A client asked me what the best ways of paying Chinese suppliers were. Let's go through the 3 most common options you have. It is 98% likely that one of these options is the best for you. 1. T/T payment T/T stands for Telegraphic Transfer, which means bank transfer. Here is the way most importers work (let's assume there is no expensive non-recurring engineering costs): Purchase under the 'FOB' incoterm, so that you are in charge of international freight. The supplier can't ship the … [Read more...]

Many importers are puzzled. They ask quotations for a plastic part, and Chinese suppliers quote wildly different amounts for the injection mold. One reason, obviously, is the nature of the mold: Is it in hard metal (e.g. H13 steel), ready to make hundreds of thousands of pieces? Or in soft metal (e.g. aluminium), for making a few prototypes only? Is it a single cavity mold (requiring more machine time and more labor)? Or multi cavity (more expensive, but more efficient for large … [Read more...]

I had an interesting discussion last week about one of the mega-trends I see happening in the Chinese Manufacturing sector -- the consolidation of the manufacturing sector, from many players of all sizes to a few large players. Several factors, most of which act in an inter-related manner, are driving this trend. Let's look at the major factors. 1. Competitive forces Competition drives inefficient players out of the market. With Alibaba.com, 1688.com, and other directories, sending an RFQ … [Read more...]

Freightos just released a pretty comprehensive guide for importers. I was invited to write a chapter, and some other service providers and software vendors were invited to, depending on their experiences. It was written mainly for the buyers of consumer goods (luxury market excluded), particularly those selling through e-commerce. Having said that, I found several chapters that cover topics I seldom write about (freight, Customs, drop-shipment, and so forth) and do a very nice job of … [Read more...]

Last week I was invited to speak at the Sourcing Shift conference in Hong Kong. And the first two speakers described a very interesting case study: how the Kingfisher group (owner of retail chains such as B&Q, Castorama...) is re-organizing itself to respond to competition and to cut costs. Amazon is starting to have an impact on the do-it-yourself home improvement market in Europe. Other actors have been quite aggressive too. In response, Kingfisher looked at other strategies that … [Read more...]

Many fabric mills have closed, as part of Beijing's anti-pollution inspections: Some of them were operating a dying and/or printing process without a license Some had a license but but were found noncompliant with the current regulations The manufacturing of the base raw materials (the oil-based fabrics, the dyes, etc.) has also been affected by the new environmental policy. What does it mean? Less supply for the same demand of fabric for making apparel, home textile, and other … [Read more...]

Many importers lament that Chinese suppliers don't take any responsibility when quality issues are found after shipment. Ten years ago, I would have confirmed that it happens less than 0.1% of the time. These days, it seems to become more common. I talked about this with a client last week, and here is what came out of our discussion. I listed 5 ways to increase your chances, as a buyer. 1. Work with a manufacturer Again, ten years ago, I would have suggested to work with a trading company … [Read more...]

I have recently published the 15-part series for new buyers who are starting to work with Chinese suppliers (and for more experienced people who want to double-check whether they are working in a smart way). The 15 articles are listed below: Do You Need a Sourcing Agent? How to Identify Potential Suppliers? How to Verify a Manufacturer Second Choices vs. “Never Again” Negotiation: The Terms you Need to Discuss Keep Some Leverage with Suppliers Pre-Production: Describing … [Read more...]

Up until now, I have written advice that is targeted at certain types of importers. I call them the “hands-on buyers”, and I know them well because many of them are our clients. They tend to follow productions closely. However, let's not overlook a good half of the buyers -- the “hands-off buyers”. My point here is really this: there is no one set of “best practices”. As far as importers are concerned, there are at least two types of buying strategies that can make sense. First, let’s … [Read more...]

Up until now, I have written lessons about “hard” issues: screening suppliers, writing specifications, negotiating the right terms, and inspecting quality. But I feel I should take a moment and focus on “soft” issues, and in particular, how to build good rapport with suppliers because it is so important, while at the same time so difficult to get right. First, let’s look at what specialists call the “inner circle” and the “outer circle”. 1. Some background: the inner and outer circles I … [Read more...]