Archive for category: Perks

Since 2010, China is the world’s main manufacturing hub. Almost all manufactured parts are made with components at least partially produced in China. The fact that so many companies do work with Chinese suppliers doesn’t make it easier to identify reliable ones.

Is China still a good place to buy from ?

Cost of manufacturing in China

In spite of the increase in production costs, China has succeeded in keeping an overall cost advantage over other countries. This resilience is partially due to the fierce competition between Chinese suppliers.

For a given product, there will be tenths or hundreds of Chinese suppliers, often located close to one another and with very similar products, as the last factories to open where often opened by former employees of the first ones.

Naturally, the exacerbated competition is good for buyers that can use it to pressure down on supplier’s prices. The downside of it is that it is hard to identify which one will be the best match if you are not only looking for price but also for quality. This difficulty is enhanced by the plethora of offers by trading companies (also more commercially active and English speaking) that tops the offer of the already numerous factories.

Cost of shipping between China and Europe

Since the sanitary crisis logistics costs between China and Europe have soared, in some cases by more that 1000% ! It cannot be denied that this increase have an impact for the sourcing of low added value manufacturing parts. Nonetheless, logistics costs increase also impacted all other countries in the World, while China relied on the high productivity of it’s ports to contain this increase. The result being that China was able to keep logistic costs competitiveness compared to other countries closer to Europe.

In these conditions, how can I be sure to have access to the good Chinese supplier for my product ?

It is important to act according to a methodology, which we propose in three phases:

1. – Supplier research phase
2. – Comparison & pre-selection phase
3. – Suppliers Background Checking & final choice

The supplier research phase is rather simple, as one just need to browse what one is looking for, use specialized websites (Alibaba, made-in-china, global sources…), or search specialized fair listings where one can always find a fair share of Chinese suppliers.

The next step is to compare the known technical offer/ capabilities of suppliers, their pricing and response time. Following this comparison, a short list of 2 to 3 suppliers at max should emerge.

You  then need to evaluate the credit you can give to this suppliers with background checking : documents (license),  address, factory or trading company, percentage of production sub-contracted. It is here quite convenient to use a standard questionnaire and then conduct some verification. You may also require 2/3 of them to provide samples to check quality and reactivity, Even if a little costly, it may be worth it and prepare you for a backup plan.

In which language can I communicate with a Chinese supplier ?

Surprisingly, many Chinese while having very poor oral English communication skills are able to communicate in relative good English by written. They are indeed relying on online translation tools, but most of them can also understand and write a simple English. We so advise simple written English communication, avoiding long and complex sentences and double-checking that information is well understood.

Supports for choosing good suppliers in China.

Needless to say, following this procedure takes time and a little bit of knowledge about doing business in China is needed in order to avoid usual Chinese suppliers tricks. Furthermore, if the size of the order or the complexity of the parts needs it, supplier visit or third party audit/inspection should be considered seriously. Read more