How to Find China distributor

 

It is not easy for US exporters to find proper China distributors. The reason is, unlike China suppliers, China distributors do not promote their business in the US. Therefore they are mostly unknown to US companies. However, there are cost-effective ways to find many potential distributors in China to sell your products. Before you set up to physically go to China, you should conduct sufficient research and connection, so that your costly visit could be very productive. It is highly recommended to use government resources.

 

Steps

 

1. Search online to get general idea of the market situation and distributors in China for products that are similar to yours. China distributors of course focus their attention on China market. So they normally do not have website or web listing information in English. Therefore you need to have an informed person who understand Chinese to help you.
2. Contact US Embassy in Beijing or Consulate Generals in Shanghai, Guangzhou, Chengdu, and Shengyang for assistance. These agencies could give you lists of reputable distributors in China, with company and contact information.
3. Record your findings using a data table, so that you could better manage the vast information you obtained. The data table would include columns like distributor?s name, company information, products range, market channels and industrial applications, and notes.
4. Analyze the information you have and initiate the contact with your interested distributors. You may directly send email or fax to the distributor in English, because you may like your target partner to have some one speak English in daily communication.
5. Develop relationship with the potential distributors of your interest.
6. Visit the distributors in China and finalize the cooperation agreement. The best time to visit your distributors in China is during relevant trade shows or relevant industrial conventions, seminars or workshops. Join US governments? trade missions to China is excellent opportunity for establishing relationship with China distributors, because, by accompany government officials to visit China, you obtain high credibility with China companies.

Tips

 

In internet searching, there are generally two kinds of websites you should use. One kind is the major Chinese search engines, like www.baidu.com, www.sohu.com, www.sina.com.cn, www.google.cn, and www.yahoo.cn. Another kind is business web directories maintained by various industrial associations, which could give you very concentrated and structured information of distributors, by products, by market channels, and by industrial applications. You can also find these directory websites through search engines.

• When you set up to visit China, it is highly recommended you to use Gold Key Matching Service provided by US Commercial Services to arrange meeting with reputable China distributors in your area. US Commercial Services work with US Embassy and Consulate Generals in China to provide this service locally with a small fee of $675 per program. One of the big benefits of this service is that you will directly meet the high management of the potential distributors. For more detail, visit http://www.export.gov/comm_svc/goldkey.html
• The equity information of a China distributor is very important, it may be privately owned limited liability company, a government owned company, a company that pertains or is affiliated with a big group of companies, or industrial association, or local government. Such information is the key to understand the capability and marketing channel of the distributor. For example, if you are to sell consumer products to upscale department stores, you may use a private limited liability company. Or if you are to sell control devices to energy industry, you may want to work with a distributor that can help you go through necessary regulatory process.
• In developing relationship with China distributors, you need to repeatedly exchange information with them, discussing business plan, marketing support and launch plan, etc. In the cross-culture and cross-system environment, intensive communication is the key to establish firm relationship. When proper, sign a memorandum of understanding (MOU) with the idea distributor, expressing the intention of cooperation. MOU has very important symbolic significance of confirming business relationship in Asia.
• In China very few distributors can operate national wide. You may need to find many distributors to cover the whole market. But you should start with working with one in a major city.
• There are sayings that working with China distributors is difficult. Yes, it is. However, that would be where the opportunity exists. Once you get through, the transaction cost will become your profit and the entry barrier will help protect yourself from competition.
  

How to Find China Supplier

Suppose you come up with a product idea or think you have market channels for certain products, and you want to find a supplier in China because of the low product development cost and low production cost there, then read on. If you google the product name or concept, you will find tons of China suppliers / manufacturers. However, you still think you have not got one, because you want to find a capable and reliable one that would satisfy your specific needs and have good desire to do business with you. Many people get frustrated because they have been communicating with suppliers in China for months, but finally feel difficult to move forward. The reason, most likely, is that they did not find the suitable one at the beginning. To successfully find a suitable China supplier, you need a strategy - understand what you need, what are available, what are the steps, and what to expect. This strategy will consist of awareness, knowledge and a good amount of homework. Below are some practical steps to find a suitable China suppliers of yours.

