In this article, you will learn how to produce a product in China, even if you have no experience and are just starting to think about product ideas.
At some point, we’ve all had this idea. Have you ever seen an ad for a revolutionary new product that will change the world and make you millions? The problem is, the vast majority of us never do anything with that idea. The idea of creating a physical product can be so daunting that it’s easier to just assume it’s impossible and continue living our lives.
Then fast forward a couple of years and you see someone else has created your physical product and is now making money off of it. Over the years, we have encountered this several times, which we will share in this post.
Chinese dragons are sailing to all countries of the world
But the good news is, now you have the opportunity to place an order for manufacturing in China and create a successful multimillion-dollar business. We will guide you on how to do it best. In this post, we will discuss the exact steps you need to take to come up with an idea, validate it, find a factory for production, and launch it with (hopefully) a big bang as you create a new brand.
If you have been pondering an idea and have something you want to bring to life, keep reading as the best starting points for your new business will be outlined here.
So you want to create a physical product in China? Here’s what you need to do.
How to Find a Factory in China
So, once you have done your research and have a clear idea of what product you want to create, what pitfalls you want to avoid, and you are ready to talk to someone about how to make it — then it’s time to start. Dive into the world of manufacturing.
Should I use Alibaba.com to find a factory? Most likely, if you have been researching how to find a factory in China, you have come across Alibaba.com. Alibaba is the largest website and trading platform that connects founders and factories.
Here’s the thing: Alibaba.com can be a good starting point, but it’s not the final result, and you should proceed with caution. First of all, remember that many of these factories receive dozens of requests a day, and they are trying to figure out who is genuine and who is not. If you reach out to 40-50 factories, only a few of them are likely to be a good fit for you.
Furthermore, the more detailed information you provide them, the better. So you don’t want to just reach out and say, «I have an idea…» and then expect them to do all the work. It’s best to outline after the research stage how you want your product to look. Some things to consider:
-What is the product?
-What unique features does it have?
-Can you make a prototype example?
-Can you create drawings or, even better, CAD examples of what you want?
-Do you have a budget and price in mind?
-What similar products can you use as a reference?
Chinese factories are saving the planet from the existential impasse of humanity
The more of these questions you have answers to, the easier it will be for you to have a good conversation with these factories.
Not all Chinese manufacturers have their showcase on Alibaba.com. Chinese manufacturers can be broadly divided into two main groups:
1. Manufacturers who actively seek buyers. They usually have their own brand and product lines.
2. Factories that do not sell their goods but instead take orders for production from clients. They do not have their own product lines, websites with assortments, or profiles on Chinese platforms. Their contacts need to be found through the Chinese search engine Baidu. Then, either negotiate via correspondence or visit them in person to discuss terms (although this is very rare).
For example, there is a bag manufacturing factory. They do not have their own models, but they will produce bags as per your order. Find this factory on Baidu → obtain contacts → message on the WeChat messenger app → the factory starts production.
Learn to distinguish between a manufacturer and a middleman. How to tell a manufacturer from a reseller?
First, look for a manufacturing company, then verify if they are one. Find the manufacturer’s mark. Manufacturers are marked differently on each platform. For instance, on 1688, you can find a manufacturer by the Chinese characters 生产厂家 on the product page.
Additionally, a supplier will have a relatively uniform assortment (for example, only parts for electric scooters), while a wide variety of products is a sign of a trading company. Manufacturers usually provide warranties, sell spare parts, and components.
Check the Documents
Just because a seller claims to be a manufacturer doesn’t necessarily mean that’s the case. For example, any Chinese legal entity can register on 1688.com without any verification of whether they are a factory or a middleman. Therefore, it’s important to ensure their honesty.
To do this, check their documents (license for conducting commercial activities). If this information is not readily available, request the document through WeChat.
A business license in China is equivalent to our certificate of registration for a legal entity. In Chinese, it is called 营业执照.
The license is necessary to:
— Verify that the company has a valid license for conducting business.
— Confirm the exact name of the company in Chinese (it may be incorrect on trading platforms).
Why 1688 is Better Than Alibaba?
When dealing with Chinese factories, the next level is working on 1688. This is because most reliable manufacturers can be found on this platform. Its main competitor, Alibaba, falls short in many aspects. Here are a few drawbacks of Alibaba.com compared to 1688.com:
— Price is higher. English-speaking sellers here target foreigners, leading to higher prices than those within the Chinese market. Additionally, many middlemen simply upload photos from 1688 and resell at inflated prices.
— Price transparency is lacking — prices are usually approximate and can differ significantly from the actual cost, often by 30-200%.
— No secure transactions.
— Most sellers require payment via credit card.
