Question: I often feel indecisive during the process of seeking a Chinese supplier to work with. For the same inquiry, this factory quoted $5 and the other factory quoted $8. Which factory should I choose to work with? Why is there such a big difference?
For foreign buyers, Made in China is very cheap in terms of price, but the price difference is also very large.
First of all, the price difference is normal, and there may be fine goods at a cheap price, but it is important to understand the reasons for this, so that you can then better choose the factory or service provider and control the quality level.
The reasons for the price difference are as follows:
1、Small factories struggle to compete
2、Market: There are many factories in the same industry. Small factories have no scale advantage, so they can only reduce the profit rate in the hope to win customers.
3、Advantages and Disadvantages: Basically, the price of small factories is relatively low, but small factories will have defects such as old machines, unprofessional labour, and low survival rate.
Decision: If your own company is still in its infancy and needs low prices to gain a competitive advantage, you can explore the authenticity and quality of the supplier with 1-2 small trial orders.
Low price, low quality
1、Market: Due to network, multi-channelization, fierce competition among competitors, and the low price demand of sellers, in order to win the initial cooperation opportunities from customers, all suppliers will use defective fabric/accessory, and purchase leftover stock in order to reduce the cost of the product to achieve the low price point that meets the customer’s requirements.
2、Advantages and disadvantages: low price, and general product durability.
Decision: If the procurement is used for advertising, activities, disposables, etc., and the quality requirements are lower, then you can choose a lower price supplier.
Other Factory behind the Factory
1、First Case: Some factories are small-scale factories themselves, but they have the advantage of foreign trade personnel, and once the order is secured, then it is sent out to the other factory behind it.
2、Second Case: the factory does not know how to produce this type of product, and once the order is secured, then it will be handed over to the other factory behind it.
Advantages and disadvantages: high prices, quality may not be good; but communication is barrier-free.
Try not to choose this type of factory, although the communication is barrier-free, but such multi-participation is prone to problems, and not easy to control. Now that the language is internationalized, it is easier to find a supplier that has no barrier in communications and has its own factory.
Foreign trade companies are relatively expensive, mainly relying on services to make money.
1、Market: There are many factories and fewer resources for integration and utilization, which enables foreign trade companies to be established. Foreign trade companies have different types of suppliers to choose from, and they are better equipped by tactics when it comes to negotiating prices.
2、Advantages and Disadvantages: The advantage is that it can help check and control the quality. The disadvantage is that the price is relatively high.
Decision: For the first time doing business with Chinese suppliers, you can consider choosing a trading company, which is relatively guaranteed. Those who need to purchase products of different types and industries may consider working with trading companies also.
