Many Amazon sellers like to look to China for suppliers, as they believe this can help them vastly reduce their production costs. However, engaging Chinese suppliers doesn’t mean just contacting them, sending them your product specifications, and then expecting your products to be manufactured and imported to your desired country of sales. There are way more factors to consider in this process, and you better be aware of such conditions before you start sending Chinese suppliers your request for quotations.

In summary, there are three main types of Chinese suppliers that sellers often come across, and each has its own strengths and weaknesses. In this post, I shall do a quick introduction of these three Chinese supplier models, and I hope to offer you insights on how to choose the most appropriate Chinese supplier for your business through this guide.

Chinese Supplier Model 1: Manufacturers or factories

These suppliers are the owners of the factories which make your products. You can communicate your needs directly with them, and they normally have a high level of expertise in the manufacturing process. Cons? You have to take care of the entire sourcing process by yourself, including managing the contracts in Chinese, product inspections, follow-ups with customs for exporting your goods, etc.

Chinese Supplier Model 2: Local trading companies

These suppliers are the middlemen who link you up with the manufacturers. You may be able to get your product at a lower price than going direct to a manufacturer if you work with them because they can bolt your order onto an existing line of very similar goods with their client factories and thus achieve economies of scale. However, trading companies will often seek to protect their manufacturers’ interests, and thus in times of disputes, it will be all up to you alone to fend for yourself.

Chinese Supplier Model 3: Global sourcing companies

Sourcing companies work on your behalf and deal with the whole supply chain (sourcing, quality control, shipping) right up to your door. They are also the middlemen, but unlike trading companies, their loyalty will be to you rather than the factory, so when a dispute arises, they will represent your interests. Cost-wise, their services will naturally be more expensive.

So, here are the three most common types of Chinese supplier models. When trying to select the most compatible suppliers for your business, you will also need to consider the following issues:

Issue 1: Experience with the import-export process

A good supplier should possess knowledge of China’s import-export processes and regulations. In China, products of different niches normally come from various regions across the country, and the manufacturing processes of each product differ in speed and timing. Ideally, sellers will like to find a warehouse that can allow them to store or hold the different products until they are ready to import all the products to their destined country of sales. However, warehouses differ in their costs and also their operational routes. Not every region will have a warehouse that supports exporting products to your destined country of sales.

Other than that, your suppliers should have a solid understanding of the compliance requirements in the country where the goods will be sold. For example, what are the different customs tariffs and regulations? Are there any import restrictions? It will be a big problem if you do not have a Chinese supplier who understands the importing process well.

Are you comfortable with managing these processes all by yourself? If you are, I will advise you to go factory-direct as this will save precious time and money. If not, enlisting the help of trading or sourcing companies will be a great choice.

Issue 2: Consider the size of your order

If you are looking to work with direct manufacturers, do note that most of them have a minimum order quantity (MOQ) for their products. Thus you as the seller will need to be clear of your total order value, as well as order value per product and per supplier. Smaller orders are generally not welcomed by them. In other words, you must make a big order and be certain that you are able to clear off your product stocks.



Hence, if you are just trying to test waters in a specific industry, you may want to consider working with trading companies. This is because most trading companies work with several different factories and business owners at the same time. They can easily consolidate the smaller orders for a product into one big order when they pass it over to the factories for manufacturing and then distribute your desired quantities to you. This will provide you with the option to carry multiple products in the same industry, and at the same time, be able to import smaller quantities per product.

Issue 3: Communication and language proficiency

Communication is vital within the whole import-export process. Especially if you are engaging suppliers from China, it is important to at least have some personnel on your side who can do business communication in Chinese. Or else, you should engage Chinese suppliers who have an elementary level of English proficiency – whichever is easier for you.

If you generally have larger orders but you are short of the time and resources to manage the back and forth communication, then I will suggest you work with a sourcing company. These are the people who can help you manage the operational part of the process (including inspection, following up on goods, shipping tariffs, etc.) and smooth things out when the situation gets tricky.



For example, if issues are found during the pre-shipment inspection of your goods, which is often the case, intense negotiations with the factories will be required to get them to re-work the goods so that they meet your expectations. It will be a huge advantage if you have a Chinese person on the ground and on your side to help negotiate the reworking terms.

Let’s do a quick sum-up of the 3 factors to consider when choosing the correct Chinese suppliers.

1. Experience with the import-export process
2. Size of your order
3. Communication and language proficiency

So, which of these Chinese suppliers models will you choose to work with? I will love to hear your opinions! Comment below this post, and let’s exchange our experiences working with different types of Chinese suppliers!

I will see you in the next post.