How to find a reliable overseas manufacturer for your products

BY READERS DIGEST

17th Dec 2020 Managing your Money

As an entrepreneur, it can be pretty exciting to finally get to the part where your ideas, strategies, and designs are finally coming to life. However, finding the right manufacturer for your products can be a complicated task.
Entrepreneurs who are only starting out can sometimes underestimate the importance of finding the right manufacturer. They might simply go with what everyone else is doing and jump too quickly into the process because they just can't wait to get started.
If you want to provide quality products, make good profits, and have a long-term partnership with a manufacturer who can properly meet your requirements, you need to take the right steps upfront.
But before getting into finding the right overseas manufacturer for your needs, you should think about your business strategy.

Your Budget and Business Strategy

Before even thinking about finding a manufacturer for your products, you need to think about your budget, gross margins, and strategies for your business. Without considering your funding and the amount you can spend, you might head down a dangerous path.

You might see that your planned costs might not be right when you look into getting your products manufactured. Sometimes, it happens because of unexpected middlemen. That is why you need to properly research the manufacturer to determine how much you should be paying for your products.

Also, don't forget to account for other costs that can decrease your profits, such as ads and website costs.

Understanding the Manufacturing Industry

Before you pick a manufacturer, you should find out what the manufacturing industry is made of. Understanding the manufacturing services and the middlemen out there can help you choose the best choice for your products.

You should compare domestic and overseas manufacturing options. Depending on the number of products you are planning to produce and your business' size, you might usually find international manufacturers more suitable. Domestic is generally the choice for companies who want their manufacturing to align with their brand image.

Unless you're going for the All-American brand image or something, overseas manufacturers make much more sense. However, there are three categories of manufacturing services that you should know about: trading companies, wholesalers, and factories.

Wholesalers

The wholesalers seem like a very attractive option for entrepreneurs just starting out. Wholesalers purchase products in massive quantities and have them stored in the country. This may make it very convenient for you because you can save on shipping and get the products comparatively faster.

However, you don't know the background of these products. Also, the wholesalers upcharge the products and make their money.

So if you were thinking about wholesalers, it might be beneficial to reconsider. You can read about how much money businesses have saved by direct going to factories instead, or you can compare the cost yourself.

Trading Companies

A trading company basically has many close relationships with several factories. This allows them to offer products to businesses in a wide range of categories. However, they don't have any factories of their own.

These companies also add a percentage on top of the actual product cost and sell it to you. Thereby increasing your product costs. If you simply go directly to a factory, you can save money in getting the products manufactured.

But the problem is that many trading companies pretend that they manufacture the products and have one or more factories. If someone is saying they have a factory, can produce the products, and does deliver, you might see nothing wrong. But in reality, you will be overpaying for the products with these trading companies.

Other than the costs, you will have a lot of trouble holding them accountable if some products turn out to be defective. Since they are in the business of making money and don't really want any problems, you might "not be able to communicate" when any issues arise. Since you probably don't know what factory made the product, you will be stuck.

Factories

The best option for your manufacturing needs is going directly to the manufacturers or factories to make the most profits and have a good company reputation.

Since this is the best choice, you might already have understood that it's not going to be easy. Good things don't usually come easily. However, many sources can put you in touch with the right manufacturers.

You need to understand that the factory offering the lowest rates in the market isn't necessarily the best option. Having a business shouldn't be about making a quick buck and getting some cash in your pocket. Providing quality products is one of the most crucial things for the success of a business.

Getting to the sources, you might already know of many websites online that connect factories to businesses. While some of the companies on there are actually factories, most of them are trading companies. Sites like Alibaba are one of the popular examples where you can find a lot of trading companies.

If you see the term "industry" or "trading company" in their name, it's most likely not a factory. If their product category is massive and not much of it stems from the same raw materials, it might not be a factory.

So you know that it's not easy to find a manufacturer or a factory for your products. A great trick you can use is to send an audit team there. You can contact any manufacturer and ask them if you can send an audit team to review the factory. If they have nothing to hide, they will agree, and you can send an audit team down there. If they disagree or don't reply, then it's best to look around more.

Sending an auditing team can also allow you to properly understand important things like their quality control measures, production capabilities, and the factory's profile. All of which you should know to make long-term decisions. You can contact Jonble, they are cost-effective and can provide the services.

Ask Potential Manufacturers the Right Questions

When you're talking to a manufacturer, it's hard not to get straight to the costs. But you need to truly understand the level of quality they can provide and their service's legitimacy.

You can do that by asking them the following questions:

Do you have a minimum and maximum order quantity?

To determine how capable the manufacturer will be for your business in the future, you need to know their manufacturing capabilities. Since business can be unpredictable, you need to know about the maximum and minimum order quantities.

If it doesn't serve your needs and they aren't willing to negotiate, then move on.

What is your average turnaround time?

Time really matters a lot in business. Suppose you don't get your products on time. In that case, you won't be able to determine proper reorder levels for future orders and not be able to keep your customers happy. It will be very stressful overall.

However, it will be hard for them to give you an accurate turnaround time before making a sample or a prototype. So an estimate should be good enough to start.

Can I review your company with my auditing team? Can I review your business license?

You might've already read about the importance of getting an audit from a third party of the manufacturer above. Basically, it can help you find out how good and legit the factory is.

You could also ask them about reviewing their business license. It might seem intrusive, but it can help you determine their credibility and legitimacy. You can do this before sending an auditing team.

Could you provide the names of some brands you have previously worked with?

Asking them about the companies they have worked with or are working with allows you to contact those businesses and ask them about their experience.

If you haven't heard of the company they mention, do some research into it before making contact.

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