box of rocks, you wouldn’t know until after the payment was made.

So make sure the terms of the LC protect you and even more important- be sure to conduct your due diligence upfront and have 3rd party inspection in place to ensure the item shipping is what you actually ordered.

Here are some more resources explaining how to source safe:

8 tips guide of importing process from china for newbies

How to find Reliable suppliers to grow your business

6 Things To Remember Before Working With Chinese Suppliers

How To Minimize Risks When Import Products From China

38.Q: What method of payments do Chinese suppliers prefer?

A: Chinese suppliers prefer 100% in advance via bank transfer (or better yet- cash) and they would be very happy if you don’t bother to use a contract or PO. Some buyers are crazy enough to do business that way and if something goes wrong, they have no leverage.

I assume the question is really about what methods will Chinese suppliers accept, rather than what do they prefer, and if you are looking for payment methods that are fair to both the buyer and the seller, you may be interested in these links:

How To Minimize Risks When Import Products From China

39.Q: Supplier didn’t ship the order and kept our deposit. What to do?

A: I have a couple of options for you.

If you wish to get the order shipped with this supplier, but reduce your risk, you could consider linking the supplier’s performance to you payment.

For example, pay the supplier after the goods have been inspected but before the goods ship out of China. This inspection could take place at the factory if a random inspection is sufficient, or 100% inspection could take place at a 3rd party if you wanted a very close inspection.

It would also be wise if you had a team representing you on the ground in China to help mediate and explain to the Chinese supplier how the above solutions benefits both parties.

If you have already given up on the supplier due to their poor performance, then here are two ideas:

List them at SupplierBlackList and expose them to the world and help other buyers avoid this bad supplier.

Consider issuing a demand letter from a Chinese lawyer to show them you are series about getting your money back as they messed up the order and caused you substantial financial loss.  

For your reference, here are some resources relating to your situation:

How To Choose Your China Supplier And Sourcing Agent

How to find Reliable suppliers to grow your business

40.Q: Can Leelinesouring help me with my buying program?

A: Yes, Leelinesourcing has a wide range of sourcing related services. Leelinesourcing services are especially valuable for

Established import companies who have existing purchasing programs and a lot of experience in China sourcing and who seek better control over their sources;

Importers who use agents and who prefer to deal directly with factories.

New importers who have a clear understanding of their needs. The services are designed to provide direct access to the most competitive Chinese manufacturers and manage the follow-up of orders placed.

For your reference, here are some resources relating to your situation:

Amazon FBA Sourcing Services

Amazon FBA prep services

Amazon FBA private label service

Amazon FBA logistics service

41.Q:What products are ideal for sourcing in China?

A:Products that have:

High Labor Content

High quality/labor ratio

Sufficient value to justify shipping costs

For your reference, here are some resources relating to your situation:

13 Tips You Should Keep In Mind When You Are Thinking of Outsourcing From China

How to sell chinese products make money on amazon online

How to Sourcing the right product which can earn money from Amazon quickly

42.Q:What savings can I expect from sourcing in China?

A: Savings usually depend on the product but generally savings are:

Production costs: 20% to 50% savings

Tooling costs: Over 50% savings

Every intermediary step: 10% to 15% savings per step

For your reference, here are some resources relating to your situation:

How Does A Freight Forwarder Help You With Your Business

The advantages of the sourcing company

43.Q: What is the best approach to China sourcing?

A: The best approach to sourcing in China depends on your specific needs. There are three approaches one should consider:

The direct approach

The agent approach

The full service provider

For your reference, here are some resources relating to your situation:

13 Tips You Should Keep In Mind When You Are Thinking of Outsourcing From China

TOP 20 Sourcing Agent Company In China

why have a sourcing agent in a target market

The advantages of the sourcing company

44.Q: What happens if defective merchandise arrives at my warehouse?

A: If this happens, you will find it very difficult to get your money back under the direct approach because it means the goods went through your own quality control and passed.

With an agent or a full service provider, you generally have recourse and can get a credit on future orders to remedy the situation.

For your reference, here are some resources relating to your situation:

How to Tell your Supplier Package your Goods correctly to meet the standard of Amazon FBA requirements

45.Q: How do I avoid defective goods and poor quality after I place my order?

A: The key to avoid poor quality and defective products is prevention. Implementing the following will guarantee success every time:

You understand your own quality needs down to the smallest details

The factory fully understands your quality criteria and is willing, able and experienced to deliver goods as per your requirements.

You have a quality control program in place that is followed through by all parties involved.

For your reference, here are some resources relating to your situation:

How to Tell your Supplier Package your Goods correctly to meet the standard of Amazon FBA requirements

46.Q: Why should I pay for samples when I can get free samples from Alibaba or another B2B website?

