The fact that Business A sells match sticks and Business B also has the same product does not make them the same. The approach to the China wholesale market and their business models alongside other things contribute to this difference. When choosing a Chinese market distributor or products from online wholesale suppliers, major care has to be taken.
Suppliers constitute a significant part of business strategy. They can make a difference in how you break into a market especially one such as China. In this article, we will be looking at how to eight principles to rely on when looking for suppliers.
7 Essential Principles to Choosing a Chinese Market Distributor
Principle #1: Match Your Business to a Suitable Chinese Market Distributor
Finding a suitable supplier is a lot like matchmaking. You need to go through the bag eggs to find the good ones. To do this, you need to check for compatibility, preferences and if you share similar tastes. For a business, this requires you to take another look at your business model.
Conduct a thorough analysis of the model your business is built on. Take a look at the market research, the product niche and the minimum quantity for a purchase order. Then, choosing a Chinese market distributor that matches the model is essential.
- Online stores (Wish, Shopify, eBay)
On these three e-commerce platforms, the modus operandi is the sale of various products. Every seller will have a shop that hosts different products in different categories. However, due to the different inventories, order quantity per product may not be high.
The sellers will want to test the market with new products to know what buyers want. After analyzing, more orders might be placed depending on market reaction. So, should you pay a visit to these retailers to market your products? No!
The first step, contact them and get them to purchase a few products to test them. Aliexpress and DHgate are good examples of places to start. The MOQ is lesser than Alibaba.
On the Amazon site, two things are essential; product and customer service. If you want to break into the China wholesale market, you need an excellent product and an effective marketing strategy. The two together will give good rankings.
For Alibaba on the other hand, you might need a high MOQ that surpasses $1500. There are ways to maneuver this especially if you have a lesser MOQ, but this might involve paying higher. But, if you are dealing with a reliable supplier and you can guarantee the quality of the products, it is a good bargain.
When your sales become steady, your MOQ can increase thereby reducing your cost and increasing profit margin. Also, paying a visit to China does not hurt. Here, you can communicate with various sellers one on one and negotiate a good deal.
- Specialized Importers
There are specialized markets for products. An example is auto parts. Here, specialized knowledge is essential as it is often technical.
Things like the quality of material and technical know-how are essential. Apart from this, the products sold here often have variations making it harder for just anyone to break into the market. So, when you want to buy from or when choosing a Chinese market distributor, you need expert knowledge of the product.
If you have multiple product lines, it can be tasked to look for a supplier for each of them. Therefore, for a site like Alibaba, you can choose a reliable supplier to be your own sourcing agent. Doing this makes it easier for you to leverage the resources and network available to this supplier.
Another option is to hire a sourcing agent. But you also have to factor in whether the sourcing agent has adequate knowledge of the category. There is also the risk of the agent contracting a supplier you are not okay with.
Weigh the two options and go for the one that offers the best benefits.
- Design a product
Designing a product is another option to look at. But, not many people go through this route due to the technicalities. First, you need an idea, you need to do research for the concept, look for a market, look for materials to develop this product, test the product, then looking for retailers.
If the above steps are tasking, another avenue is to reach out for products from online wholesale suppliers or pay a visit to China. Share your ideas and let the suppliers for the work. There are drawbacks to this approach such as negotiating price, overseeing factory operations, quality of products, etc.
Another option is to find a sourcing agent who takes you to meet manufacturers based on your budget and product idea. They also help you with negotiations and places to showcase or sell your products.
Online markets are not the only places to try your luck. You can visit local supermarkets that sell an extensive inventory. Several products can be procured from these chains. However, there are a lot of them in China, so it is best to outsource the task.
Principle #2: Identify the Major China Wholesale Market
China has a supply chain divided into six. Each member of the chain relies on the other to make a profit. They are:
The creator of the goods for sale. They are the ones that create the products for the suppliers to sell. The Chinese wholesale supplier you should be looking for is the one who offers you the lowest price.
In the Chinese market, two types of manufacturers exist. Those who cooperate with sourcing agents and domestic traders. Their prices are reasonable.
The second type is those who participate in exhibitions in China and own shops on Alibaba as products from online wholesale suppliers. Their prices are higher.
- Trading Company
The trading company is another member of the supply chain. They are also called middlemen. They procure the products from China for resale. It is easier to get a smaller MOQ from trading companies as they already have a relationship with factories.
- Sourcing agent
Such agents have no products to sell to you, they help manufacturers sell their products. They also help you source for a manufacturer that can provide the service you need. As such, Amazon sellers prefer sourcing agents.
For those requiring different products from the China wholesale market, the agents are the best option.
