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When it comes to finding products for your small business to sell, then it pays to shop around. The cheaper you can source an item, the greater your profit margins will be. Alternatively, you can use the low cost price to reduce the end price to consumers as a strategy to gain market share. Since manufacturing costs are an order of magnitude cheaper in Asia, China is one of the first places small businesses look when seeking out low-cost inventory for their store.
If you have the resources to visit China, then attending a trade show is just about the best option for finding a reputable supplier. There are two main fairs to consider:
Canton Import And Export Fair. Held twice a year in Guangzhou, typically in April/May and again in November, Canton is one of the biggest sourcing fairs in the world. In fact, it is so large that it operates in three distinct phases covering electronics, consumer goods and home decor, any "everything else" respectively. For dates and details, visit the English-language version of Canton Fair website.
Global Sources Trade Show. Similar to the Canton Fair and featuring many of the same exhibitors, the GST is held annually in Hong Kong. This fair tends to focus on certain product categories so if you're looking to purchase electronics or fashion accessories, this could be the best show to attend. Another appeal is the low language barrier. Unlike in mainland China, almost everyone in Hong Kong speaks English so it's much easier to get around.
Both fairs are free to attend although you will have to budget for flights, hotels, interpreters and so on. This could be a small investment for the contacts you potentially can establish with reliable local manufacturers.
While in China, it's worth checking out a wholesale market where you can browse a massive selection of products at extremely low prices. The Yiwu Market, for example, is the largest wholesale market in the world. Unlike the trade fairs, it is a physical store where you can inspect goods and walk away with them, or have them shipped to your U.S-based warehouse.
Wholesale markets are open year-round (except for Chinese holidays) so you don't have to wait for a trade show to find a supplier. Goods are sold off the shelf so you can see exactly what you're getting and gauge the quality of the product through physical inspection. Bear in mind that you're buying from wholesalers not the manufacturer. You'll need to make some effort here to weed out any knock-off products and fake brands.
For small businesses that don't have the resources to fly to China, online directories are the next best avenue for ordering wholesale products direct from China. You can do a general search for suppliers on Google, but most businesses head straight for the business-to-business directories that give you thousands of Chinese suppliers at your fingertips. The main directories are:
While each directory works a little differently, you navigate them much like you would with a typical search engine. Type the name of the product you're looking for, and the directory will return the names of suppliers, prices and minimum order quantities – more on that in a moment.
Once you've made contact with a potential supplier, either online or at a trade show, you need to email and ask for a sample of the goods you are interested in. Most suppliers will send you photos of the products or product catalogs for free, but it's difficult to gauge the quality of items from a photo.
Ideally, you'll receive a test sample of the product to validate its quality. You may have to pay for samples, but it is usually a small investment for peace of mind.
The rules of thumb when importing goods from China is: be specific. Don't assume that the supplier knows what you want or that he won't cut corners to achieve the agreed price. Include as much detail in your order as possible – size, color, thickness, materials and so on. Send a diagram or image if you can so there's no room for doubt.
Watch out for large minimum order quantities (MOQ) when you order from China. Every Chinese vendor will have its own MOQs, which is the smallest number of units you can order. Some manufacturers work in extremely large quantities of many thousands of units, whereas others are willing to sell you a few hundred units at a time. The best way to find out a supplier's MOQ is to ask. The price-per-unit tends to get cheaper the more units you order, so be sure to ask for prices at different quantities – 500, 1000 and 5000 units, for example.
Make sure your order is specific about the payment terms. There's usually some room for price negotiation when dealing with Chinese manufacturers, but make sure you have a written record of the the final price.
Most suppliers expect you to put down some money upfront, usually around 30 percent, with the balance payable when the items are ready to ship. Most vendors won't even look at your order until the down payment is wired to their account. This is risky: if the vendor does not deliver the goods, you have no way to get your money back.
Alibaba offers a payment protection service called "trade assurance." This guarantees your money back if you don't get the quantity or quality of goods you ordered or the shipment doesn't land.
Ocean shipping is five to six times cheaper than air shipping and essential if you're importing a large volume of goods. It's also complicated to navigate if you don't know what you're doing. Importing goods by air or sea requires a whole bunch of documentation like commercial invoices, packing lists and bills of lading to clear customs, and there may be customs duty to pay on your imported goods.
Importers are also required to pay a bond that acts as an insurance policy in the event that you default on your customs duty. And of course, some goods are banned from being imported, period.
The best advice here is to hire a customs agent who can take care of all these procedures for you. You could spend hours poring over the United States International Trade Commission Harmonized Tariff Schedule to figure out what customs duties will be assessed on the products you're buying, but it's probably easier to get an expert to organize this for you.
If all of this sounds easy, bear in mind that there are some pitfalls to watch out for.
Regardless where you meet the supplier, the language barrier can make communication very difficult and you must be crystal clear about what you are ordering. Ask, clarify and reiterate all of your points and make sure there's a written record of everything you've agreed.
It's hard to control quality when the supplier is based overseas. If it's a large order, hire a third-party inspection company to inspect the quality of the product. For around $300, you can get a quality assurance check before the product leaves the factory (and the payment leaves your bank account).
Watch for scammers. Not everyone has honest intentions in the online marketplaces and if a deal sounds too good to be true, it probably is. Use Alibaba's payment protection if you're worried about being scammed.