Small importers face many challenges in China (see 10 hard truths for small buyers in China). Yet they can’t resist the attraction of very low prices–compared with what they have to pay wholesalers in their country. I seriously think many small buyers would be better off purchasing domestically. It depends on their organization.
Some of them consolidate their procurements in 1 or 2 small factories and can manage to get reasonable prices and (most of the time) acceptable quality. Others purchase many different product lines and spread their quantities across many suppliers–in that case, they need to be VERY tolerant about timing and quality.
I got many small importers on the phone, and they usually describe all the problems they have to face with their Chinese suppliers. I seldom dare to ask them “why are you buying here in the first place?”, but it is clear that some of these folks are not going to make much margin with their China projects.
I just came upon an interesting Q&A on this topic in the latest issue of the CSIC blog:
Q. My quantities are small, so how do I get good prices from Chinese suppliers?
A. You don’t. There are reasons for being in China, and small quantities are NOT one of them. If you are not buying as much as your current domestic distributor (or will soon be buying these quantities) you are probably not ready to be in China. Just because you know you can get things cheap still doesn’t mean that it’s right for you. China is best for millions of the same thing- not hundreds of different things. Even if your product items are of a large dollar value (hundreds of US dollars per piece) you are probably still better off buying from a domestic distributor rather than from a Chinese supplier.
Further, because you are getting lower costs you need to understand that there is a trade off in a lack of oversight/Quality Control (QC) as well as logistics and importing responsibility. If you are buying small quantities and you can’t afford to do some of the QC and shipping/importing yourself then you shouldn’t be buying in China.
I would say, it is possible to get low FOB prices from a “small” factory (less than 400 workers), but it is very difficult to get consistently low total prices (including freight, duties, the occasional quality/timing accident, and miscellaneous costs).