Beyond Alibaba!

If you have sourced in China before, I bet the first thing that comes to mind is Alibaba.

This is a perfectly normal reaction. Alibaba is a very useful and convenient sourcing platform.

Post a buying lead, and you will have dozens of responses within a few hours. Even some in a few minutes. You can just sit back and relax while suppliers come to you. To most this is ideal. Put in minimal effort, for maximum returns.

But have you ever asked yourself whether there are alternatives to Alibaba? The answer is a resounding “Yes”. And many might be better suited to your needs.

Before we look at a few alternatives beyond Alibaba, you might want to know why you should look any further, if Alibaba has worked for you.

Simple logic is that you can only judge the effectiveness of Alibaba if you have something to compare it to. If you have not looked any further than Alibaba, you have nothing to measure it against, objectively or even subjectively.

I could write about the shortcomings of Alibaba, but this is not what this article is about. A simple Google search provides enough of these.

Instead we will simply look at some alternatives you can explore.

Business Networking

A useful alternative to Alibaba is networking, both offline and online.

I am sure that you have colleagues in the same industry as you. Ask them for a supplier reference, or if they know of any good suppliers.

It is in their interest to give you these details. It might seem counter intuitive for a business to share its good suppliers with anyone else. It actually gives them a valuable tool. Leverage.

Think about it. If the supplier misbehaves with an order, it also risks the referred buyer’s order. The supplier knows the two buyers are in contact, and that they will probably discuss any misdeeds by the supplier. Therefore, the supplier risks losing more business than it would without the referral.

Make use of professional networking sites such LinkedIn . There are thousands of suppliers in every industry here, and they are connected to thousands of buyers. There are also plenty of industry specific groups that are also a good source of suppliers.

One of the best things about LinkedIn is that you can get supplier references by connecting to a supplier’s network.

If you use a supplier you have found on LinkedIn, and there are problems with your order, the supplier risks this being discussed on the site. If a supplier does a good job, you can create some goodwill by mentioning this to your network.

The main downside with LinkedIn and other professional networking sites, is that it takes time to build up a network, and use it effectively. A strong network can also take a few years to build up.Joining groups is far quicker and will result in quick references and advice.I suggest checking out the following link; LinkedIn-Beginner Tips.

Joining your local Chamber of Commerce, is also a way of networking with others. So is joining the local federation representing your industry.

Trade-Shows

There was a world before Alibaba, and many businesses sourced through trade shows, both in their native country, and abroad. There are still thousands of trade-shows every year, and they are still valuable as sourcing tools for a number of reasons.

You can meet suppliers face to face. This goes a long way to establishing a relationship. It is far better than an “email” introduction.

Face to face meetings usually result in clearer communication. Important points can be stressed.

Face to face meetings give you the ability to “feel out” suppliers before doing business.

The supplier will have physical samples of its products.

There will be multiple suppliers in one venue.

Business deals can be done immediately at a trade-show if you so desire.

 

Here is a link to the important annual trade shows in China. China Trade Shows.

Many Chinese suppliers will also exhibit at local trade shows in your country. A good example is Magic in Las Vegas every February.

There will be plenty of trade shows in your country, too. An internet search is a good start.

 

Other B2B Websites

Although Alibaba is the biggest and most well-known B2B site, there are many more. Some of these tend to offer a better user experience. I personally prefer the interface (less clutter) and ease of Global Sources. You can also check out Made in China.

Another advantage of alternative sites, is the lack/reduction of spam. I can honestly say, out of the numerous sites I use, Alibaba creates the most spam. They are also extremely pushy in their mails trying to sell me Gold Member status, which I do not appreciate. It often borders on unprofessional behaviour

A Web Search

An old-fashioned internet search often leads to good results. Not all suppliers have Alibaba membership, for a multitude of reasons. An internet search often gives you more detailed and accurate information about a supplier than Alibaba. It is not in Alibaba’s interests to police poor performing suppliers, as they risk losing these fee-paying suppliers. The internet is not as kind.

