Electronics products sourcing in China: Things you need to know

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Electronic products are always best sellers on the market. With young people being the major consumer group, the electronic products are upgraded frequently. Among all enquires Chinawhy received, the electronic products sourcing inquiries has always been the most.  

In sourcing electronic products, foreign buyers may come across all kinds of misleading issues. This article will focus on introducing electronics product sourcing resources and experience, explaining common misconceptions and identifying scams.

Hot electronic products in the market

Green hand importers or electronic products buyers would always ask me which kinds of electronic products sell well. According to Chinawhy’s statistics on enquiry and by comparing electronic products from several major electronics B2B, B2C platforms, the following are our recommendations:
A
Radio (AM/FM radio, multi function radio, with iphone dock)
TV (CRT TV, LED ,LCD ),
Speaker ( PC speaker, TV speaker, sound bar, home theatre speaker system , buletooth speaker), earphone (iphone /ipod/ipad earphone, normal earphone, bluetooth earphone, moblie earphone) , DVD (protable DVD player)
CD player
CD boomBOX (include can play the CD, MP3, VCD, DVD , IPOHNE, IPOD),
MINI HIFI system ( CD,DVD, VCD) ,
MP3, MP4 player,
microphone (wire, wireless),
wireless TV link,
Mouse ( wire, and wireless, bluetooth) ,
Keyboard (wire, and wireless, bluetooth),
Battery, adaptor, charger (for phone, notebook, game player) ,
PC camera,  
car radio product ( CD, DVD, earphone) ,
Amplier,  
Cable(HDMI, AV , RCA, Scart ),
Wireless door bell,
Photo frame,
Set top box.
Iphone accessories.
Samsung Galaxy accessories.

B.
Card reader;
USB flash disk
SD storage card
Digital camera
Photo scanner
e-book
table PC
tablet
Side-line range of computer( hardpan; ROM; CD-ROM; case; portable power source, etc)
Mobile phone
Monitoring unit
Video
Telephone
Network card
Router
POS machine
Game machine

How to buy electronics products from China?

1. Customs statistics

Many countries now open up their customs data and statistics to the public, which are of great importance to the procurement. For example, through the customs data, you can dig out all the necessary details about the Chinese tablet suppliers: how many products they export to your country, whether they provide products to your competitors, the quality of the customer groups, and whether customers will place reorders (reorder is an important factor, do not deal with suppliers who failed to get reorders from the customers).

Chinawhy exclusive custom database screenshot

By digging into the customs statistics, the following aspects of a supplier can be known:
Business standing ( based on export volume)
Competitiveness of their products and service (based on repeat orders from regular clients)

Chinawhy has already purchased Customs Data from 18 countries, including US, El Salvador, Guatemala, Nicaragua, Costa Rica, Honduras, Peru, Colombia, Paraguay, Uruguay, Ecuador, Argentina, Panama, Chile, Venezuela, Russia, Ukraine, and Pakistan.

For example, for a buyer from Colombia would like to purchase tablet from China, through customs data, the following aspects of the supplier can be examined:

  • Whether the supplier has provided products to the Colombia.
  • Whether the supplier has provided products Spanish-speaking neighboring countries such as  Peru and Ecuador.
  • If the supplier has provided products to the Colombia, then to whom? Which company? And is there any reorders?
  • If the supplier has not yet provided products to Colombia, but delivered large amount of products to the neighboring countries like Peru and Ecuador, then the Colombia buyer may have a large chance to be the agent for the supplier in Colombia.
  • If a supplier has not yet provided products to Colombia, South America as a whole, or all 18 countries we can trace back to. Then one thing can be sure about the supplier is that it is not doing well in business.


Therefore, Custom data can help to know about a supplier creditworthy evaluation, business conditions, the competitiveness of its products and services. No other resources and channels (including exhibitions , Alibaba ) can be compared to these statistics in this respect.

2. Alibaba

Alibaba can facilitate the buyers to find supplier more easily, which is Alibaba's advantage, but the disadvantage is that the suppliers’ creditworthiness and competitiveness are hard to define through Alibaba.

As a sourcing company, Chinawhy also uses the Alibaba platform. Here is how we purchase: firstly, by using our procurement software, we send inquires to 800-1000 Suppliers and then delete the number of quotations (based on price, professionalism, service attitude , etc. ). Eventually we will pick out a short list (3 – 5 suppliers). And among them, , we will determine the final top supplier and backup supplier through sampling and examining their customs export platform records.

Chinawhy sourcing pro software screenshot

3. Trade shows

Trade shows are perhaps the oldest way to find suppliers. With the rise of e-commerce, the exhibitions are not as important as before. But it still boasts incomparable advantages.

At the trade shows, we can see:
1) people
2) products

We have always recommended that buyers should get to know and correctly judge a supplier through its customers, understand a company's moral bottom line from its owner, and see a company's current development through its salesmen.

The moral bottom line will help us to know what the company would do if the worst circumstances took place, for instance quality deficiency, and claims for compensation.

