How do you do business with the suppliers in China？

How do you do business with the suppliers in China, how do you negotiate with them, how do you set up a good relationship with them?

Here I would like to take an example of LCD/LED TV to explain to you.

 

1. 1. How do you find the suppliers for LCD/LED TVs?
   1. you can find them through Alibaba.com or Globalsources.com, but big suppliers don’t do ads. on these kinds of websites.
   2. Canton Fair or Hong Kong Fair. Big and serious suppliers spend money on the trade shows, because they think that serious.
   3. You can find the suppliers through an interpreter like me, I have visited more than 15 LCD/LED TV suppliers in Shenzhen.

 

1. 2. What are the trade terms with the manufacturers in Shenzhen China.

1. Payment: Almost all the suppliers in China want at least 30% deposit when you place the 1st and 2nd order, and 70% before loading the containers, and then they can accept L/C at sight later on, so please don’t waste your time trying to negotiate with your desirable terms, they prefer not to do any business if you don’t follow their terms. Some big companies are willing to give you 4% discount for T/T, 2% for L/C at sight, they are willing to give you better price rather than give you better payment terms.
2. Deliver lead: Most of the TV suppliers have a 30 day delivery time, and 35 to 40 days for the first order, because they need to get your logo graphic and confirmation of all the information they need to complete your order. This is negotiable, it depends on how busy their production lines are, how many components are in stock, and how busy their people are. However, as for TV, they need to purchase TV panel, electronics parts, and cabinet, this will take some time depending on how close they are with their suppliers.
3. C. Quality: Most of the suppliers are buying A grade panel, which is usually 70% or 80% no bright dots, 20% to 30% 3,3,5 which means that no more than 3 dots on the A zone, no more than 3 dots on the B zone, in total no more than 5 dots on the whole screen.
4. D: Warranty: most of the TV vendors provide 1 year warranty or 1% spare parts (no including panel and cabinet, only electronics boards, remote control and cables.)
5. E: Price: most of the suppliers are very honest on the prices, some Indian customers are trying to negotiate and get a better price, sometimes you will just insult them and will only make the relationship worse if you are trying so hard on the price negotiate. If you really don’t trust their prices, you can just find more suppliers to compare the prices. If the suppliers are really willing to do business with you, they will offer 2 to 4% discount, maximum 5%, but their services and the following-up of orders might be worse if they find more better customers later on.
6. F: Quantity: most of the electronics suppliers will request a MOQ of 1000pieces. or a 20’ container, some good suppliers are willing to do it with 500pieces. They can’t accept 100pieces to 300pieces. the reason is very simple, the cost to deliver your order include marketing, sales, purchasing of parts, set up production line, labor operation time and materials, and the only difference between small order and big order are basically labor time and materials which don’t cost that much. And the most important reason is that their suppliers are not willing to accept less than 500piece order. If you are willing to pay much more for 300pieces, say 30% or 40% more, they are still not willing to do it, however this is a simple math, 300*(1+40%)=420, then why don’t you buy 500pieces. For your information, most of the suppliers don’t have any electronics product in stock, they might have some samples though. If you need to know exactly why, you will need to know the manufacture process, more information on http://www.interpretershenzhen.com/electronics-product-manufacture-process

 

1. 3. What are the LCD/LED factories like?

Most of these factories only have one or two production lines (assembly lines), only some big companies can make their own electronics boards (The main chipsets are mostly from Mstar the models are usually MST6M181 and MST6M182), very few suppliers have their injection machine to produce the plastic cabinets, only a few big companies have open cell technology for the panel, the panels are mainly from Chimei, some companies are using LG/Samsung/AUO/BOE

This assembly line can produce 100set per hour, medium and big companies can produce 200 thousands set per month.

 

As the LED TV are getting cheaper and cheaper, most of the companies are only now producing LED TVs instead of LCD TVs, CRT TVs are now out date.

 

 

1. 4. How much do the LED TVs cost at Shenzhen Manufacturers?

 

A good price lists from a big LED TV suppliers based on a 40’ container:

15.6” 69USD

18.5” 88USD

21.6” 110USD

23.6“ 129USD

26“  162USD

32“  189USD

42“  349USD

One 20’ container can take 700set of 22” LED TV.

 

1. 5. How do you build up good relationships with the manufacturers in China?