 

A simple Google search of Ningbo, China apparel factories nets a lot of options. There are the usual suspects such as Alibaba and Made in China caught in the search. It also gives some other B2B sites, as well as direct supplier websites.

Another good thing is that peripheral information is caught up in the search, such as advice in finding factories and other useful articles. Some of this makes interesting reading.

In conclusion, a sound sourcing strategy requires that multiple channels are explored.

Being prudent and ensuring all possible channels are explored will not only improve your sourcing ability, but will give you access to new connections, up to date information, and industry news that can directly affect your business.

Tips for China sourcing (and all other countries, too).

As someone who has worked in offshore manufacturing for many years, I often get asked a lot of similar questions from clients. They usually take the following shape;

·        “How do I know if a particular factory is good?”

·        “How do I know if a factory can make my product?”

·        “How do I know if a factory can achieve my required quality level?”

·        “How do I know if a factory is actually a factory and not a trading company or agent pretending to be a factory?”

All of these questions, and more, can be addressed with proper factory verification, or evaluation.

The next question, that comes up, is rather obvious. How do you verify a factory?

There are a number of methods, that can be used individually or in combination.

Third Party Factory Inspections/Audits.

Many third-party inspection agencies, such as Intertek, Asia Inspection, and SGS, will audit a factory for a fee.

This fee depends on a number of factors, which are beyond the scope of this post, but a general report will consist of a number of sections, such as a general overview with a score, a factory profile, workflow and organisation, production lines and their capacity, factory facilities and machinery, amongst others.

There are usually optional things the auditor can check, such as social compliance, R&D, etc.

They will then have a general overview and photos. Specific areas of concern will be noted, as well as recommendations.

Bear in mind that these reports can run into 30 or 40 pages, so I have only covered the tip of the iceberg.

For more detail, you can check Asia Inspections Website, Asia inspection Factory Audit

This method has obvious advantages, such as experienced and certified inspectors, and objectivity.

The major drawbacks are twofold. Firstly, if you want to inspect multiple factories, it can get really expensive. Secondly, an audit is simply a snapshot in time. Things might change tomorrow. A factory might have “borrowed” a machine from a friend’s factory, just to pass the audit.

Sourcing Websites.

The most well-known site for sourcing factories in China, is Alibaba.com. They even have audited Gold Suppliers. This might seem as a one stop shop, but there are also major disadvantages.

Firstly, the coveted Gold Supplier status is purchased. I have been offered it on numerous occasions, and I am not a supplier. They also offer third party inspection services, and trade assurance. However, it is my personal opinion that these are slightly biased in favour of sellers, as Alibaba’s fees from sellers are their bread and butter.

Also keep in mind that these third parties are within Alibaba’s networks, so there is also a vested interest for them to be biased towards Alibaba.

Self-Verification

With some experience, and a bit of common sense, you can self-verify your factory. It will not be as in depth as an audit from a third-party inspection agency, but when you are dealing with multiple factories, the cost of the above-mentioned audits, can be ridiculously high, and usually unaffordable, especially to those new to doing business in China, or any country for that matter.

I often work for start-up clients, who have small orders, and a limited budget. For each client I often need to get quotes from multiple factories, or at least reach out to multiple factories, to see if they will take on my clients work.

The next question would be how to self-verify.

I usually begin with a company introduction, which gives my clients non-negotiable business terms, quality requirements, expected lead times, sampling requirements, etc, as well as my own factory evaluation form the factory needs to fill in.

These two documents are important for a number of reasons.

·        If a factory cannot meet your basic business terms, there is no use wasting time discussing anything further. Rather find out that a factory does not accept letter of credit payments at the beginning. Many new buyers will spend hours and hours with a factory, possibly even visit, and when it comes time to place the order, the factory will state they cannot accept one or another of the buyer’s terms. If you find this out at the beginning. It will save you money and time.

·        The factory evaluation form is obviously not as detailed as a proper audit, but it asks for basic documents, a list of machinery, number of workers, number of production lines, QC department details, sample department details, photos of the factory (internally and externally), whether the factory has the right to export or must export through a trading company, etc. It will tell me if the factory can meet my client’s needs.

