How to buy wholesale from China
The China wholesale market is vast, but tricky to navigate. Check out Zyla’s guide to help you keep control of Chinese supplier costs.
China is the world’s manufacturing hub, with many US businesses relying on the Chinese market’s manufacturing expertise to source reliable wholesale suppliers. Last year, 40.7% of all US imports came from China, and the value of US imports from China reached $536.8 billion in 2022, up 6.3% from 2021 figures.
Buying wholesale from China provides many opportunities for online sellers to save money on inventory costs and keep their storefronts stocked with new and exciting products to win over lifetime customers.
However, there are some pitfalls in the process to avoid. For example, e-commerce sellers must ensure their wholesaler in China has the correct documentation, including export licenses. Plus, they must check product samples before buying in bulk to ensure they’re high quality.
This article will answer some of the most common questions e-commerce business owners have about sourcing goods from China.
How to find wholesale suppliers in China
These B2B platforms list an extensive range of manufacturers and contain search filters to help you narrow your search by product category, supplier location, lowest prices and other criteria. Many of these wholesale marketplaces offer Trade Assurance programs that protect overseas buyers by certifying that the manufacturer is reliable, that buyers can return goods, and that they are not infringing on intellectual property rights.
Alternatively, you can attend trade shows with reputable Chinese wholesalers in attendance. Or, you can get in touch with a Chinese supplier sourcing agent, who can help you find a reliable supplier that matches your requirements and check supplier documentation (including licenses, certifications, and sales contracts).
If you want to design a variety of products from scratch, you may want to consider working with an Original Equipment Manufacturer (OEM). An OEM allows companies to manufacture products under their brand name.
In contrast, an Original Design Manufacturer (ODM) manufactures a wide range of products based on specifications provided by another company. An ODM often allows sellers to customize the manufacturer’s goods with their designs and logos. However, an OEM will require the e-commerce seller to handle all aspects of the design process.
Regardless of the route you choose to source products, if you’re including brand logos on your high-quality products, you will need your product specifications, design files, trademark licensing, and non-disclosure agreement paperwork ready to go. Consulting with a specialized Intellectual Property attorney will help ensure that your rights as a brand are protected.
How to order wholesale products from China
Once you have a shortlist of potential suppliers and read their product reviews, reach out to request product samples and get quotes for Minimum Order Quantities (MOQs).
MOQs are the smallest quantities a China wholesale trader can sell to balance their raw materials and production costs. They can significantly impact seller margins, so negotiating wholesale prices and quantities will help ensure that you also profit from your Cost of Goods Sold (COGS) per unit. To help you calculate whether a MOQs quote will work for you, consider the following formula
- COGS (per unit) = (Product price + shipping + import duties + taxes + cargo insurance + inventory storage + marketing ) ÷ MOQs.
Sellers with lower COGS per unit can sell the products cheaply and still turn a profit. In contrast, if the COGS (per unit) is higher, sellers may have to accept a lower profit margin on sales, find an alternative wholesaler in China, or raise the prices of products in store.
It’s vital to ensure that your China wholesale order is large enough to cover the costs of getting the products to the US, so ensure the minimum quantity isn’t too low. You should also keep your product prices competitive with other vendors and conduct customer research to ensure you offer affordable prices to your targeted customer base.
Once you have negotiated your order price and quantity and checked the samples to ensure product quality, arrange freight forwarding and payment terms before signing off on your order.
How to Import bulk items from China
The importing process and shipping costs vary depending on your state, product type, and order quantity. In some cases, you may need a license to import to the US, but even for products that don’t require it, you may still have to register as an importer; check the United States Customs and Border Protection (CBP) website for more information.
Find a freight forwarder specializing in Chinese wholesale imports and contact a customs agent to help you cover duties and get your items across the border – especially if you’re a first-time international buyer, as you may encounter delays if your items are held up due to incorrect paperwork.
Looking up the various Incoterms will also demystify the international rules of foreign trade and help you avoid supplier disputes and delayed shipping times.
As mentioned in the process of working out your costs, cargo insurance is a wise investment, as this will help you mitigate losses if your goods are damaged in transit, regardless of the shipping method you choose. You can learn more about managing various supply chain risks in this article.
Buying direct from a wholesaler in China
If your Chinese vendor is listed on an online marketplace like Alibaba and AliExpress, you can ask your supplier if they offer early payment discounts. These sites can also help you set up Letters of Credit, which work like a merchant cash advance, helping you make your payments in full quickly. Failing that, you can use other trade finance options to help you make your payments.
When it comes to sending money to your Chinese suppliers, you can choose to send payments in US dollars or CNH. Your China wholesalers will likely have a preference, but sign up for a free Zyla Account today to ensure you get a good deal on currency conversion costs.
Why Zyla is your key to connecting with wholesalers in China
Zyla is a leader in the international payments industry that uses up-to-date FX rates to ensure that our currency conversion costs are more competitive than some mainstream banks.
There are no minimum deposit fees or subscription costs to use your Zyla Account, so you can pay your China wholesale suppliers directly in CNH and save on your international money transfers.
If you want to learn more about Zyla’s great benefits for e-commerce sellers, sign up here or call us on (855) 797-3366.