 

If you have very good relationship with the suppliers in China, you will get very good price at the very beginning, and your will get good product/ good deliver lead as well as services after you place the order. Here are some tips to build good relationships:

1. Hire someone who speaks good English to be your interpreter and a private driver when you visit them, when the suppliers see this, they will understand that you are visiting many suppliers and you really want to do business, if you are a serious customers, you will get the best price at the beginning.
2. Hire someone to be your business guide and consultant who is very experienced in the electronics and international business. This person can act as your eyes and ears after you place the orders. The suppliers have to deliver your order as soon as they can because you have someone who is chasing them to do things for you, at least they don’t forget your order.

Hire an inspector to check your product before shipping. Sometimes it is not because that the suppliers want to deliver your bad quality product, but because the sales persons are too busy or their quality people are careless, so they might forget this or that, or just make a small mistake like this or that, so to be sure of your order, double check is always go

Why do you have to find the manufacturers?

Some overseas buyers always want to find the manufacturers, they don't want to go through those trading companies, they think if they deal with the manufacturers directly, they can save money. However,  in some cases, you will lose money and get worse services if you deal with the manufacturers directly. If you really want to deal with the manufacturers, and you also don't want to go through the trading companies, why don't you hire a trading agent who know your language and manufacturing process. This is a good website for you to find a trading agent as most of the freelance interpreters here speak good English, and they know the international trading process, they can be your business guides and consultants.

1. Some big manufacturers will have their marketing and sales team, they attend all the big trade shows, they don't advertise so much online, because they think the serious and big buyers will attend the trade shows as well,  the customers that they get from the internet are mostly small "fishes", and they don't treat these small fishes very well, sometimes they just ignore their emails, if you are a small fish, when you place the orders to them, the delivery time can be very long.

2, Small to Medium size of factories and the trading companies like to advertise a lot online, they spend 2 to 10 thousands USD on Alibaba, Made-in-China and Global Sources, just to be members, and spend time and human resource to update their product and answer inquiries.

 

3.  Some small manufacturers can't afford to be a member on these international website, they spend 400USD to 1000USD on the local Alibaba, and they can't afford to hire someone who speak English, they do not have an export license, so they have problem in selling product overseas directly, they have to reply on the trading companies.

You might remember the German philosopher Hegel's saying, trading companies have their reasons to exist, and sometimes they are very professional, they provide very good services, they are good for certain types of customers, they get paid just because they add value to your transation.

Electronics product Manufacture Process

---What do you need to know if you want to customize your products and have them manufactured in China?

As an interpreter and translator, I speak both English and Chinese, and I have been helping business people find suppliers, the suppliers always want an order of minimum 1000PCS, and I need to explain to my clients again and again why the suppliers need so many, that is why I wrote the following explanation.

 

 

If you are selling some consumer electronics product, and you want to differentiate from your competitors, you will need to customize your product and make it special and different. However you need to produce 100 or 200 demo samples first to show to your customers, and if your customers like your product, you will place a big order to your suppliers.

Then you start to find and contact some good suppliers (you might want to hire someone who speaks both English and Chinese to help you), the suppliers will tell you that their MOQ (Minimum Order Quantity) is 1000 pieces, if you need samples, they can hand-make one or two for you which they would call it “prototype”, and the quality of the prototype is not as good as the one made by machine in massive production, from this prototype, you can only see what your product will look like in reality other than on the computer. A prototype is quick necessary because if there is anything you don’t like, you can change it easily.

Why would the suppliers ask for a MOQ of 1000 PCS?

Because what you need is not exactly what they are currently producing, you need to have something different, you might want to change the mechanical parts, or features and functions, or packaging and printing.

1. If you want to change the mechanical parts,

your manufacture will need to develop a mold or tooling, a mold costs from US$20,000 to US$150,000, when it is done, they will install it on a injection machine, and put some plastic material in it to inject what you need, each part can be finished in just a few seconds. If you are willing to pay for the mold fee, they will be willing inject as many parts as you like, every extra part will cost very little money (mainly the plastic material cost), if you don’t want to pay for the mold fee, you will be asked to place a very big order so that they can earn their mold fee back.

 

 

2. If you need to change the features and functions of your electronics product,

your manufacture will need to change the electronics and software, that means that they need to re-design the layout of the PCB (printed circuit board), have a new list of components, and re-program on the chipset. The PCB is done by machine, how they mount the components on the PCB is called PCBA (printed circuit board assembly), PCBA is mostly done by a machine called SMT (Surface Mount Technology) machine. Your suppliers are usually just assembly factories, most of them don’t own the SMT machines, so they have to subcontract this job to the companies who own this machine. The suppliers that own the SMT machines will need to buy or produce PCBs,  and buy electronics components from the BOM list, the components are ICs, resistor, capacitors and etc., one PCBA usually consists of 50 to 500 different kinds of components, and most of the components are in reel or bag, each reel or bag has 1000, 2000, 5000 or 10,000PCS. Once all the components are ready (sometimes it takes weeks to find the exact component) and installed on the SMT machine, the machine can produce thousands of boards in one day.

