With the continued rising popularity of e-commerce and sourcing e-commerce products from China, it’s important to connect your store directly with manufacturers. Partners like Alibaba are making it easy to enter the market, but once you’ve found products that work, wouldn’t it be better to cut out the middleman and work directly with the suppliers?
Mark Houng has guided affiliates to Fortune 500 companies through the route to obtaining quality suppliers in the most efficient way possible.
Expect to learn how to source innovative, top-notch products, while getting the right price for quality goods from China – the largest manufacturing country in the world.
Speech by Mark Houng | Founder, Mark Houng Inc.
Mark Houng Speech Transcript
Hello everyone, my name is Mark Houng.
Wow, good crowd here. Good to see you guys. I’m very excited to be here.
So I want to give you a little quick introduction about myself.
I’ve been doing the import-export for business since 1990.
First starting out working with a lot of Fortune 500 companies. Companies like Timberland, Walmart and things like that.
I picked up some experience from there.
I also grew up in a family where my great-grandfather was one of the biggest importers from Taiwan and from China.
So I grew a lot in the environment that I knew I wanted to do import-export business.
Now having said that, any one of you ever had a family business and you thought you can do things better? I was like that.
So I thought “Hey, this thing is easy.”
I went out and did it on my own and I failed miserably.
So what I want to do today is really share with you my experiences. And then help you with understanding a little bit better.
I don’t have a lot of time today but help you get a little bit of foundation to start importing products from China.
So at the end of the session, I will give you an email address and you can just email me.
And I’ll send you the slides in case I cannot cover everything here.
So a quick question, how many of you here have already been importing from China? Raise of hands.
Drop shipping? Okay, perfect.
Importing From China: Pros and Cons
Now let’s talk about the pros and cons of importing from China.
Why do you want to import from China?
I know that a lot of you who raised your hands here, that you want to import from China because you’ve probably done some drop shipping.
And you want to increase your profit.
If you have a brand building that’s gonna be super important that you import directly from the manufacturer.
In fact, if you are doing drop shipping and then you switch to importing directly from a manufacturer, you’ll probably end up paying 25%, 30% less.
So that’s a pretty nice chunk of change for your business.
You can put that into marketing. You can do a whole lot of other things.
Plus if you start importing directly, you cut down your lead time.
Drop Shippers’ Biggest Challenges
One of the biggest challenges for a lot of drop shippers is that it takes too long to dropship from China.
So if you import directly, take it to a warehouse in the state. You can do it instantly. The order comes in, ship out next day, same day if you want.
That cuts your lead time down. A lot of happy customers.
Most products are made in China. So China is one of the biggest manufacturing facility in the world.
You have all kinds of different R&D resources. And it can be extremely profitable.
But if you’ve never done it before, it could be a little bit overwhelming.
However, everything is made in China. Even Apple, JBL, Samsonite, you name it. Any kind of product.
The question is whether your business is ready to take it to China.
So let’s talk about some of the cons.
The language barrier obviously. The cultural differences.
The timezone. So if you’re in the States, in Europe, then they are 8 – 12, 16 hours ahead of you. So it could be a little bit difficult to work with.
And the Chinese laws are different compared to Western law. So you gotta know a little bit about that.
And then the long distance.
When Is China Right For You?
So when is China right for you? What stage of business are you in?
How many people here are doing over 7 figures a year? Raise your hand.
Okay got it.
6 figures? Okay great.
So if you are doing 6 figures or more, then yeah. China could be perfect for you.
Obviously, depending on your industry right.
But if you’re just starting up, and you’re doing say less than a million dollars, one of the things that you can do is work with a few other companies.
That’s why an event like this is so important.
Because then you will meet some people. You will gather some friends. And you can all import together.
And there won’t be a lot of competition as long as you lay out the rules ahead of you.
So if you’re a small business startup, that’s something that you can do.
And if you are mid-sized, doing 7 figures and whatnot, you are able to do that on your own. That’s perfect.
We won’t cover large companies right now, which is a totally different animal.
Challenge To Small Businesses
So now a challenge for a lot of small businesses.
How do I vet suppliers? What about the larger MOQ’s?
The time, how long until they can deliver?
How about legal protection? We’re gonna go over that right now.
And something important for you to know is that a lot of scammers out there are really looking for small businesses.
Because first of all, for small business startups they are the most vulnerable group of people for scammers because they have limited experience.
There’s really no safety net.
So if something happens, you won’t really pursue any type of legal action, you don’t have any kind of legal representative. And that’s difficult.
