25 Nov Importing from China as an SME
Too many small to medium sized businesses (SMEs) consider offshore contract manufacturing as unrealistic and only achievable for major retailers and chain stores. These businesses assume that their limited resources and buying power restrict them from buying from agents or wholesalers. In fact there are very little barriers preventing SMEs from going direct to manufacturers and importing the goods themselves.
Since China become the factory of the world more than 20 years ago, Chinese manufacturers have adapted and fine tuned the art of contract manufacturing. A key point for SMEs is that this has not been exclusive to large manufacturers supplying major retailers. Smaller factories have also learned how to effectively work with smaller businesses with smaller buying power. This means that as long as you can find a suitable factory that matches your size and market, you can have access to similar pricing available to major retailers without having to order a full shipping container(s) worth of stock.
Cost is generally the major factor for businesses outsourcing their manufacturing to China. The cost savings are commonly about 30-50% compared to purchasing stock from a local wholesaler or agent. This cost saving allows businesses to produce a higher volume of product for a reasonable cost. Alternatively, if your competitors start manufacturing in China while you’re still buying wholesale locally, your business will be exposed to the risk of being priced out of the market. However, while price is a key consideration, it should not be the only factor impacting the decision for a company to take its business to China.
Private label capability
When buying from wholesalers or importers, a business is generally required to make use of whatever branding and possibly packaging that their supplier offers them. By importing directly from the manufacturer in China, you are then capable of producing your products under your own unique brand with your own packaging. Suppliers can often produce packaging with customised branding for surprisingly small order quantities, though this again depends on finding the right manufacturer. Private label retailing is becoming increasingly popular as consumers seek out and stay loyal to brands that align with their image and beliefs.
Growth through new products
Chinese factories generally work with a whole range of buyers from all different countries, and are required to stay up to date with global trends to meet the demands of their buyers. Developing a hands-on relationship with manufacturers provides your business with exposure to new trends in your specific industry, allowing you to stay ahead of competitors in your local market. In turn, keeping your business’ product range up to date helps to retain and expand your customer base.
Customised product
Other than cost, the other most significant benefit is being able to easily adapt and customise products to meet the particular requirements of your customers. Working with the manufacturer directly gives businesses the ability to stay competitive by offering a unique product.
The bottom line
While cost and product customisation are the most significant benefits when importing directly from China, there are a range of other advantages that are available to SMEs just as they are for major retailers. SMEs should not hold back from offshore manufacturing in China when the benefits are so great and can be easily accessible.