How US Sellers are Maximizing Profits with Chinese Suppliers
The best way to describe the trading relationship between the US and China at the moment is, ‘it’s complicated.’
Yes, the two countries are currently involved in trade disputes, but they have been trading partners for a long time (since 1979, to be exact, when the US and China signed their first Bilateral Trade Agreement).
Despite the trade war tariffs, US imports of products from China in 2022 rose to the highest reported level, up 6% from 2021 and close to returning to peak import levels from 2018.
These figures highlight that many US businesses still recognize the numerous advantages of sourcing goods from China. For example, air freight shipping times can be expedited (averaging around 1-5 days to reach the US from China).
Plus, China’s highly advanced and diverse manufacturing sector offers US brands practically limitless choices of suppliers. In essence, if you can conceptualize it, you can find a manufacturer to make your ideal e-commerce products a reality.
With that in mind, this article will explore how US sellers maximize profits with the help of Chinese suppliers. Plus, we’ll show you how your e-commerce brand can capitalize on this enduring trade relationship.
US brands currently sourcing from China with great success
China’s extensive manufacturing network and its efficient fulfillment cycles have made it the optimal supplier location for many high-profile US brands, including:
Apple
Apple has been ranked as the world’s top technology brand for the past ten years, and its success can, in part, be attributed to its contracts with Chinese manufacturers for sourcing raw materials, making component parts, and assembling Apple products.
While the company’s involvement with Chinese suppliers has garnered some controversy surrounding labor costs in the past, Apple denies claims it broke any Chinese labor laws. The company plans to continue utilizing China’s extensive and highly advanced microchip manufacturing expertise to meet global demand for its products.
Walmart
Walmart is the world’s leading retailer, with revenues totaling $585.2 billion in 2022. According to the latest estimates, Walmart works with Chinese suppliers to manufacture 70-80% of its extensive range of products.
It also has over 300 store/warehouse locations in China and stores in 20 other countries. This demonstrates that the US/China trading relationship is reciprocal, and that demand for US goods is high among international consumers.
Patagonia
Founded in the early 1970s, American outdoor clothing brand Patagonia places great emphasis on sustainability and fair trading practices, including ensuring that clothing manufacturers are paid a decent wage.
Patagonia works with a number of suppliers in China, which helps the company keep its prices affordable. However, keeping manufacturing costs low doesn’t come at the expense of their employees’ welfare. The company takes its social responsibility metrics very seriously, carefully vetting its collaborating partners worldwide to ensure that all suppliers are working towards minimizing negative impacts on their staff’s wellbeing and the environment.
Under Armour
Fitness apparel brand Under Armour works closely with manufacturers worldwide, including suppliers in China, to help keep their costs low and make the most of the country’s manufacturing efficiencies.
In 2020, the company won a case against a Chinese manufacturer for intellectual property infringement because they had taken steps to register the trademark in China. This case was significant because it underlined the importance of securing trademark protection in English and for translations or transliterations of intellectual property in other countries. Following Under Armour’s example can alleviate some of the risks of opening up sales in new, untapped markets.
How to bolster supplier relationships with suppliers in China
As the above companies demonstrate, partnering with Chinese suppliers can launch your US brand to new heights. However, at the same time, e-commerce sellers must be mindful of the following to ensure their business relationships run smoothly:
Work with a Chinese sourcing agent to vet potential supplier partners
Patagonia and Under Armour’s success in their Chinese supplier relationships hinges on their thorough supplier vetting processes.
Working with a Chinese sourcing agent, if you are new to importing from China, will help ensure you gain transparency on manufacturing practices, including checking that each supplier respects your intellectual property rights and has the proper licenses (find out more in our E-commerce Seller’s Guide to Importing from China).
A sourcing agent can also help you find Worldwide Responsible Accredited Production (WRAP) or SA8000-certified suppliers. These accreditations demonstrate that your supplier partners are doing their bit to protect against inhumane labor practices and discrimination, and that they promote freedom of assembly and association.
Protect your purchases with Trade Assurance
B2B supplier marketplaces like Alibaba and AliExpress offer US buyers Trade Assurance. This program ensures that companies in the US can access quality services from manufacturers overseas, including a fair and timely returns and refund policy should anything go wrong with their orders. It’s also wise to invest in cargo insurance to protect your imported products in transit.
Send China payments in your supplier’s preferred currency with Zyla
Finally, maintaining complete control over your supply chain costs is more straightforward if you can pay your invoices in your supplier’s preferred currency.
Whether in USD or Chinese (CNH), making fast and secure supplier payments can help you access early payment discounts and ensure your customers get their products on time.
With a free-to-open Zyla Account, you can make safe international payments directly to Chinese businesses without registering a new bank account overseas. You can also save on FX fees, as our rates are often more competitive than those of mainstream banks.
Moreover, our customer service team is on-hand if you need extra support in controlling your currency exchange costs, such as setting up a Forward Exchange Contract with your suppliers in China, which enables you to lock in an exchange rate for up to 24 months.
Click here to get started with creating your free Zyla Account, or call us on (855) 797-3366.