A: When paying for a sample through Leelinesourcing, you are paying the direct cost of the sample to the factory. Leelinesourcing never profits from a sample cost. Agents on Alibaba/B2B websites often provide free samples at first, but you will surely be paying much more than the sample’s cost when placing an order.

47.Q: How does Leelinesourcing secure the best available price?

A: Leelinesourcing has a network of hundreds of factories which we have had experience working with in the past as well as new competitive and qualified factories.

Thus we get the factories to compete for your business by offering up the best price while still maintaining the quality standard.

For your reference, here are some resources relating to your situation:

How to get your best wholesale price from Suppliers

48.Q: Hi waiting for sample and ordering product is taking a lot of time. I am customizing the product. If I get standard one it will be quicker. Is the wait time worth for unique product?

A: Don’t take shortcuts because you’re impatient. You know the right thing to do is be unique and stand out as selling the same thing will most likely get low sales – especially with low reviews compared to the competition.

For your reference, here are some resources relating to your situation:

How to Sourcing the right product which can earn money from Amazon quickly

5 Steps for Helping You Find the Best Products to Sell on Amazon

49.Q: I am in dilemma. I am customizing the product. I am worried what if people do not like my customization. Is it prudent to stick to existing product or try new customized one? This is my first product. Please help.

A: In every business, market validation is important. You can take the samples and show friends and random people and see the reactions. But overall, if you don’t believe in your product, how do you expect to make sales?

For your reference, here are some resources relating to your situation:

How to sell chinese products make money on amazon online

10 Amazon Hot Sale Products And Where You Can Find In China

50.Q: When paying the supplier do you use PayPal only? How reliable is trade assurance?

A: To maximize your protection, you can pay through Alibaba with their Trade Assurance system but make sure everything regarding the transaction is recorded on the system as far as all aspects of the product and what you’re expecting to receive, the extent of responsibility of the supplier, etc.

Use a credit card along with the Trade Assurance you have double protection with your credit card company.

If you use Paypal, never send it as “Friends and Family”, you will get zero protection. Again, pay with a credit card through Paypal so you have double protection.

Record the details of what’s been agreed upon with your supplier into the notes for the transaction.

I don’t recommend ever paying by wire transfer (TT) unless you’ve already built a working relationship already with the supplier.

For your reference, here are some resources relating to your situation:

How to avoid risks when cooperating with Alibaba OneTouch

How To Minimize Risks When Import Products From China

51.Q: What does it mean when an alibaba seller asks if you have an “express collection account”?

A: The supplier want to know this because the sample freight should be paid by yourself, if you have a Express account, the freight can be deducted in your side, no need to transfer money to supplier.

For your reference, here are some resources relating to your situation:

How to avoid risks when cooperating with Alibaba OneTouch

52.Q: Do you gave your Logo first before you order your sample product? Or you just order the sample product first?

A: If you just want to see the product for quality then no need to give the logo yet. If you’d like to see the logo on the product then you can either pay extra for that and have it sent as a sample, or the supplier can send it to you and reimburse you when you make a larger order.

Hope this summary of questions and answers about purchasing products in China can help you in your business. And if you have any other questions or requirements, plase don’t hesitate to look for help from Leelinesourcing.

Leelinesourcing is a professional sourcing agent in China with decades of experience in sourcing products for customers. We are confident that the products we source for you are the best quality with the lowest price.

Our services include but are not limited to finding suppliers, conducting credit verification, cross-price inspection, negotiating prices, product photography, labeling, FBA transportation and product branding. We will be always here waiting for you.

If you have any more questions about FBA, please do get in touch so we can assist you in getting the right information. 

Leeline sourcing company is involved in different sourcing business that will help your company’s grow, and make your international business better. No matter how big or small your orders are, we will help you source quality and affordable products, and we will ship them directly to you.

• Product Sourcing: With over 10 years experience in this field, our team will keep your mind at peace, and you will be sure that the products are supplied through a responsible supply chain.

 Amazon FBA sourcing service: We offer you Amazon seller services, from product procurement, to brand labeling, quality inspection, packaging services, product photographing and also shipping of products to FBA warehouses. Just tell us what you need, and we will help ship your products to your warehouse at lightning speed.

• Business and sourcing ideas: If you walk into our office, we will share business and sourcing ideas with you, even if you are importing yourself, our ideas will help you avoid mistakes that will be costly to your business. Our advice will surely help your business turn out better.

We will keep updating new resoures about hot selling item in china, if you are planning to open your online shop and don’t know what kind of products to choose, welcome to subscribe our articles, we will give you some sourcing inspiration.

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FOUNDER’S NOTE
LeelineSourcing will always help you buy cheap and good quality goods from China.

sharline leelinesourcing founder


About the author

Sharline is the founder of LeelineSourcing.com. With 10 years of experience sourcing in China, She loves to share knowledge and ideas in sourcing bussiness.She writes only the truths which others are normally not willing to tell. This makes her posts distinguishable from other import & export articles.

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