Steps

1. To understand what you need, you need to first know what are available, and categorize and analyze those available. Here are some important category concerns for you to think about suppliers specific to China's business practices: manufacturer vs. 3rd-party supplier; Big corporation vs. small family owned; 3rd-party supplier with in-house product development capability vs. 3rd-party supplier just buy-in and sell-out; vertically integrated manufacturer vs. assembly-based manufacturer; company with export license vs. company without export license, coastal location vs. inland location, etc. Proper categorizing and analyzing of the types of the suppliers will help you understand what you need. For example, if you just need to import products in a narrow range, you may choose a manufacturer other than a 3rd-party supplier. If you are a small business and need dedicated attention, you may want to develop good relationship with a small family owned business.
2. When you have the awareness of the categories of the suppliers, you can set out to search for them, meanwhile further developed your category system. Then you do not loss your judgment in the massive searching, and act efficiently and effectively. More importantly, understanding the types of suppliers will help the way you approach them tactically and strategically. You are better aware of what to expect and how to get it.
3. Now comes the search job. Internet is always the best place to start with. Don't do it yet. You want to know what you will be doing, and do it efficiently and effectively. Before go online, make a table for recording data like company name, contact information, business scale and scope, category check boxes (important), and notes. Then go on.
4. There are two good ways to do the search, google is always the best to start with. And it is powerful. Generally, if you search by a product name, the first 100 results shows the most relevant suppliers' websites that are serious in that product. Not always though. By googling, you can also find your competitors' information and develop your better sense of market segment and marketing channels. You may also want to try Yahoo, MNS and AltaVista.
5. Another way is to visit famous business directory websites. Alibaba.com and Made-in-China.com could be the best for finding vast China suppliers, with very structured company information, pictures of products and contact information. The directory websites are also excellent resource of industrial knowledge. Some people use Alibaba for the purpose of getting industrial information and price list by contacting the listed suppliers. Some people developed real business through Alibaba.
   Now you are well informed about the business you intend to do. With the categories analysis, and the help of the data table, you are systematically informed and ready to process the data.
6. At this stage, you may like to have an experienced person to help you in analyzing the information. In your strategy, you will also need to include the consideration of the future contracting and operation. You may seek advice from a Chinese who understands Chinese mentality, culture and business practice. You may get the incorrect interpretation even you are visiting the supplier's English website or, you may also omit data that contains key information.
7. Now you may have narrowed down the potential suppliers you want to work with in a manageable amount. You can go ahead to develop relationship with them. Finally, you will find the ONE. The process can be fun and friend-making experience. Good luck.

Tips

• Analyzing the types of suppliers has strategic importance. It will help you to understand where you are what kind of result to expect, what are things you need to take care of in the mutual cooperation.
• If you send out inquiries through Alibaba.com or Made-in-China.com, you will get tons of replies from suppliers of all kinds. Some guys would continuously send you products info for years, and are able to pass through all sorts spam protection. So you may not use your primary email account to register with Alibaba.com or Made-in-China.com.
• Not always the higher google listed website indicate more serious business of the searching products, some good China suppliers are not good in having their website listed high, while some other internet guy can have their website listed very high. Use your industrial judgment.
• Be aware that the decision-maker may not speak any English, while establishing good relationship (guanxi) with the top management is crucial for long term success.
• Email is good for exchange products specification, catalogue and price list. To establish deeper relationship, phone call is 10 times better than email. Personal meeting is 100 times better than phone call. Every people want to star a business, so you have to show you are more serious in some way. Phone call and meeting surely help. As long as your contact person uses English, you can just go ahead to give that person a phone call. It does not matter how much you and that person could understand each other, you can always follow up with an email. If so, you might be the only 10% potential customers that leave the voice (more physical message than email) with the supplier.

Introducing LinkUSA Program

- Free Chinese Web Directory Service for US Exporters -

LinkUSA program is the first of its kind in the US and China. It is a Chinese language business directory service based on the website www.specspro.com. With this program, you as a US exporter would expect to achieve the following:

? Chinese language advertisement of your company and products
? Increased brand equity of your products in China market place
? Establishment of your preliminary China market presence
? Increased accessibility of your business information to Chinese customers

The service is provided by ChinaLINQ.com LLC for free to US exporters or potential exporters.



