When you’re done with the product specification sheet, you would have a couple of suppliers in your list. Then the problem would be assessing these suppliers and select out one or two feasible ones for final cooperation. Therefore, this whole part is about how to research and assess suppliers.
Sourcing supplier step-by-step guide
|1.Collect supplier resources||Want to import from China, you should find the right supplier, check the guide below how to locate a supplier.|
|2.Send RFQ to suppliers||This step is to send a request email with RFQ to your suppliers.|
|3.Supplier assessment & Fraud prevention||Tell you how to find a suitable supplier and how to keep away from fraud.|
1. Collect supplier resources
There are two main ways to find suppliers: online and offline. Choose one way or combine double ways based on your budget and actual needs.
Indeed, finding a feasible supplier is a headache process. It’s more like the scenario happened in the Fortress Besieged. You are searching for your supplier, and so is your supplier. However, before you two find each other, you shall need to overcome a wide gap that is spanning over your two ends. How to quickly and accurately find a reasonable supplier is a hardly earned tactic. Followings are the must-have skills that most seasoned buyers would like to use in their sourcing trips for your reference. Of course you can ask our online Adviser and they may give you some good options.
|Online||1. Online Domestic Directions|
2. Online Overseas Directions
3. Local Library
4. Search Engine
|1. thomasnet.com (US)|
3. scottsinfo.com (US)
|Offline||1. International Exhibitions|
2. Chinese Exhibitions
3. Visit China Wholesale Market
|1. International Toy Fair Nuremberg / Frankfurt Exhibition / Chicago International Household Goods Exposition and so on|
2. Canton Fair / Yiwu Commodities Fair / Shenzhen Machinery Exhibition and so on
3.Yiwu Futian Market (The main commodity)
Guangzhou Leather Wholesale Market (The main luggage)
Chenghai Toy Wholesale Market
|Suitable for small retail buyers||Online B2C Marketplace||www.ebay.com|
Above methods are for your reference only. If your budget allowed, we suggest you come over China to attend exhibitions. Compared to suppliers on Alibaba who are probably using Google Translator to communicate with you, those at the exhibitions are more professional.
2. Send RFQ to Suppliers
At this point, we need the previously prepared RFQ file. Draft an email and attach the RFQ as well. To avoid unnecessary time-costing, please notice to stress out all information you need from suppliers in the email at one time.
a. Send RFQ to suppliers
We’ve come to the hardest step. Chinese suppliers get bombarded with email requests all the time from flaky buyers so it’s common for many suppliers not to reply every email. Good supplier have their own reply and priority rules. Of course, high-quality inquiries are given top priority. How to make your suppliers respond you quickly? The following points may help you get more attention over others.
- If possible, just go ahead and make an international call to your Chinese suppliers. Claim who you are, what you need, and simply ask out your concerned doubts such as MOQ, payment terms and lead time etc. Rest assured, they will mark your inquiry as the top priority. Trust me, Chinese suppliers do not always receive international phone calls and it can make you stand out from the crowd. At the same time, you can take this opportunity to know their business professional levels.
- The most concerned and important factor during the whole inquiry process is “How Much?” Please do not send out your RFQ randomly. Instead, take several minutes to think how to well write this email. Believe me, it pays off twice.
- The third tip is to keep following-up. Chinese suppliers are usually working under severe stresses. Their schedule is really tight. They need to spend a lot time in collecting and auditing a vast ton of information and data before a final complete quotation sheet comes out. They will be possibly missing some points sometimes. Thus, you’d better remind your suppliers at a certain time, and make sure they are totally informed.
- In order to let your suppliers to make a budge, and get a satisfied MOQ and price, you’d better do something while waiting for your replies. You need to figure out the prevailing prices and those minimum quantities in most situations by yourself, and make it to your advantagewhen negotiating with your suppliers.
b. Template of inquiry mail
The biggest question you’re going to have is “how much?” but before you hastily send the supplier your request for quotation (many times referred to as a RFQ), take a few minutes to plan out what you want to say and the questions you need to ask. Planning your email will increase your chances that you will receive a response and the correct information.
Here is an example of an email I might send out:
Hi Sir/Madam, My name is [your name] and I am from [your company name]. Here we are contacting you in order to approach more potential suppliers. But we have several questions as follows: 1.What’s your MOQ? 2.Could you provide test samples? 3.What’re your payment methods? Attached is the RFQ File, containing all product specification data. Please fill in the file and return back to us. We are looking forward your reply within 3 working days. Thank you, [your name] Procurement Manager of [Company] Website: Phone: Skype/wechat:
Just as we said that first impression is really important, that golden rule applies to the trade area too. Suppliers receive lots of inquiries daily, and they will make a priority to reply those promising customers first
3. Supplier Assessment & Fraud Prevention
China’s business environment now is way too much better than that in ten years ago. The authorities have made a change and the whole credit system is on the right progress. However, you’d better be careful to avoid the Chinese’s “Everything-is-possible” trap. Finding a reliable supplier isn’t an easy task. For instance, there are chances that golden suppliers on Alibaba.com turned out to be a not-so-honest one, what’s worse, their business license is probably fake as well. At this step, let’s take a look at how to select a reliable and qualified supplier?