·        These two documents require input from the factory, and will give insight into their ability to follow simple instructions, how long it takes them to respond, and to see if they ask the “right” questions. I am not only interested if a factory can make a product. I am also interested to see if they are going to be difficult or easy to manage. If a factory does not confirm they have received my mail, this is a problem, as I will have to follow up. If they say they will return the evaluation form on a specific date, and do not, this is a problem. Especially if they do not inform me of this. Again, I will need to follow up with them.

·        They will let you know if the factory has competent English-speaking staff. Whether you like it or not, English is the international business language.

To put it simply. If a supplier cannot read a document properly, fill in a document properly, follow basic instructions, and miss one simple deadline, they are going to be a problem. Period.

With self-verification, you should still visit the factory prior to doing business. I always raise the importance of this. To be cost effective, set up a trip to see the maximum number of potential suppliers. Take the factory evaluation form and photos to each factory. On many occasions I have been taken to a factory different to the one I have information on. This usually occurs when a trading company or agent, try to pass themselves off as a direct factory. Do not be afraid to ask questions. Often on a factory tour, there will be people other than your contact accompanying you. Ask who they are.

I hope this article gives you some insight into how to verify a factory. Remember, you can never fully eliminate risk. Your goal should always be to reduce any risk as much as possible. Supplier verification goes a long way towards this goal.

Good luck with your China sourcing.

#sourcinginchina

Over the years, one very important thing I have learnt, is that managing clients expectations is often the most difficult part of business.
Not something you learn at University!

Mismanagement 101

I could not make this up if I tried.
I just finished some work for a department of a relatively large Hong Kong trading company.
I could not understand why they needed four merchandisers, as there was barely enough work for three.
It turned out that initially there were four desks in the office, and three merchandisers.
As there was an extra desk, the manager was afraid that someone senior to him, would come to him for a favour, and ask him employ someones child, friend, etc.
As the manager did not want to put himself in this position, he decided to hire someone to fill the desk.
Surely logic entails moving the extra desk out of the office. Far cheaper and easier.
Never under estimate the effect of culture on business.

Email only, please.

People often ask me why I refuse to use any of the instant messaging services (Line, What’s App, We Chat, etc) for business.
I always reply, that today, email is also an instant messaging service. Everyone has their email app on their phone.
What is important to me, is that it creates a chronological paper trail that cannot be disputed, accessable through any computer or smartphone.

Off topic, but.

A bit of topic but bear with me. It is the weekend.
Very rarely do I need to dress formally, but I had to for a meeting with a local business.
In my meeting, I met with a few executives at a mill.
Expensive suits, but one thing bothered me a bit.
Out of the three, one was wearing an Apple watch, while the other two would check their phones for the time.
It was a relatively long meeting.
I know in todays world a decent watch is not essential, as you can just check your phone, which on many occasions leads to someone checking more than time.
Am I alone in thinking a decent watch goes a long way in business and in general? It adds an air of professionalism? 
I was reading a book called “Snap” on my last flight, which explains the power of first impressions, and how they are generally very difficult to change or reverse. Highly recomended.
I personally feel that I am not dressed without a watch, whether working or sitting at home.  
Thoughts?

Value addition, people! 

I have had a few suppliers ask me about the concept of value addition.
This is especially the case in countries like China, where costs are increasing, and buyers are leaving.
I have given them a number of ways to add value.
One important one is , take responsibility! 
If you are supposed to submit a strike off, for example, on a specific day, and you miss the deadline, take resposibility and try to correct somehow.
I always get the same story. “The printer is too busy, so the printing is late”. “The mill is running late” etc”.
This is vendor blaming.  
Using my example above, the printer might well be running late, but simply telling the customer this, reduces value. If a factory chooses a printer, that printer is their responsibly to manage. Not the buyers.
Make up for it somehow. Offer to express courier courier the strike off to the buyer, or get creative.
This is an example of value addition. There are many, many more.
Feel free to add.
#valueaddition

#resposibility