Screen shots of the website are as attached.

Why LinkUSA Program

 Your web pages are hosted in China

The hosting server is located at Shanghai, China. Therefore the information is much easily accessible to visitors in China. The page load speed is very much faster in China. The website has been registered with China authorities, particularly finished the ICP registration with the Ministry of Information Industry of China.


We work with various China trade promotion associations and organizations to promote LinkUSA program. Our plan includes using commercial directory services in China to promote this website.
All these measures will substantially increase your exposure to China market and the market channels. Another important benefit is that your business name obtains increased internet value and history in Chinese internet world. That will become important asset of yours for your long term success in China. With LinkUSA, you would achieve these great results for free.

Is L/C a reliable payment tool?

Just 10 years ago, L/C - Letter of Credit was a very popular tool to cross-nation payment. Now L/C is still widely used. The reason that, traditionally, the buyer is hesitate to make prior payment to the seller overseas, while the seller does not like to ship the goods without receiving the payment. Therefore, the buyer and seller, both with desire to conduct the transaction, wish to have a mid-party to guarantee both payment from buyer and shipment from seller. There comes a trustable mid-party, bank. Then comes L/C.

Here is how the L/C works. Buyer, instead making payment directly to the seller, makes a deposit to his local bank. Buyer's local bank sends a statement to seller's bank stating if certain condition satisfied, the buyer's bank will make payment to seller's bank. The condition is normally the submission of certain documents, such as bill of lading, insurance policy, invoice and packing list, etc. Ocean bill of lading is particularly important, because it often represents the title of ownership of the goods. The statement is called documentary letter of credit, short for L/C. When the seller's bank receives the L/C, it will inform the seller the same statement. The seller, after making the shipment, present the required document including bill of lading to the seller's bank. By presenting the required documents, seller provides the evidence that the goods have been shipped out. So, the seller's bank sends the documents to the buyer's bank, and the buyer's bank makes the payment to the seller's bank. Finally the seller's bank makes the payment to the seller, and the buyer's bank transfer the documents to the buyer. With the documents, the buyer can claim the goods from the ocean carrier.

However, L/C is not totally reliable tool. The banks that offer the guarantee just verify the documents. They are not responsible for the move of the physical goods. There are still a lot of commercial risks related to the physical goods, in term of quality, quantity and specifications. In case the seller ignores the L/C, the buyer still need to keep the deposit in the bank until the L/C expires. And L/C is costly and not convenient to use.

Now with the globalization, ease of communication and availability of information, the buy and sell have much better understanding of each other. Mutual trust can be established much more easily. The role of L/C is becoming not so important now. Further more, many other parties can act as trustable mid-party, such as freight forwarders, export management companies and other service providers. On trend it that the buyer is more and more have the whole transportation process under control, in order to have better visibility of the supply chain. Trade term FOB or even EXW now become more and more popular than CIF, that means the buyer has strong control of the transportation, which greatly reduce the risk of the payment.

How to import from China

You may be able to find new business chance or new profit growing point by being able to directly import from China. It can be complicated, but it pays to take the effort for immediate profit and long run success.

Steps

1. Find the products of your interest

There are many sources to find your products. Internet is the easiest one to start with. There are many web listing services. In my view, www.alibaba.com is the best. Register your username on www.alibaba.com website, post the products of your interest, and you will receive tons of products supply information and perhaps price list.

2. Establish relationship with potential suppliers

Select a few potential suppliers to communicate with. Narrow down the ones that you really want to work with. Discuss the price and trade relationship. Obtain product samples. Discuss shipping and payment terms. Gather all necessary information to prepare for placing a trial order.

3. Understand trade terms and use them

Before placing any order, you need to understand and confirm with your suppliers about shipment terms. Most popular are FOB and CIF, as well as payment terms. These are closely related to your landing cost calculation and risk assessment. You can consult an import management company and a freight forwarder for detail break-down on the costs and risks. You can also use an import management company to negotiate the trade terms.

4. Do your homework on compliance issues

You need to understand the relevant import compliance regulations before hand. Besides US Customs and Border Protection, other government authorities like USDA, FDA, DOT, and ATF also regulate the importation. Pay particular attention when you import textile products from China. Go to the websites of these agencies to understand, register or download the forms. Compliance issues can be very complicated for some products. It is highly recommended to consult a good Customs House Broker before placing any order.