a. Review RFQ
|Product Specification||Don’t keep your eyes on the price only while you are analyzing quotations, but compare other including parameters instead. Thus, when you receive quotations, you should consider them in an in depth and overall way.|
|Trade terms||Professional suppliers, in particular, will clearly specify their Trade Terms, Validation Period, etc., but other suppliers will omit that directly.|
|Required documents||Suppliers may not give you full sets of licenses and documents, you need to confirm the price includes certificates fees or not.|
b. Verify License
The massive improvement of Chinese business environment and credit system are attributed to the launching reform of new “Five-in-one” Business License. That means, there is no separate Business License, Certificate of Organization Code, Tax Registration Certificate, Social Insurance Registration Certificate, or Auditing Registration either in China. Those five licenses are integrated into one brand-new business license. Benefited from the modern Internet technology, each business license owns its individual two-dimensional bar code. We can scan the bar-code to check its authenticity easily. The new license example is here for your reference.
|Company license||The new FIVE-IN-ONE license have an individual two-dimensional bar code, you can scan it and check it out easily, or you can check with this two site: http://gsxt.zjaic.gov.cn/, http://www.tianyancha.com/, but its only in Chinese version.|
|Product test report||The certificate contains the issuing company’s info, you can check with them.|
|Quality Control System Authentication||On the certificate contains the issuing company’s info, you can check with them.|
c. Supplier selection and evaluation
How to find the best suitable supplier? It’s not an easy task. But we will list some important parameters for your reference, and by comparing those parameters, you can find your ideal supplier.
|Data||Supplier A||Supplier B||Supplier C|
|Company name||Zhongshan City AOJIESI kitchenware co. Ltd||YIWU City MATENG e business co. Ltd||Ningbo YOUJIAJIN import & export company|
|Company Address||No.50, Industrial park of Caitang Town, Chaozhou City, Guangdong||No.309, Xuefeng Road, Chuangye square, Yiwu city, Zhejiang||Room 402, Hanfa Mansion, SHUNCHANG Street, Ningbo City, Zhejiang|
1. Sometimes you can distinguish manufacturer, wholesaler or agent from the name, like Import and export, E-business, Co.ltd most likely trader, of course some they may have factory also.
2. Generally speaking, a company’s address can tell us its identity nature. For instance, factories are usually concentrated in industrial zone. Trading companies are located in city downtown or CBD. Their addresses are always ended with Mansion, Square, and Plaza etc.
3. Registered date is another point, as a Fraudster won’t last long.
|Data||Supplier A||Supplier B||Supplier C|
|Product Certification||CE, Rohs||CE||N/A|
|Quality Management System||ISO90001||N/A||N/A|
|3rd party audit||WALMART||N/A||N/A|
1. Registration fund is not a matter of importance right now in China, because the new registration system doesn’t require applicants to deposit funds into an assigned fixed account. It’s just a registration system, not involving any registration funds.
2. Meanwhile, obtaining those certificates like CE or Rohs is also pretty easy. However, QMS, another prominent quality management system in China, plays an important role for big companies to consistently meet customer requirements and enhance their satisfaction. Only those middle or large scaled companies would think about applying for the QMS certificate.
3. Especially those who are capable of handling with the third-party audit are really professional factories. Though that sounds pretty good, small orders are impossible to cut in their tight pipeline, because they are enough busy with their Walmart orders.
|Data||Supplier A||Supplier B||Supplier C|
|Trade terms||Fob Guangzhou||EXW||Fob Ningbo|
|Payment terms||TT, LC, OA||TT only||TT, LC|
A professional supplier is able to accept more various international trade terms and payment methods.
d. Fraud Case Study
After getting through above steps, you might start thinking that you finally get here. Do you finally select a truly reliable supplier? But from our past experience, it is “probably not”.
Following case is from one of our customers’ real experiences. We’d like to share the story here and hope this will never happen again.
e. Prevent from Fraud
Speaking of Chinese credit condition, even you’ve checked their business license, registered funds, or signed a contract more, that still can’t ensure anything won’t go wrong. Thus, here comes the question, how to secure the safety? In fact, there is no 100% safety, neither is it when you are cooperating with big company such as Hanjin, which all of a sudden went bankruptcy. However, from our past experience, we can list several steps for your reference in order to decrease chances of getting cheated.
- Be careful about payment. Try not to pay full amounts upfront. If possible, try the L/C or OA, because small suppliers usually are incapable to accept those payment methods.
- Find an agent. Let the agent sign the sales contract with local suppliers. As such, you can easily cope with the above case. According to Chinese laws, a local company can directly sue the other party, and what’s the more important, it costs pretty lower.
- Find a prestigious third-party to follow up your order. For instance, you can ask a third-party to check the factory in person before you are about to remit the payment. It only costs about 200 USD, but to the maximum extent, secures your funds. Also, a third-party is feasible during the shipment. Ask them to supervise the cargo loading process. In the same way, use small money to protect from big issues.
- Try your best to find more suppliers. 5-8 suppliers are the best. Not all suppliers will give you replies, and in the end, you will find a big part of suppliers are not fitting in your expectation. Make sure there are 3 suppliers who are willing to give examples at last. This is critical to succeed finishing your first-step.