I see some good advice, published in Linkedin or elsewhere, aimed at importers sourcing products from China, Vietnam, or other low-cost Asian countries. A lot of this advice is sound. However, I noticed that a good chunk is NOT applicable to companies buying under 20 million USD a year -- and, sometimes, not under 1 billion USD a year. I made a list of 9 things large importers can get, but small companies usually can't negotiate. (Of course there are many exceptions, but they remain … [Read more...]
How to Pay Chinese Suppliers by T/T Payment (Bank Wire Transfer)
T/T stands for Telegraphic Transfer. In other words, an international wire of funds from the buyer's bank to the seller's bank. When a Chinese supplier asks for a T/T payment, what they really mean is they want a wire transfer. (Technically, a T/T is not exactly the same as a wire transfer through the SWIFT system, but the vast majority of people think of them as the same thing.) A wire transfer based on SWIFT is the most common payment method in international trade with Asian countries. … [Read more...]
Communication with Chinese Suppliers: Banging Your Head Against the Wall?
Over the years, Chinese manufacturers have gotten better at understanding their overseas customers. And, in many industries, their quality has tended to improve. However, communication with sales people is still an area of frustration for many buyers. In many factories, junior English-speaking employees are placed in a sales role. Their basic function is to translate what customers write/say to the rest of their organization, and vice versa. Over time, as they gain in experience, they are … [Read more...]
The 3 Best Ways for Importers To Pay Chinese Suppliers
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...]
Investing in an Injection Mold: What Is Best Practice in China?
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...]
Is Factory Consolidation Accelerating in China?
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...]
Expert Guide for Importing from China
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...]
How the Kingfisher Group is Re-organizing Sourcing Operations To Cut Costs
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...]
Fabric Suppliers & Dyeing Houses in China: a Source of Headaches!
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 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 similar … [Read more...]
5 Ways To Have a Chinese Manufacturer Take Responsibility for Quality Issues
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...]
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