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5 Different Types of Suppliers in China Explained

Overseas manufacturing may involve several different types of suppliers, some of which include traders, importers, buying agents, wholesalers, and factories. Knowing the difference between the types of suppliers is crucial for choosing and engaging with the right fit for your line of business. Choosing a supplier can be challenging, especially if it’s your first time sourcing and manufacturing from Asia. The key is to find a reliable supplier with whom you can establish a long-lasting relationship. Let’s examine the different types of suppliers and their key differences.

1. Traders & Trading Companies

As the middleman between a manufacturer and a customer, traders and trading companies work directly with manufacturers to supply the products. Traders typically make it easier for customers to acquire products from factories because of their previously-established relationships with factories, existing network, and understanding of the local Chinese market.

Traders and trading companies can be split up into several different types of suppliers, each of which offers a set of benefits and possible disadvantages. Working with a trading company facilitates remote business and communication while offering customers low-cost purchasing solutions. What’s more, trading companies can also be instrumental for identifying hard-to-find suppliers.

The type of trading company you work with makes all the difference. Low-value trading companies may not have the same level of project management and accountability as high-value trading companies. With high-value trading companies, however, you’ll likely be subject to higher markups on the products they supply.

East West Basics has access to a host of different types of suppliers, which gives our customers plenty of options when it comes to navigating the sourcing and manufacturing space. We’re always adamant about presenting the highest quality solutions to our clients, but we know that there may be times in which that comes at too hefty a price point.

High-value trading companies are typically better suited for larger product design and manufacturing enterprises that need support with supply chain management, logistics, quality control, intellectual property protection, economies of scale valuable to buyers and sellers, financing solutions, distribution channels, and domain expertise.

2. Importers

People and/or companies that bring goods into countries from abroad are considered importers. Whether US or based somewhere else, importers have the home-base advantage. Importers purchase raw materials and partially-completed goods from foreign suppliers. Companies partner with importers for their local presence, cultural awareness, strong understanding of the market, and business acumen. The downsides to working with an importer as your chosen type of supplier may be their proximity from manufacturing facilities, which could result in higher overhead should extensive changes be required.  What’s great about working with East West Basics is our international reach. We make it easy for clients  to acquire the goods they need wherever they are in the world.

3. Buying Agents

While not necessarily a type of supplier in their own right, a buying agent acts on behalf of suppliers to tender negotiations and execute contracts. Buying agents or representatives may supply some of the services above and usually work on a contract or exclusive basis based on cost plus, so they have less financial exposure. Their benefits include transparency, consolidation, and risk reduction for all parties, which can be instrumental when searching for a supplier partner.

4.  Wholesalers as Suppliers

The most common type of supplier may be a wholesaler, which acquires in bulk and sells in smaller quantities. Wholesalers generally work with western companies with warehousing in America, Europe, or Australia. Using a wholesaler as your supplier may reduce lead times, risk, and order amounts, making it the perfect solution for manufacturing smaller quantities. The downside to working with wholesalers as suppliers is that doing so often incurs an increased cost.

5. Factories as Suppliers

Working directly with factories to make a product is the most cost-effective way to go about securing the goods you’re looking for. That said, it may not be the easiest option. Going straight to a factory means you have to screen several possible suppliers to find qualified factories at low prices. In addition to plant inspections, this process takes time and manufacturing expertise. The best thing to do in this situation is to work with a sourcing and manufacturing expert company like East West Basics.

Choosing asourcing, manufacturing, and procurement firm that offers timely product development support, intellectual property secrecy, and reduced manufacturing risks and costs without compromising quality can be a challenge. That’s why East West Basics exists. We’re here to help you choose the right type of supplier in China and beyond.

The Best Way To Find A Manufacturer For Your Product

What is the best way to find a manufacturer for your product? Skip the hassle and outsource your manufacturing. Contract manufacturing (also known as outsource manufacturing or outsourcing) has many advantages, including elimination of overhead and reduced costs.

Advantages of Contract Manufacturing

Your manufacturer needs to have the research and development skills, production skills, quality control, factory relationships, boots on the ground, and local language skills to create a successful product. With contract manufacturing, you can achieve a quality product by leveraging the expertise of your contract manufacturer.

