How a company will choose a supplier is one of the most basic functions in purchasing. A company will not only consider the product price, but will also need to consider several other factors.
If we take a look at Chinese suppliers there are some initial checks you can make before you reach out to them to place an order.
The supplier name is the first step; one of the requirements for factories is that their name includes the city or factory location. A factory or supplier name will first have their location, so for example Suzhou, then the company name itself, then what it sells (mainly). If you’re buying from China and the supplier does not have these elements in their name then it most likely is a middle man.
Buying from the factory is most likely your best option to get the best and lowest price.
Tips for all supplier selection
Here are some ideal checks you should make:
- Decide what you need, and shortlist a few options
- Check how long has the supplier been operating. They should have a fair few years of manufacturing experience.
- Where are they located – you can check on Google maps if they are in an industrial area and they aren’t on the 15th floor.
- What their capabilities are – can they produce the quantities you need either large or small
- Try to visit them in person. You can arrange a ‘surprise’ visit if you happen to be in the country.
- Make sure to have a good single point of contact who speaks at least some English
- Check if they have an understanding of quality requirements, for example CE marking.
- Check what else they make, if your product is one specific type you don’t want them to be producing multiple different types of goods as that may reduce the quality
- Do they have their own quality certification? Does this check out?
- Send out RFIs to each with the same request for pricing in a standard format.
There are resources you can use, such as Alibaba.com which has some useful search options and background information for manufacturers. You still need to check them carefully and there’s no reason why you shouldn’t be able to research multiple options.
Earlier I mentioned that the first part of a manufacturer refers to where it’s located. This can be useful as different manufacturing regions specialise in certain products. The east coast of China has the most populous cities as well as the main export transport links.
Shenzhen is well known for its electronics manufacturing; the Iphone is manufactured here.
How to choose a supplier is China is very much easier these days with technological improvements. Chinese manufacturing itself has vastly improved and it would be expected to tick a lot of boxes in order to be attractive to overseas buyers.
For larger operations you also need to weigh up whether you can make what you need yourself. Leaving the cost of production to a third party keeps costs low but opens you up to potential risks.