Over the past 8-10 years, the emergence of supplier directories on the internet has made sourcing in China more efficient for importers.
It is easier to identify exporters and to have a quick idea of the market price for a given product. You can find manufacturers, trading companies (often pretending to operate a factory), freight forwarders, etc.
General principle: it’s like the yellow pages
- Suppliers can generally be listed, and post a few products, for free.
- If suppliers want a good chance of getting customers, they need to pay. Then they are listed in good position in the search results, and their profiles get much more traffic. Some suppliers pay millions of RMB for this advertising!
- Buyers don’t need to pay anything.
The 5 big players
Alibaba
Alibaba is the most famous supplier search engine. Its website’s audience took off during the SARS health crisis in 2003, when few importers dared to come to China.
It is a pure online player, unlike some of its competitors (see below). Suppliers can pay to have a “gold supplier” status, and then pay for each keyword they target. Alibaba also has a website all in Chinese, where advertising fees are lower.
Alibaba has — and deserves — a bad reputation. A small proportion of its advertisers are scammers that take advantage of small and unsophisticated importers. And their marketing is frankly misleading, as I wrote before (see the Alibaba scandal).
Global Sources
Global Sources has been in this business for 40 years. In addition to its website and its magazines, it operates trade shows in Hong Kong, Mumbai, Dubai, Miami, etc.
Suppliers need to pay a lot of money to have a premium profile (more than on alibaba.com), but they don’t pay for keywords they target. You will find a higher proportion of large manufacturers on globalsources.com, and you will run lower risks of getting scammed.
Of interest to importers: free resources such as product alerts and China sourcing reports.
The HKTDC
Hong Kong Trade Development Council‘s mission is to help Hong Kong-based suppliers. It organizes trade shows in the Wan Chai exhibition center, in downtown Hong Kong.
The HKTDC operates a website that, not surprisingly, displays a high proportion of Hong Kong companies.
Note that some of them are trading companies whereas others own manufacturing plants in China and/or other Asian countries… But you won’t know for sure until you check them up by yourself.
Made In China
Made In China seems to be the No.3 or No.4 player on this market.
I don’t know much about this search engine. It seems they mimic Alibaba, without bringing any significant innovation.
Global Market
I also don’t know much about Global Market. I hear about them less often than the above-mentioned websites, so I guess they are a bit less successful.
They are the only major B2B platform that explicitly tries to exclude trading companies, through their proprietary “GMC” certificate.
Some are more specialized
DHGate
DHGate allows anybody to purchase wholesale products in small quantities, directly on their website. Like eBay, DHGate shows the number of transactions and the proportion of happy customers. It is a pity we can’t see the same data on the other search engines (the reason is that they are not marketplaces, so there is no way to track who purchased from a given supplier).
Alibaba recently decided to copy this service through what they called “Aliexpress”.
MFG.com
MFG.com only displays industrial components. It targets manufacturers trying to source cheaper parts.
A few warnings for importers
Before using the above-mentioned websites, make sure you read this:
- Anybody can set up a company, pay a fee, and appear high in the search results. Feedback from other importers (except for the worst complaints) is not taken into account. Again, it’s like the Yellow Pages!
- These search engines are only useful in identifying potential suppliers. You still need to screen them and to audit their factories — even if they are presented as “audited” or “verified”. And then, you will need to sign a contract and check production quality before shipment.
- You can easily sort the candidates by price… and you will tend to be drawn toward the lowest bidders. This is very dangerous.
- A company might truly be a manufacturer, and still subcontract most of its production (basically, they act like a trader). Beware of the illusion of “buying direct from the factory”.
Is there space for a new type of listing?
Is it possible to align incentives so that importers share their best suppliers? I don’t believe it is possible (I already wrote why).
Some directories try to list good suppliers, rather than advertisers. For example, Good Factories promises to display “self reviews, peer reviews [by other importers], and expert reviews”. It means buyers need to pay a fee. As much as I like this principle, I am not sure it makes for a viable business.
TradeMango pulls information from the US customs’ database and uses it to display search results. And it directs buyers to the supplier’s website. I love this kind of transparency. It is still in beta testing, but it looks promising. We’ll see how they monetize the website once has taken off…
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