For many first time importers, selecting the right supplier is like playing pin the tail on the donkey. Sometimes they get it right, and the tail lands on the donkey’s backside, but most of the time it ends up on the donkey’s head, on its chest, or it misses the animal completely!
Here are the top 3 mistakes made when selecting a factory.
Relying Solely on Alibaba and Made in China When Sourcing
While Alibaba and Made In China have thousands of good suppliers, many of the best suppliers in terms of price, quality, export experience and lead times do not advertise their business on these platforms. A large percentage of the Easy Imex preferred suppliers were found at industry specific trade shows held in China. The best suppliers often prefer trade-shows because it attracts serious importers who buy in volume and understand international trade.
Getting Persuaded by the Salesperson’s Charm and Low Prices
Most importers begin their sourcing exercise by visiting the likes of www.alibaba.com or www.globalsources.com and contact 20 suppliers at random.
They then receive 10 quotes back and carry on talking with these people. One salesman from the factory is really chatty, talks about how the factory produces excellent quality and forms a relationship.
Another factory does the same, but this saleswoman explains a few more details than the other factory and her price is 5% cheaper! Boom, she gets the sale.
The second factory got the sale because the saleswoman was a good talker, built up some dialogue and rapport and because she offered a low ball price.
For all the importer knows, this savvy saleswoman is working out of an apartment block in Shenzhen while claiming to be a manufacturer. In order to maximise her profits, she is now going to outsource your order to the LOWEST priced factory she can find. The factory’s prices are low for a reason because the quality and reliability of the factory are poor.
The buyer was coaxed in by salesmanship and potentially overlooked 15 alternative factories, one of which was a highly professional manufacturer with over 20 years’ experience, and another five were highly experienced factories that were willing to negotiate lower on price as the relationship developed.
The mistake the importer made was to select the supplier who 1) was proactive and replied 2) talked a good talk 3) promised the world 4) gave the cheapest prices!
Failing to Background Check the Factory
It’s essential that you background check your preferred suppliers to determine if they are trading companies, manufacturers – or even real at all! Relying on price, salesmanship and product samples opens your business up to huge risks. A thorough background check should look into:
- Factory licenses (business license and export license)
- Factory financials, size, and location
- Export history
- Compliance with national standards
- Factory accreditation (ISO 9001, ISO 14001, SA 8000, OHSAS 18001)
- Internal quality control systems
It’s common for Chinese factories to close down due to unpaid debt obligations. We’ve had several clients over the years who contacted Easy Imex because their previous factory literally disappeared. The factory stopped answering emails, their website went offline and they were unreachable via phone. Apart from the inconvenience of sourcing a new manufacturer, one particular client also lost a 30% deposit on a very large order before coming to Easy Imex.
In the next post, I will discuss how to select the right manufacturer. Get this right, and you will greatly improve your odds of running a successful import operation.