Other advantages include:

  • Resource Allocation: You free up internal resources when you outsource your This means you can dedicate your resources to advancing your business growth, without the headache of all things related to contract manufacturing in a foreign country.
  • Lower Capital Investment: When you outsource your manufacturing process, you ‘rent’ equipment, space and labor without having to purchase them. ‘Renting’ instead of purchasing, or spending the funds to build your own infrastructure means less capital spent on construction, hiring, training, quality control and much more.
  • Expertise: Outsourcing your manufacturing process means tapping into the competencies of your manufacturing partner. You can leverage their expertise, capabilities and resources. Not only does this give you support when it comes to creating your product, but you also gain insights from their technical and conceptual expertise as well.

Trusting the Outsourcing Process

A reputable outsourcing manufacturer should be able to allay all of your concerns. At East West Basics, we provide a one-stop shop for our clients to create, develop, and source a variety of products and materials. Our headquarters and showroom are located in Shenzhen, and we have clients across the world – which has allowed us to develop long-lasting international networks. Trusted across the globe, we provide an integrated and streamlined outsourcing process that grants you all the advantages of outsourcing. If you’d like to learn more, feel free to contact us today with your questions. We’ll help you find the best contract manufacturer for your product today.

MOQ Meaning: Definitions, Types, Pros & Cons

Diving into the world of sourcing? You might have seen the acronym ‘MOQ’ pop up every now and then. MOQ refers to Minimum Order Quantity, and it is what most manufacturers will institute so that you will commit to buying enough of a type of product to make it worth their while to manufacture it. Think of the eggs you’ll pick up at supermarkets – it is simply not efficient to sell eggs individually when you think about transporting the product, packaging costs, and so on. The same logic applies to the MOQ. Here, we take a closer look at MOQ and what you should know about it.

Types of MOQs

Simply put, the MOQ is the least number of units that a supplier is willing to accept an order of at a single time. Factories can institute different MOQs for different order types. For example, a supplier might have an MOQ of 1000 units. You will be unable to buy less than 1000 units of inventory at a time, no matter what, because of this MOQ defined by the supplier.

Coming up with an MOQ

There is no standard MOQ amount, given the large variance in products and markets. The steps below can help you with calculating an appropriate MOQ for your product.

  • Determine the demand of your product. What is its competition, what seasons does it sell the best in, and how well does it sell in general?
  • Calculate your break-even point. What is the lowest dollar-amount you are willing to charge per unit in exchange for a higher order value?
  • What are your holding costs? Certain products might be more expensive to store than others. You will need to figure out how much space you need to store your products and how long you can expect them to be in storage before you can sell through them. You will then need to determine if the MOQ your merchant is offering is feasible and cost-effective to hold.
  • Track your past trends. If you are negotiating your own MOQ with your supplier, track your past trends to estimate how much you can sell. Perhaps you need to sell at least 150 units to make a profit? Are you able to sell 200 units of your product easily? Take a look at your past performance to inform your next steps.

Pros and Cons

The pro of an MOQ is that it provides both you and your supplier with a very clear standard to work with. An MOQ should be the most cost- and labor-effective option for both of you. A con is that if you are unable to sell through the units you purchase (or sell enough to make a profit), you will be at a loss, and your products may sit idle in holding spaces that will cost you more money. If negotiating an MOQ for private labels and branded products sounds daunting, you can contact East West Basics to help you navigate the process.

A Definitive Guide To Sourcing Products From China

Are you an eCommerce seller? If so, it is recommended that you secure products to sell at a healthy profit margin. Some sellers may prefer to source their products from the United States, but the US is still unable to compete with China due to their highly competitive prices. Sourcing products from China typically allows for greater margins and higher profit. Below is a guide to sourcing products from China.

Finding a Supplier from China

Sourcing your products from China is cost-effective but the process itself is not straightforward. You will need to find manufacturers (of which there are plenty) and understand how factory pricing affects your own ability to make a profit.