- China wholesale market suppliers
Leading wholesale markets in China are Shenzhen (electronics), Yiwu (consumer goods), Guangzhou (bags, accessories, daily apparels). Here, you can see different factories within the cities. You are more likely to find reasonable prices within these cities.
- Only the Chinese currency is acceptable
- You need to understand the language to get an interpreter
- Get a freight forwarder in advance
- Get a sourcing agent to handle all above mentioned three
Dropshippers can be found on DHgate and Aliexpress platforms. The minimum order quantity requested is small. In such cases, the store might not stock the product you want. They obtain from a third-party then sell to the customer.
- Wholesalers of overstocks
The overstocks are products with a minor flaw that manufacturers sell at reduced prices. You can buy the products cheap and sell them for a profit in your home market. Yiwu and Guangzhou are the best places to find Chinese wholesale supplier of overstock items or products from online wholesale suppliers in reality.
However, care needs to be taken for importing branded items to prevent facing charges for trademark infringement.
Principle #3: Find China Wholesale Market Cities
China boasts of three major trade cities Yiwu, Shenzhen, and Guangzhou.
Over 70,000 booths can be found in the city. As a result, it is the largest wholesale market in the world. The town has five central districts all selling different products. For example, if you want to purchase supplies or toys, go to a particular region and compare the prices of the various suppliers. If you want to know more info about Yiwu, please click here.
Looking for electronics? Shenzhen is the place to be! Fashionable and cheap electronics can be gotten from here. It is also easy to find imitations products within the city.
The premier electronics center in Shenzhen can be found in the Huaqiangbei. However, unlike Yiwu, the sellers are not segmented. Also, seeing the same seller at the same booth is not easy.
For clothing and apparel, this is the best place to source them. It is the largest place to consider when choosing a Chinese market distributor for garments. You can find shoes, clothing, luggage, adult products, beauty products, and children dress in different sections.
Principle #4: Visiting Trade Fairs
The China market has two major exhibitions. They are professional exhibitions and comprehensive exhibitions. In the great presentations, you can find a variety of products. Professional exhibitors on the other hand just display a single product.
Principle #5: Get online wholesale suppliers
Several e-commerce platforms exist. Some of them are AliExpress, Aliexpress, DHGate, Light in the Box, Mini in the Box, etc. On Alibaba, you are likely to find more suppliers than on any other B2B site. However, learning to separate the wheat from the chaff is a skill that can only be learned over time.
Finding the right supplier on Alibaba should not be based on the Gold supplier tag you see. As anyone can get it once $4000 is paid. Also, the search function on Alibaba is not like Google which produces quality results. Suppliers with expensive ad-rates are more likely to come up.
If you do not want to deal with the China wholesale market from Alibaba, you can go for Made in China or Global Source. The standards and fees for these sites are better than Alibaba. For your electronics and machinery needs, they are the best options. However, the MOQ is higher than Alibaba.
MOQ for DHGate and Aliexpress is smaller, but there are quality problems. It is as a result of the sellers making use of different factories for the production of the same model. So, if you are an Amazon seller, these two sites should not be your first option.
Principle #6: Verifying Chinese Market Distributors for Long-Term Cooperation
If a supplier boasts of offering products or services that do not meet the present conditions of a competitive market then avoid it. There are also cases where you pay for the supply of products from online wholesale suppliers but end up receiving nothing. Read our tips on how to verify credible sellers:
- Equilibrium between quality and price
- Knowledgeable seller
A seller who does not know his products should b avoided. Everything from the materials used to produce it, to the certificates needed should be known
- Communication efficiency
Make yourself available when choosing a Chinese market distributor. Emails might take a while due to time differences. WhatsApp and Weixin (WeChat) are useful tools of communication as they make you access at any time to the suppliers.
- Attitude and Responsibility
How a seller reacts to your business transaction is a clear indication of whether they can be trusted for long term business. A good China wholesale market seller understands this and seeks to create smooth cooperation.
Principle #7: How to Deal with Chinese Market Distributors for Business Growth
- Have better terms of payment
Cash flow is essential for the survival of a business. But, to be an importer and exporter, you need adequate funds to support the purchase of products and the shipment of them. If the products are being sold on Amazon, it takes a month for Amazon to release the payment onto you.
So, with our investments tied up in products and the revenue yet to be received, it can affect business growth. However, with an understanding seller, you can agree on terms of payment when the trade relationship has been established over time.
- Exchange rate
To sell from China wholesale suppliers, two currencies will be in play. The Chinese Yuan and the US dollar. Exchanging one money for the other attracts a rate. These rates are not standard and can fluctuate. You need a cooperative supplier willing to adjust prices for you.
- Ask the old supplier for help sourcing new items or recommending new designs
Before starting your import journey in the China wholesale market, ensure you read all the principles above to guide you. If you want to get a quote, feel free to contact Zigpac.