 

 

 

 

 

 

 

 

3. If you just want to change the package and printing on the box,

your suppliers will need to subcontract this jobs to a packaging company that they have been working with. The packaging company will convert your printing design in an AI file which is a readable file for the printing machine. The packaging company will need an order of 1000pcs each time.

 

 

 

4. In China, most of the suppliers don’t charge you for the consulting and prototype, but you need to show great interest in placing a big order to them, otherwise they will not be  interested in working with you.

In addition, there is not so much difference in marketing and sales cost to the suppliers between 200 PCS order and 2000 PCS order.

As for the customers, you need to get your new electronics certificated your country, in Europe, CE certificate is required, in America FCC or UL is usually required. Your supplier need to submit a sample to a laboratory to get your certificate, and this costs thousands of dollars as well.

If you need someone who is good at electronics manufacture process, please don’t hesitate to contact me, I will be happy to help you by saving you time and money.

What do you need to know if you want to have your item made in China?

---Standard procedure for developing business with Chinese manufacturers.

1. Identify your suppliers/manufacturers online or through tradeshow. You can also use our sourcing services. If you send me a list of these suppliers, we can check and verify if they are legal online.

2. Contact your suppliers/manufacturers, you might need a translator to help you communicate well with them.

3. Visit your suppliers/munufacturers with a local interpreter or a business guide, you can visit multiple factories in one day if they are not far away from each other, it is better if you hire a private driver with a car, some suppliers maybe arrange a driver to pick you up at the hotel, and then send you back to you hotel again, this is not very efficient if you plan on visiting many suppliers.

4. Get quotes from your suppliers/manufacturers, an interpreter or business guide will help you get reasonable prices, if you only want cheap price, or some suppliers would like to offer you very cheap price, but it usually ends up with bad quality on product or service.

5. Order samples or make prototypes at the suppliers that you want to do business with. You local business guide can help you consolidate all the samples from different suppliers, and check them all before ship to you.

6. Get sample or prototype approval. You need to do it yourself, and it is very important.

7. Start trial order. Usually there are a lot of problem and you need good and quick feedback.

8. Place big order. During production, it is better if you arrange an inspector to see how they run the production line, make sure they take good care of your product.

9. Arrange inspection before shipping. This is very important, after checking by your inspector, you will need to pay the balance.

10. Watch your suppliers load the containers. If you trust your suppliers, you don’t need to do that.

http://www.interpretershenzhen.com/how-much-to-pay-for-a-translator-in-shenzhen

Usually it is about US$60 to US$120 (RMB400 to RMB800) per day.

Some smart translators or interpreters like to quote a very low daily rate when they receive an enquiry, they even do free sourcing for their potential clients, and talk with the suppliers that they need commission which is a big part of their income. For me, I never want to get commission from the suppliers, I usually do not do sourcing for my potential clients, I do sourcing for my regular clients though, but I charge my clients for the time I spend, some translators think that I am stupid, but I just want to have a long-term cooperation relationship with my clients.

Some students in college or some new graduated people without much working experience or no experience with overseas people would also like to quote with a very price or even free, and it usually ends up that the people from India or Mid-East coutries would like hire them, as these clients do not really care too much about effeciency and risk, what they really care is this small amount of pay for the translators.

So what is the reasonable rate to hire a translator or interpreter in Shenzhen? If you know how much the apartment rent, food, clothes and transportation cost in Shenzhen, you will have a better idea. A 15 squremeter room with a bed, a toilet and a small kitchen is about RMB800 to RMB1000 in downtown Shenzhen, and RMB500 to RMB700 in the suburbs, a fast food meal for a thin guy in KFC is about RMB20 to RMB30, a regular T-shirt for men in Wal-Mart is about RMB40 to RMB80, a pair of jean is about RMB80 to RMB150.

According to the authorities (All the employers need to claim their employees’ salary to the authorities, the more they claim, the more they pay the tax and social insurance for their employees), the average monthly salary for all the labors and workers in 2008 was RMB3621, in 2009 it was RMB3894, the labor is the big proportion and there are 21.75 working days per month.

