Whenever I give a speech or write an article or post about what it takes to succeed in China, I invariably list “a good Chinese partner” as item one. Perhaps not surprisingly, I am always getting asked how to find the “good Chinese partner” to which I am always referring. My initial response is usually something like, “with great care.”
But if the questioner pushes me for more details, I then tell them that they need to conduct due diligence on their Chinese partner. And if they ask me what that means, I tell them that it depends on what the partner will be doing, as obviously more due diligence is required for a USD $5,000,000 deal than for a USD $50,000 one. For the $50,000 one, an internet search, preferably in both English and in Chinese may be enough. For a $5,000,000 deal, more will be required, especially if the full $5,000,000 will truly be at risk.
More specifically, I am often asked what to do to find a really good manufacturer of x product. To which I actually have a fairly substantive response. I usually list out the following three options:
1. Do it yourself, from the comfort of your own coach. Use a website like Global Sources or Alibaba, which list hundreds of thousands of Chinese manufacturers and do some filtering out of bad actors. I have dealt with companies that have developed amazingly good long-term relationships with Chinese manufacturers found on this sort of website, but I also have dealt with companies that have experienced unmitigated disaster. In my experience, these websites generally work better when the product is a relatively simple and standard product and neither quality nor customization are paramount.
2. Do it yourself, with a China fly-by or two. Use a website like Global Sources or Alibaba to come up with 1-10 potential suppliers and then get on an airplane and visit them. There is a lot to be said for this in that visiting accomplishes three important things. First, it allows you to see the facility of the Chinese manufacturer that may be making your product and a lot can be gleaned from that. Second, it allows you to meet the key person or people at the Chinese manufacturer that may be making your product and a lot can be gleaned from that. Third, it lets your eventual Chinese manufacturer know that you take your products seriously enough to come to China to make sure they are made correctly and I am convinced this alone makes the trip worth it as it increases the likelihood of your getting good product.
3. Engage an intermediary (trading company, sourcing agent or factory representative) to conduct this research on your behalf. This you are going to have to pay for, one way or another. Some of these companies charge you an upfront flat fee for the work. Some charge a percentage. Some charge a set amount for the product and then buy it for less from the manufacturer. There are pluses and minuses to all of the payment methods, but generally, the more you pay early, the less you will pay in total.
Some intermediaries are invaluable. Others are completely incompetent or, even worse, flat out crooks. Some do not even reveal that they are acting as an intermediary, leading you to believe you are dealing directly with the factory. My law firm has made plenty of people unhappy when we have had to tell them that the reason “their” factory isn’t going to be providing them with any product is because they do not have a contract with the factory and the factory from which they previously received their goods does not even know that they exist.
It should go without saying that you should first determine whether you need an intermediary and if you do, you must choose that person or company very carefully. What does need to be said though is that if you are using an intermediary, your contract with your intermediary and the contract with the manufacturer should mesh and should be written so as to protect you, and not your intermediary or your factory. Far too often companies come to us with bad product and upon reviewing their contract with their intermediary and the purchase orders between the intermediary and the factory, we have to tell them that they have no chance of any remedy.
There are, of course, other options in addition to the three set forth above, including doing your own manufacturing in China, but the above three are the most common for SMEs.
What do you think?
Jiangmen Jinling ventilating fan Manufacture Ltd. was established in 2000 year, the predecessor is Jiangmen Jinling Household Appliances Co., Ltd., it has been more than 40 years. The First JINLING Ventilation Fan was produced in 1974. Our Company was focusing on the development, production and sales of environmental electrical appliances for more than 40 years. It is a well-known enterprise and national export base of electromechanical products for the production of ventilation fans and Electrical fans. The company won the title of “China’s Best” for ventilating fan issued by Market Economic Research Institute of Development Research Center of the State Council and the Social and Economic Development Research Center of Guangdong Provincial People’s Government: wall exhaust fan, wall ventilation fan, in wall vent fan, in line exhaust fan, window extractor fan, window ventilation fan, etc.
The ventilating fans air performance test room which is established on foundation of IEC60665, has completed a number of provincial and ministerial project for researching and testing. In 2016 JINLING has won title of “Guangdong Provincial efficient energy-saving ventilating fan engineering technology research center”, and won one second-prize of Guangdong Provincial Science and Technology Award and 3 third-prizes of Ministry of Science and Technology Progress Award issued by National Light Industry Ministry. Moreover, JINLING is main drafter of 7 national standards, national industrial standards and national measurement procedures.
From enterprising market situation, Jinling can stimulate the infinite vitality; from within the enterprise, in the limited office space, can inspire the team’s infinite vitality, enhance creativity; from the product function, in a limited space, Jinling can live in an infinite living space.
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