And as the salesman is responsible for dealing with orders, his or her expertise, language skills, communication skills will directly affect the execution of your orders. If the salesman cannot even manage Basic English communication and barely knows enough about the products, makes and breaks promises easily, can you trust the supplier (actually it is the salesman) with your orders?

If buyers want to look for Chinese electronic products suppliers through exhibition, we mainly suggest the following exhibitions:
Canton Fair (phase 1)
HKTDC Hong Kong Electronics Fair

4. Wholesale Market

If the buyer want to purchase large varieties of products, and the purchase for each product is small in quantity (not enough to reach the factory MOQ), then the most viable strategy is to purchase from the purchase Shenzhen electronics wholesale market. There are 2 electronics wholesale market in Shenzhen: Shenzhen Seg Electronics Wholesale Market(or Shenzhen Saige Electronics Wholesale Market) and Shenzhen Huaqiang Electronics Wholesale Market.

As most sellers at the electronics wholesale market in Shenzhen can neither speak English nor take US dollars as the payment, not to mention arranging export. Therefore, if foreign buyers want to purchase from this market, it is better for them to find a reliable sourcing company to manage the entire procurement process, including:
Product sourcing
Wholesale market visit
Sample arrangement
Contract arrangement (Important)
Payment
Quality control (Important)
Consolidation and Shipping
Exportation

When buying electronic products from the wholesale market, there are mainly two risks to be considered:

Shenzhen Seg Electronics Wholesale Market

Quality of the products
Often in a wholesale market, dishonest sellers would pass off the sham as the genuine and the market was filled with many inferior products or products with inconsistent quality. Therefore, the sourcing company you choose must be familiar with and frequent the wholesale market and can identify the honest sellers from the dishonest ones. Besides, the sourcing company must be familiar with electronic products and their quality control.  Before shipment, the sourcing company must send representatives to inspect the products in a rigorous manner.

Risks
As sellers at wholesale markets are all small businesses without a company body, most of the payment has to be made in cash. Therefore, your sourcing company must well control procurement and transaction process.

Hong Kong's offshore accounts
Hong Kong offshore company refers to supplier register a company in HongKong with neither office nor employee, just a shell company. And the supplier lives in mainland China (for electronic product suppliers, mostly in Shenzhen and other cities in Guangdong Province) to remote control the offshore company.

We note that the vast majority of electronic products supplier are dealing with customers through Hong Kong offshore company (at least 80 % of the electronic product suppliers would operate thusly)

It is risky to deal with an off-shore company, to know more reasons, please refer to this article.

Hongkong offshore company, basically is an empty company, without office, staff, or anything in Hongkong. It only cost you a few hundred of USD to have an offshore company in Hongkong.

If the buyer has a contractual dispute with a supplier(poor quality or late delivery), if you are dealing with their offshore company in Hongkong, where should you sue the supplier?

If you sue them in Hongkong, you win the lawsuit, then you find out that they don’t have anything in Hongkong to compensate your loss. If you sue them in mainland China, the court won’t accept the case, as this is not a company registered in mainland China. As you know, Hongkong and mainland China adopt different law system.

Given that most electronics companies operate through offshore accounts in Hong Kong, we believe that if these companies have entities (brick and Mortar Company) in mainland China, foreign buyers can sign a contract with the entity and state in the contract that payments shall be paid to their Hong Kong offshore company.

If the supplier only has a Hong Kong offshore company without any brick and mortar company, we do not recommend to trade with them.

Do not buy brand name products
For some new, inexperienced foreign buyers, they might think that since China is the world's factory (iphone is produced in China), everything in China will be cheaper. Isn’t is a good business model to import iphone 5 from China and then wholesale or retail them in their country?

Indeed, products made in China are enjoying certain advantages, but world-renowned brand name products, such as iphone 5, Dell Laptop, Samsung Galaxy are not the same case. As a matter of fact, China places higher taxes on these products, making the price higher than in many other parts of the world.

Iphone 5 is produced at Foxconn in China. But Foxconn has no right to sell iphone 5. It just provides foundry services and gets the processing charges. After the iPhone 5 left the Foxconn factory, they will be unified through Apple's distribution channels according to a unified global pricing strategy and sold to various countries around the world.

The Apple Company would be foolish to set the price of iphone5 at 150 USD in China (most fraud will tempt green hand buyers with low price, such as 100 or 150 U.S. dollars for an iphone5). If the price of iphone5 is indeed 150 USD in China, then plus the cost of export, air transport, and the cost of import to USA, the customs duties, value added tax, as well as logistics expenses, when it was eventually sold on the USA market,the price will still be lower than those iphone5 produced and sold in the continental United States., which is a case that will never happen. Therefore, any supplier who claim that he or she can supply cheap Iphone(100 dollars to 150 dollars) would most likely be a liar.

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Comments

1 Responses to " Electronics products sourcing in China: Things you need to know "

  1. IGNACIO on  MAY   11th , 2014 12:53 AM

    THANKS. THOSE ARE NICE TIPS.

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