Starting to work with foreign suppliers in general is a real challenge. In particular for a new importer! Language and cultural barriers, and lack of experience can discourage and slow down projects. However, with these simple steps and the help of an expert, efficient supplier selection in Asia becomes easier:

Supplier Search

Determine the needs to be able to filter several elements such as:

  • – The activity of the supplier (manufacturer, marketer).
  • – The characteristics of the product (shapes, sizes, colors, weights, dimensions, possibility of customizing with a logo for example).
  • – Unit prices (consider incoterms and transportation costs).
  • – The general conditions (minimum order, methods, terms of payment, production/delivery times).

Selection

Is your commercial information available (websites, catalogs)? Are you recognized in your industry? Do you cooperate with the requested data? Do you have export experience? Share customer references? Are your answers consistent?

Negotiation

Of the prices and commercial conditions according to quantities and frequency of the orders. The negotiation will allow identifying the suppliers willing to adapt to the needs of the client and discard some.

knowing how to play with the MOQ in a negotiation

MOQ (Minimum Order Quantity) is the abbreviation that refers to the minimum order required by a supplier. It is a requirement that refers to the lowest quantity of a product so that the purchase/sale can be concretized.

In general, suppliers in China have a fairly high minimum production, with which the price of the product is associated.  Upon receipt of a quote, the minimum quantity of the order needed by the supplier appears in order to include the costs related to international shipping.

Why do suppliers apply MOQ?

  • Chinese suppliers tend to have a very low-profit margin in order to keep prices low. A reduced profit margin means that the supplier manufactures a large number of items in order to maintain balance.
  • Through the MOQ, suppliers simply reflect the MOQ imposed by their suppliers in order to produce. It’s a chain!
  • Most suppliers start production until they receive order confirmation, to avoid expenses that would raise their prices for sale (for example storage)

Can MOQ be reduced?

We agree: the MOQ is an obstacle for an importer, especially for a first purchase! It is almost impossible to eliminate this concept from negotiation, but it can be reduced… Let’s see how!

  • Investigate which item is manufactured the most: Accepting a product that the supplier manufactures frequently is very likely to reduce the minimum order.
  • Ask which item is about to be mass-produced: taking advantage of the order of a large customer, you can ask them to add a few more units and thus reduce the MOQ.
  • Check if the supplier has a stock: although it is not common, the supplier may have stock of certain items. Buying these products is another way to reduce the MOQ since the production has already been done.
  • Start trading with intermediaries or “brokers”: intermediaries are another option that propose lower MOQs, however at higher prices.

In case you fail to adjust the MOQ with a supplier abroad, it is worth approaching a domestic wholesaler! Importing is not always the best strategy!

Samples

To evaluate the supplier’s commitment (sometimes samples are free, sometimes the supplier asks for payment first), their response time, perform laboratory and operational tests.

Verify The Legal Existence Of A Supplier

In the case of a marketer (broker) to avoid cases of fraud, confirming legal data (permits and licenses) quickly, before making any advance.

Perform A Factory Audit

In the case of direct manufacturers, to verify that it is indeed a manufacturer, evaluate production capacity, human resources, and legal and financial information. In addition

Why conduct a factory audit of a supplier in Asia?

Factory auditing is an extremely useful and cost-effective service. It allows importers to ensure the reliability of a supplier and the quality of their products. It is an excellent tool for potential suppliers: the importer will be able to have a detailed profile of his business partner before confirming the first order and thus not make any mistakes. This service also applies to suppliers with whom you have already worked, as part of a re-evaluation for example. Below we will see what are the reasons to perform a factory audit in Asia.

Confirm its existence

A factory audit minimizes the risks of working with a supplier in Asia. You can guarantee that the factory is legal. It also confirms that it has all the necessary requirements to be able to produce, sell and export what the importer wishes to acquire.

Verify your experience

A factory audit allows an importer to observe a factory without arranging any travel.  A quality expert evaluates your experience in the industry. Through the facilities and tools available to you for example.

Evaluate your organization

A factory audit helps to know if the supplier can meet deadlines and has storage capacity. It also allows the importer to know the organization in terms of decision-making and negotiations.

Once the supplier is selected, the tasks of international payments, shipments & import procedures will come into play.