Here is a table:

Year	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002
Average Salary	494	679	881	1023	1209	1378	1532	1726	1920	2162	2352

Year	2003	2004	2005	2006	2007	2008	2009	2010
Average Salary	2551	2661	2706	2926	3233	3621	3894	4205

Here is a link to the authority information http://www.szsi.gov.cn/sbjxxgk/tzgg/siywgg/sizs/200905/t20090512_2429.htm

Now you have a better idea how much is reasonable.

http://www.interpretershenzhen.com/how-much-to-pay-for-a-translator-in-shenzhen

Business Negotiation

How do you negotiate with your China suppliers?

First of all you need to know your supplier’s status or capability, you might want to ask the following questions:

1, how many employee do you hire, and ask them to give you details on the numbers of labors, technician, engineers, sales and management people.

2, how big does your factory cover, they will tell you in square meters.

3, what is your monthly production capability, they will probably ask for your order quantity, then you will need to ask what is your deliver lead.

4, what is your complaint rate or defective rate, and what is your warranty policy.

5, what is your MOQ (Minimum Order Quantity)? If I purchase more, what is the discount?

6, How good is your product quality, can I send someone to do inspection before container loading? If you would like to hire someone to do the inspection, no matter what kind of inspector will conduct the inspection, as long as they know that someone will do inspection, the factory needs to make sure the products pass the standards.

7, what is your payment terms, can I pay you with 100% L/C at sight? They will prefer to do T/T for the fist 3 transaction.

8, what is the percentage of your domestic market sales, what countries are your oversea markets? Do you have customers in our country.

9, Based on the condition above, what is the cost per unit?

Secondly, you need to make sure that their month capability fits your order quantity, this is very important.

Copy from http://www.interpretershenzhen.com/business-negotiation

Business Guide and Helper in Shenzhen Electronics market

Are you coming to visit the electronic market in Shenzhen, and you get confused where to go, whether you will buy some fake products, and more over, you find language barrier in the markets because you don't speak Mandarin.
However, if you hire a translator to be your business guide and helper, you will be easier and you can save a lot of time and money when you have an interpreter to accompany you around the market, if you are hiring a male translator, he can even help you carry your luggage.
For this, I set up a website www.ElectronicsShenzhen.com to give foreigners more and more information and guide them around the market online.

Translate for the English Tutors in Shenzhen

I help set up and translate some websites for those foreign English who live in Shenzhen for a long time, I charge them with very reasonal price, and they all enjoy my services, here is one of the websites, www.EnglishTutorsShenzhen.com
If you are looking for a translator for your English Tutoring Services in Shenzhen, please don't hesitate to contact me.

Please be noted that I do translation and advertisement for the English Tutors for free, and when they find students, they will pay me for each student they find through my websites.

What is the future of a translator or interpreter in China?

Some students like to study foreign languages in colleage, and some of them become a translator or interpreter, and some of them work as a translator for a long time before they become something else. But I think in China, translators do not like position for a long period, usually for a few years. Most of the translators are specialized in a certain industry, when they learn enough about their industries, they become something else. One of my friends, Kelly, she knows fashion a lot, after being a translator for a few years, she works hard on fashion and make some money out of this fashion business.

For me, I just want to be a translator or interpreter, but I want to become more and more specialized in the electronics product business, especially in the tablet PC, cell phone and some of the industrial electronics, because this is what I learned in college and what I have been dealt with in the past few years’ working. I know the electronics business keeps changing, and there are so many competitions out there, it is not easy to make money out of it, however, I have no other choice, will just keep on working. Recently, the hottest electronics device is probably the tablet PC such as Ipad, but I think the price of tablet PC’s will drop a lot in the near future, and the capabilities of tablets will increase, many manufacturers are working on that, so I see the future of Tablet PC business is going to be very good, that was why I started www.tabletschina.com, I want to introduce some low cost tablets to foreigners. I even have a crazy idea, I think in the future, the specialized tablet PC (I would call it Dedicated Tablet) that is specific for a certain use will be popular too, one reason is that it is going to be affordable to everybody in the world, another reason is that more and more softwares are will be developed. People can afford to buy a small computer like tablet PC to handle just one thing, so I started www.DedicatedTablet.com as well.

Of course, if there is anything new in the future, I don’t care what electronics device it is going to be, I will keep an eye on that. Another hot electronic thing I guess is LED, LED is very popular now, it is widely used in the goverment projects, but I think it will also be popularly used in the consumer electronics industry soon.

What are a translator's working hours?

I am usually working for my clients less than 8 hours per day, if my client needs me for more than 8 hours, I will have to charge him/her for overtime. It usually starts from 9 A.M. to 6 P.M. , one hour for the lunch.