5. Select a forwarder and Customs House broker

Go to your local international trade organization/association and Customs office to find the list. Visit them, and select the one you like. For the first time importer, I would suggest you to use more individualized services, because you need more attention than you would expect.

6. Place a trial order

If everything goes fine. Please a trial order with a written Purchase Order. In the purchase order, besides type out the detail description of the products and trade terms, list all needed shipping documents.

7. Transportation and Customs clearance

Your forwarder and Customs broker are take care of your transportation and Customs clearance. However, you also need to track the process and assistance, such as providing additional products information and endorsing bill of lading. You need to issue a power of attorney to your broker and purchase Customs bond for your importation.

8. Receive the products and keep the records

Now you can go to your next step to sell your products and make profit. Now you are on the track.

Tips

Pay attention to the kind of business of your supplier, are they manufacturers, or 3rd party suppliers? Compare the advantage and disadvantage. Manufacturers may have faster response in the process of product development, while 3rd-party suppliers has a broader channels that can satisfy your other needs in the future. Some are 4th-party suppliers that I do not recommend to work with.

Establish healthy personal relationship with the key employees of your supplier is very important in doing business with Chinese people.

You need to have a realistic consideration of the landing cost. There may be many hidden costs. The best way is to consult an import management company.

Letter of Credit is commonly used in trade with China. Go to your bank to get detail formality and cost.

Export agents in China are very commonly hired by China exporters. Some of these export agents are also 3rd-party suppliers, others just provide export services.

Neglecting compliance can be very costly. Not only you may need to pay unexpected and very high Customs duty such as anti-dumping duty, but also you may risk delay the Customs clearance and pay the expensive storage fee at the railway station or container yard.

If solid wood packaging material is used, talk to your broker. Sometimes pallet packing is necessary to reduce the transportation cost during the process of loading and unloading. Talk to your forwarder for detail.

Composed by Cathy Huang, March 8, 2006

www.chinalinq.com

#1 US exporter - waste paper to China

People may find with surprise that that the number one post is taken by a wastepaper exporter to China. America Chung Nam Inc was founded by a husband-and-wife Chinese immigrants couple. They now export more than 20,000 TEUs (20' container equivilent unit) of waste paper to China. A big part of these waste paper come back as cartons packed with commodities imported by companies like Wal-mart. (The pollution is left in China. Hopefully Chinese have regulation, fund plus technology to address this problem.) The way American people consuming paper is amaizing.

One very interesting thing is that this #1 exporter in the US has not set up a website yet. They have a domain name though www.acni.net. I checked that this domain name is registered in 1998. Apparently, a website is not necessary for America Chung Nam, otherwise this #1 company can easy put up a very fancy one with all kind of state-of-the-art technology in planning, tracking, booking and back-office system. By the way, I estimate that this company pays about $500 - $600 million for transportation cost per year. They have their own fleet and logistic facilities.

I found another waste paper exporter (30,000 TEUs) a year, ranked # 25 US exporter in 2005. The URL is www.geocities.co.jp/wallstreet/4228/yaoyang.htm. Isn't that interesting for such a "big" company?

About top 100 US importer and exporter

Top 100 US importers are dominated by big retailers.
Top 100 US exporters are dominated by paper exporter, especially waste paper exporter to China.

The list of top 100 exporter are interesting. A lot of companies in this list are unheard of for many people. The main reason is that they are in B2B business.

19 companies out of the top 100 export paper related products. Because this list is ranked by export shipment volume, not by value, most companies listed here export low value raw materials, such as paper, food, agri-products, chemicals. US export goes to two extremes, one is low value raw material related products, another is high tech products like electronic products (integrated circuit, telecom equipment) and aircrafts. Boeing exported about $7 billion last year.

To the contrary of the exporters, most importer are well known in the US. I counted that 35 of top 100 are big retailers. Compared to US export products, the import products are mid-valued. Most are ready to be sold to final consumers.

If you are thinking for start some kind of import or export business, I would suggest you first pay attention to the trend and pattern as you can see from the top 100 importer and top 100 exporter, and secondly think of what you can do with China.