After this comes the negotiation process, where you and the manufacturer will have to settle on an inventory at a price that suits you both. Before you even get to that stage, your manufacturers will want to know that you will order the products at a volume that will make their labor worth their while. The environment is highly competitive, and you’ll want to be able to stand out from the competition.

Before you order the product, it’s also vital to assess a sample. Asking for product samples allows you to conduct quality inspections to ensure that these items meet your expectations. In some cases, this step can be challenging if communication errors occur. If you want to avoid such issues and potential delays, it is better to work with a China sourcing expert.

Does all this sound laborious? You will also have to confront the barriers of language, customs, and all things that come with being physically across the world from your supplier. While this can feel daunting, the good news is that China sourcing does not have to be a process you undertake on your own.

At East West Basics, we have 25 years of experience when it comes to developing and sourcing products in Asia. We have a strong global network of clients as well as relationships with 500+ factories to ensure that we can match you with the most appropriate one for your products.

If you’re ready to step into the world of eCommerce, contact us today to get started.

5 Resources To Find A Trusted Supplier In China

How can you find a supplier in China that you can trust? When you enter online B2B marketplaces, peruse online supplier directories or visit trade shows, you’ll want to be wary of the few suppliers who might not be all that trustworthy.

After all, if you’re looking for private label and branded products, you only want the best. Here, we provide resources through which you can find trusted suppliers in China.

Canton Fair

The Canton Fair is the nation’s largest import/export convention. It is held biannually, and you can find nearly every industry that produces physical products here. It is vast enough to necessitate three phases: one for electronics, building materials, chemical products, and machinery; another for consumer goods, gifts, and home décor; and the last for recreational products, textiles, shoes, medical devices, and health products, as well as office supplies.

If you’re looking to attend the Canton Fair, our East West Basics Team can attend with you to provide the language skills necessary to communicate with vendors at the show. Or, if you decide to attend alone, you will want to hire the service of an interpreter, which can be costly when adding in a plane ticket to China and hotel bill. You should also anticipate the possibility that the goods you purchase could be of low quality. Our best recommendation is to reach out to our team and work with us to determine whether attending this show makes sense for your business, so our team can be there to assist you the entire way.

Yiwu Market

Open all year around in Zhejiang, Yiwu Market comprises over 40,000 shops. It is skewed towards buyers in the Middle East, Africa and India and is only for sourcing textiles, bags, shoes, watches, and other accessories at low prices.

If you want other products, you might need to seek them out elsewhere. You should also note that these products do not align with safety standards and regulations in the United States and the European Union. The quality of products you will find here also fluctuates with their prices.

B2B Marketplaces

B2B marketplaces make it easy for you to connect with suppliers and manufacturers in China. Be warned that the online marketplace can be difficult to navigate, so it is important that you do thorough research before agreeing to anything. This is also a much riskier option to purchase goods in bulk online without in-person vetting.

Industry Networks

If you have business contacts in China, they might be able to connect you with suppliers based there – or at the very least, someone who can help you out. You might also want to take a look at Chambers of Commerce as well as local trade bodies.

If you have local industry networks, you have already crossed multiple hurdles. However, embarking on such relationships will require you to have some fluency in the Chinese language, as well as business practices and travel and customs regulations.

Outsourcing Agents

China sourcing agents or organizations are your best bet if you require products that have been manufactured to precise technical specifications. These agents can help you ensure quality control at each step of the manufacturing process.

If you are worried about engaging with suppliers in China due to a lack of language proficiency, sourcing agents can also provide the solution: they provide agents who are fluent in your native language to help you navigate the language barrier and ensure clear and direct communication.

Sourcing agents provide you with thorough support through every step of the process; even if you have no prior experience, they will be able to guide you along the way. That said, always make sure you thoroughly vet your sourcing agent to understand their experience and capabilities.

If you don’t know where to start looking for sourcing agents, East West Basics is a great place to start. Here, your direct interaction with our US and China (who are fluent in English) staff will ensure a smooth transition from design to delivery.

Over 40 sourcing and product development specialists from East West Basics are based in Asia. We can meet all of your needs from product design to manufacturing and quality control.

Our clients may build, develop, and source products in their preferred categories at one location thanks to our crew of skilled merchants in the US and a well-trained sourcing team in China.