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.

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.

Prices, prices, prices! 

Never be reluctant to ask a supplier about a price quoted for a garment, or anything for that matter.
Some people often seem reluctant, especially if the price is good. 
They think questioning it will somehow let it slip, that its a good price. 
But, keep in mind, it could be a mistake on the suppliers part, and when the supplier realises it, you could be in for a shock.
Always double check what a quoted price includes.
Is it for your Incoterm specified? 

Does is include all raw materials and inputs? 

If you have a nominated supplier for trims etc, does it include this cost? 

Does it take into account your payment terms? 

What is the validity of the price? 

How will any exchange rate or commodity price fluctuations impact the price? 

Does it include all sampling required once the order is confirmed? 
I am sure you can think of some more questions, but never be afraid to double check every detail.
#correctcosting

#rightfirsttime

Beginners guide to trading companies! 

A client recently asked me a question about apparel trading companies in China, which got me thinking a bit.
In my experience, the words Trading Company, Sourcing Agency, and Import Export business, are often used in a way that can be very confusing to a buyer. They are often used interchangeably, when talking about the same entity. 
This is often a simple language issue, but can be done on purpose, by certain unscrupulous business people to hide the true nature of their business relationships.
To Western buyers this is often confusing, as they usually have a distinct understanding or expectation of what each business is, or should be.
I have often been in contact with trading companies, and prefer not to use them, as they usually do not have the required control over their subcontract factories. When I mention this, I get the common reply that the Trading company has its own factory, and after a bit of digging, I find out they do not.
Last week I was in touch with a trading company, and they told me they had three subcontract factories. I then told them that this type of set up did not suit me. The salesperson’s next mail, was that her boss owned one of the factories. My next question was if he owned the factory 100%. The reply was that he only owned 30%. Big difference.
The first reply implied 100% ownership, the second only 30%. For all I knew the boss owned 0 percent. I then asked to see the document showing the trading company’s 30% ownership in the factory. Needless to say that was the last time I heard from them.
Sometimes only a factory visit and watching the interactions between all the players will lead you to the truth, along with some simple questions.
For example if I ask the “owner” how many machines the factory has, and he needs to ask someone else, you can be pretty confident that he is not the owner. If you ask him to see the sample room and the “owner” does not know where it is, and gets someone else to lead, you can be pretty sure as well.
If most of the questions you ask the “owner” are answered by someone else, usually the factory manager, or real owner, and the answers translated for you by the “owner”, you can also be pretty sure the trading company does not have ownership.
Generally there 5 types of trading companies in China, and the term is used very loosely.
1-The trading company is a totally separate entity from the factory. A factory might not have an export license, so they export in the name of a trading company which does. 
2-Some factories have there own trading company, just as a tool for exporting. They are not traders in the true sense of the word. They might also export on behalf of other factories as above.

3-Then you get a trading company who simply take orders and farm them out to factories to produce. Most seem to fall into this category. These are often called Sourcing Agencies.

4-Next are the trading companies that get factories to produce stock for them, and they wholesale out.

5-Finally a trading company with their own factory. They will usually manufacture items for wholesale and take customer orders to manufacture as well.

If dealing with any trader, it is important to work out exactly which category they fall into, as there can be serious ramifications if you get it wrong.