Working with a contract manufacturer in China
Partnering with a reliable contract manufacturer can help you to get products made faster and with better quality, all whilst keeping a reasonable price and lead time.
It is important for you to do due diligence on manufacturing suppliers, especially when you are a newcomer in the industry. Additionally, it is a great chance to educate yourself to gain more knowledge of cooperating and communicating with new businesses.
Before working with a contract manufacturer in China, make sure you are satisfied with the answers to the following questions:
What Are The MOQ And Pricing?
MOQ, an acronym for Minimum Order Quantity refers to the minimum quantities of products or units that manufacturers are willing to accept and place an order.
Typically, the MOQ is different amongst manufacturers and can be negotiated depending on materials, color, size, and other factors. However, if your order is much lower than the average MOQ like 10 or 50, the manufacturer is not likely to work with you.
In addition, the price of raw material change is another reason to affect MOQ. For example, products made by acrylic can be 20% more expensive just before the holiday season, leading to a higher MOQ. Therefore, you need to confirm the MOQ and the exact pricing, especially before the Chinese and US holidays.
How About The Lead Time And How To Handle Delays?
One of the biggest headaches of overseas manufacturing is the lead time. Customers do not have a lot of patience and they don’t like waiting. If your products are out of stock for a long time, they will walk away from you without thought.
As a business owner, you are trying your best to satisfy the customers by providing high-quality products without minutes. In this case, not only do you need to plan to increase order frequency, but you need to make sure if the manufacturing suppliers can deliver the order on time. Especially during events such as the Chinese New Year, where the workers will be staying at home for at least two weeks.
For those who want to do mass production, you need to know how the manufacturer will do if there are unpredictable delays, such as another wave of the pandemic.
What Are The Payment Terms?
Getting more details about the payment terms and managing them wisely can help you reduce financial risks and cooperation failure. In China, many manufacturing suppliers request upfront fees or deposits after you place the order. You need to confirm the payment deadline, payment method, and payment split.
One of the best payment terms is 30:40:30, namely 30% for deposit after accepting the sample and placing the order, 40% after manufacturing and quality inspection, and 30% on completion after fully receiving. It can be float around 5%-10% but it should not be an 80% payment upfront which can be a gamble for your business.
How Much For The Product Sample?
Typically, a production sample can reflect the quality of the whole production line and ensure the supplier can fully understand and achieve your expectations. Therefore, asking for samples is a must before you place an order.
Ideally, the Chinese manufacturing suppliers agree to send a production sample without a fee, but you need to take care of the international logistics and fee.
However, if you want to get products with a logo, customized shape, or design, you may need to pay for the sampling. Some suppliers are willing to refund if you place an order afterward.
How To Protect The IP?
The unique idea, design, or functionality may be your main competitive advantage to win the market. So, when choosing contract manufacturers in China, one of the biggest challenges is whether they can secure your IP.
The manufacturing company works with various businesses so it’s likely one of your competitors may be on their contact list. Even they do not work with your competitors, there are still possibilities that your IP will be stolen by some in-house engineers, which puts you and your business at risk. In this case, you should check carefully if they use any highly advanced encryption technology to keep your information safe.
Additionally, you can ask the manufacturers if they are willing to sign an NDA or NNN. With these agreements, you have more confidence to safeguard your business.
Do You Have Other Value-added Services?
Ideally, the contract manufacturing company can offer other value-added services to reduce unnecessary troublesome for you.
For instance, do they provide final packaging and warehousing services? Do they assist with the pick, pack, and ship from the factory to port?
The best contract manufacturing company you can work with is they have capabilities and experience to reduce your headaches.
As you see, finding a manufacturing supplier in China is complex. You need to consider a lot in case you choose the wrong one who could damage your business. If you need to find a reliable and experienced contract manufacturer, contact us today and let us help you!
