How To Find Genuine Manufacturers From China

Summary

In this video, Chloe from Sourcing Arts guides foreign buyers on how to distinguish between genuine Chinese manufacturers and trading companies on platforms like Alibaba. She shares practical tips to spot real manufacturers, such as identifying industrial clusters, checking product categories, and reviewing business licenses. Chloe explains how trading companies often disguise themselves as manufacturers to gain business, and how understanding China's industrial areas can help buyers make informed decisions. The video provides valuable insights to help avoid common pitfalls in sourcing products from China.

Takeaways

• 😀 Only 20% of suppliers on Alibaba are actual manufacturers; the rest are trading companies.
• 😀 Time differences, language barriers, and cultural gaps make it difficult for foreign buyers to verify suppliers from China.
• 😀 Genuine manufacturers are typically located in suburban industrial parks, while trading companies are based in urban areas.
• 😀 Using Google Maps, buyers can verify the location of a supplier’s address to check if it's in an industrial cluster.
• 😀 Each product category in China has its own industrial cluster, such as Shenzhen for electronics and Hebei for face masks.
• 😀 Suppliers offering diverse products are likely trading companies, while factories tend to specialize in one product category.
• 😀 To identify manufacturers, check the supplier's business license for terms like 'manufacture' or 'production' in the business scope.
• 😀 Cooperating with suppliers located in the industrial cluster can provide advantages in price and delivery time.
• 😀 Foreign buyers must have a good understanding of China's industrial clusters to avoid dealing with trading companies.
• 😀 Special circumstances may include suppliers that only manufacture certain products while outsourcing others; focus on the products they produce themselves.
• 😀 Buyers should use resources like Chinese business websites to verify supplier information and avoid falling for deceptive practices.

Q & A

What is the main challenge foreign buyers face when sourcing from China?

Foreign buyers struggle to distinguish between Chinese manufacturers and trading companies, which can lead to confusion and mistakes when selecting suppliers.

Why do Chinese suppliers often claim to be manufacturers even if they are trading companies?

Chinese suppliers claim to be manufacturers because they know buyers are more likely to trust and place orders with manufacturers, as they often associate them with lower prices and higher quality.

How do trading companies manipulate foreign buyers, even when buyers visit China to inspect factories?

Trading companies often have established relationships with factories and can easily arrange fake factory tours or manipulate the appearance of their operations, making it difficult for buyers to identify them as traders.

What are the advantages of working directly with a manufacturer instead of a trading company?

Working directly with a manufacturer usually results in lower prices, better product quality control, and a more streamlined supply chain, as there are fewer intermediaries.

What percentage of suppliers on platforms like Alibaba are real factories, according to the video?

According to the video, only 10-20% of suppliers on Alibaba are actual factories, with the majority being trading companies.

What is the significance of a supplier's address in identifying whether they are a manufacturer or a trading company?

Manufacturers are typically located in suburban industrial areas, while trading companies are more likely to be based in urban centers. By checking the address on platforms like Google Maps, buyers can make more accurate judgments about the supplier's type.

What are industrial clusters, and why are they important when sourcing products from China?

Industrial clusters are regions where specific products are manufactured in large quantities. Understanding these clusters allows buyers to identify the right suppliers based on their location, which can offer advantages in terms of pricing, quality, and manufacturing expertise.

Can you give an example of industrial clusters for certain product categories in China?

For example, the industrial cluster for electronic products is located in Shenzhen, while face masks are mainly produced in Hubei, and watches are associated with clusters in Shenzhen as well.

What should buyers check when reviewing a supplier’s product category?

Buyers should check whether a supplier focuses on a single product category or offers a wide range of products. Factories usually specialize in one product type, while trading companies tend to sell various products.

How can buyers verify a supplier's legitimacy using their business license?

Buyers can use Chinese business information websites like Chichacha.com to check the business scope of a supplier. A genuine manufacturer will have terms related to 'production' or 'manufacturing' in their business scope, while a trading company will not.