Top 100 US Exporters

These companies are among top 100 US exporters (by shipment volume)

Data from Journal of Commerce

I will make some comments on this list in my next blog.

1) America Chung Nam Inc - largest wastepaper export to China. 200,000 TEU's a year. www.acni.net not set up yet.

2) Weyhaeuser - Forest/Paper products exporter - owns Westwood Shipping

3) DuPont

4) Cargill Inc - privately owned

5) MeadWestvaco - Forest/Paper Products exporter

6) Dow Chemical - Chemicals/Plastics/Chemicals

7) Cellmark Group - Paper

8) Procter & Gamble Co.

9) BASF Corp - Chemical

10) DaimlerChrysler

11) GE

12) Altria Group - Formerly Philip Morris

13) Allenberg Cotton - Cotton

14) Exxon Mobil Chemical

15) International Paper

16) Engelhard Corp - Chemicals / Metals

17) Allan - Paper

18) Eastman Chemical - Chemical

19) Georgria-Pacific Group - Paper/Forest products/chemicals

20) Canusa Hershman Recycling Co. - Paper

24) Ford Motor

25) Yao Yang Enterprises - Paper, the URL is interesting: www.geocities.co.jp/wallstreet/4228/yaoyang.htm

29) ConAgra Foods

31) Itochu Chemicals America

34) Sears Holding

36) Caterpillar

38) Potential Industries Inc - waste paper

40) Goodyear

55) 3M

63) Dole

65) American Honda

71) BP

74) Chevron Corp

75) Honeywell

79) Whirlpool

92) Eastman Kodak

95) Marubeni America

98) USPS

Among the top hunderd, 19 of them export paper related items, mostly pulp and waste paper

Top 100 US importers and China

These companies are among top-100 US importers that has significant import from China

(by shipment volume)

Data come from Journal of Commerce.

 

1) Wal-Mart

2) Home Depot

3) Target

4) Sears

7) Ikea - Danish furniture maker has more than 200 stores worldwide

8) Lowe's - second-largest home improvement retailer, 1075 stores in the US

11) Ashley Furniture Industries - Private manufacturer and distributor that has 90 Ashley Furniture Home Stores

17) Williams - Sonoma, Inc - has more than 530 stores

18) Mattel Inc - Largest US toymaker owns Fisher Price, Barbie, American Girl and Hot Wheels

19) Pier 1 Import - you already know it very well

20) Nike Inc - you know it

23) JC Penney Corp

27) Dollar General - has 7551 small stores, mostly in south and Midwest

28) Toys "R" Us Inc - 1500 stores in the US

29) Big Lots Inc - 1400 stores and 5 distribution centers

32) Dorel Industries - Headquarter in Canada,  furniture and home furnishings

37) Michaels Stores

38) Whirlpool - manufactures in 50 countries

40) Walgreen Co. - 4600 stores

41) Rooms to Go - 100 stores (private)

43) Federated Department Store Inc - Macy's and bloomingdale

50) Reebok International Ltd - 200 stores

53) Dollar Tree Stores - 2500 stores

57) Family Dollars - 5600 stores

58) Retail Ventures - 110 discount stores

59) TJX Cos. - TJ Maxx, Marshalls, Bob Stores, AJ Wright

61) Conair - private

62) Liz Claiborne Inc - sell to department stores and its own 400 specialty stores

68) Fox Conn Industries - Hon Hai Precision Industries - a Taiwan ODM.

71) Gap Stores - 3000 stores

72) TPV International - Taiwan based manufacturer of color tv and display monitors

75) Best Buy - 700 stores - I know it very well.

76) Bombay Co - 550 stores - you know it well

80) Haier America Trading - a Chinese company

81) Hasbro Inc - second-largest US toymaker

82) Salton Inc - Gourmet appliance company 15 brands

84) Linens' n things - retail home goods - about 500 stores in the US. (www.int.com)

85) Office Max Inc

87) Coaster of America - Dealer network for importer / distributor of ready-to-assemble furniture and home textiles from Asia

88) Staples Inc - Office-supply retailers, 1680 stores in 21 countries

94) Applica Consumer Products - manufacturer of appliances

97) Hamilton Beach / Proctor-Silex Inc - mfg of appliances