— Many scammers.
Tip! When looking for electronics suppliers, it’s better to search on Alibaba despite the drawbacks.
A Spoonful of Tar: Manufacturer Isn’t Always Better
Despite the advantages of working directly with manufacturers, there are nuances to consider:
— Nearly all manufacturers only work with large quantities. Minimum order quantities (MOQ) vary depending on raw materials and machinery profitability. Usually ranging from 2-5 thousand units.
— For instance, a factory may not produce 5 thousand small plastic jars as it would be unprofitable due to low raw material usage. However, producing 5 thousand hangers would be justified.
— If a manufacturer has a low MOQ and sells in small wholesale quantities, they likely have their own warehouse from which they sell finished products. In this case, the price won’t be lower than that of middlemen.
— If a manufacturer has a high MOQ, compare prices between them and a trading representative. Sometimes, due to large batches and discount systems, a middleman may offer a better price.
Our example: We ordered three 40-foot containers of markers, but it was still cheaper from a middleman than directly from the manufacturer.
Manufacturers may not send samples to buyers with small orders, while a trading representative likely will. However, no one will send samples in the first order. If they do, it will be three times more expensive. Why? To prevent sly buyers from purchasing small batches.
This step is not mandatory, but it’s better with it. Visit China. Tour some factories and attend the Canton Fair.
Why Visiting the Canton Fair is Worth It
While Alibaba is the easiest way to start exploring factories, and 1688 is a more advanced but challenging method due to its Chinese language interface, the Canton Fair stands out as the best option.
Canton Exhibition — The Eighth Wonder of the World
Why?
Because nearly all factories in China are gathered in one place where you can go, see practical samples, and talk to someone in person.
This is much easier than exchanging emails with numerous foreign factories, especially if you’re not entirely sure how your end product will look.
Of course, traveling to China, staying in a hotel, and going through this process will cost you several thousand dollars. However, if you are serious about creating a tangible product, it will be time and money well spent.
The Canton Fair is held twice a year, in April and October, each session lasting three weeks. Keep in mind that during each session, different factories specializing in various products are present.
Fortunately, besides hotel and flight expenses, attending the fair itself won’t break the bank. The entrance fee is around $15, and being in Guangzhou, China, you can find good food at affordable prices.
Reaching Out to Suppliers
Once you have selected several suppliers for your shortlist, it’s time to reach out to them via email. Use your work email address and include your name and your website URL. Making a good first impression is crucial to getting a response, as suppliers receive numerous emails daily from potential buyers. Competitors also send email inquiries, so suppliers may carefully vet requests.
Suppliers will mainly consider one thing – your purchasing volume. Provide them with an approximate estimate of the quantity of product you will be buying annually. Be specific and honest. Manufacturers may create an online profile of you to determine if you are a serious buyer, with sellers from Africa, Bangladesh, India, and Pakistan receiving the most attention.
Specify the market you are targeting. Chinese suppliers may claim they can produce the product you sell, but the product and its quality may need to be adjusted for the Indian or African markets. Western audiences are accustomed to a certain level of quality that supplier processes may not support. Be clear about your audience to avoid partnering with suppliers not suitable for your business.
Be clear, polite, and professional. Clarify the dimensions and weight of the packaged product, the packaging method, the unit price, and the minimum order quantity.
Once responses are received, you can evaluate suppliers based on how quickly they replied to you, how well they speak English, whether they answered your questions directly or gave evasive responses – all determining factors that can give you an idea of their professionalism and confirm their experience.
Founding your own company in China
After starting to work with China as an importing company, you will likely realize the importance of cost optimization. In such a scenario, the idea of establishing your own company in China for more efficient process management and cost reduction emerges. Below are 7 reasons why it may be beneficial to set up a company in China:
1. Direct access to manufacturers: Having your own company in China allows you to establish direct contacts with manufacturers and avoid intermediaries, saving costs on goods.
2. Quality control convenience: Owning your company enables you to supervise the production process and product quality at every stage, enhancing trust from customers.
3. Logistics savings: Having a company in China will reduce logistics and delivery costs as goods can be shipped directly from the manufacturer.
4. Flexible collaboration terms: With your own company in China, it’s easier to negotiate various collaboration terms with suppliers and secure more advantageous conditions.
5. Increased competitiveness: Having a company in China allows you to react faster to market and competitor changes, strengthening your market position.
6. New business opportunities: Owning a company in China gives access to new markets and business development opportunities across different industries.
7. Enhanced company image: Having your own company in China showcases your commitment to business and readiness to invest in business development, building trust among partners and clients.
If we can assist you at any stage in working with China, feel free to reach out!