And it’s just a huge amount of people who are in a small business.
So it’s really easy for them to really go through that list. They can scam Person A, go to B/C/D and on and on and on.
Now business is booming for the scammers.
So learn to protect yourself.
And if you’re smaller, mid-sized business, you have some consistent sales and you’re doing great. Well, that’s fantastic.
hen you have a proven market. Then you are able to bring in customers, then you can order right away.
Find The Right Supplier
So that challenge then will become finding the right supplier that will give you the right profitability and getting a consistent supply.
Getting consistent quality and then hopefully you don’t want to manage too many different suppliers, because that by yourself is a lot of work.
So you want to establish a good relationship with 1, 2, top 3 suppliers.
And from there, you can build all your products. And it just really systemise it, make it more efficient and save yourself a lot of time.
When you are ready to buy from China, make sure that you always audit your supplier.
It’s very different when you do drop shipping.
$10, $5, $1, whatever you are buying versus when you are sending in a $5,000, $10,000 purchase order.
Before you do that, you want to make sure that supplier is not gonna run off with your money.
So be very careful. I always advise my clients who spend a few hundred dollars, do a supplier audit.
Make sure that you can take care of the quality. And that they will be able to sign the bilingual contract.
Because in China, the court of law, they really don’t recognise any type of English documentation.
So what you want to do is make sure that you have a bilingual contract.
And then the minimum order quantity is important as well.
Three Important Factors To Success
Alright, there are three key important factors to your success.
I work with a lot of clients. And the first thing that I talk to them about is, pay attention to price.
But not only price because everybody pays attention to price, right?
The first thing they do is, “Supplier A is giving me $10, and how much can you give me?”
But that’s a big mistake. Because that’s when you get scammed.
Someone will come in and cut you off and say, “Hey I’ll do it for $8”
And you get all excited. You send the money and bang, the supplier disappears or takes forever to deliver.
So you cannot take price as your only consideration.
There is also product quality and the delivery.
Now a good supplier, when you squeeze them too hard, what will happen?
They’ll try to cut the quality. And then you will create customer complaints.
So be very smart.
And make sure that you don’t end up having bad suppliers because you are just too concerned about pricing. And this is one of the hardest parts.
I mean a lot of my students they say, “Yeah I understand this.”
And then what happens is afterward, whenever you talk to them, the first thing they’ll ask you is the price.
But yeah, you just have to consistently remind yourself and work on all three.
You want to think in terms of cost.
The cost of your product, your selling price, cost of your acquisition, which includes the cost of your product, your shipping, your duty, your local delivery.
Do the math ahead of time.
And make sure that it has good quality so you don’t get returns, replacement, and bad customer rap.
Customer service, if you have to hire a lot of customer reps, that’s gonna be a very high cost for you as well.
So make sure you focus on that and you can reduce your returns.
Save yourself a lot of time, get repeat customers, which is always important.
Because you want to save your marketing cost. And nothing will save you more than having a good product.
Quality And Lead Time
So make sure that you have great quality. And with the delivery, you want to cut your lead time.
Make sure that you have a very consistent delivery.
So you can lower your inventory costs. You don’t want to store thousands and thousands of pieces.
Ideally, what you want to do is order a small batch but order consistently.
Not only will that save you money, but will also make sure that you are constantly going back and forth with your supplier.
And with that, they remember you and they will always work with you.
Plan Ahead Of Time
So make sure you plan ahead. Keep track of your delivery time, get products made and delivered.
It’s really, I say half of work, but a lot of time people tell me it’s 80% of work.
Yes, it takes a little bit of time, a little bit of research but you want to make sure, right?
Most of you here are company owners. So you want to make sure that you do focus on this part.
The marketing is all fun and everything.
I love doing that myself, but you want to make sure that everything on the back, or rather the backbone of your business is your product.
So you want to make sure that you plan ahead of time. Spend a little time researching everything. Hire the right team, the right people.
And that will make your business thrive.
We took a business from doing $2 million a year, and in 4 years to $35 million.
Marketing, everything the same, but the only difference is we really improved on the quality of the product.
And not just a product. It’s the packaging, it’s the presentation of the product, your copies, you’re technical writing, brochure, everything.
Make sure it looks good.
I can’t tell you how many times I have a customer write to us and say “Oh wow, I love your product. When I open it, this feels like a really good product.”
So make sure you take care of every detail of your product. You’ll be able to charge 30%, 40%, 50% higher than your competitor.
So very important.
Where are the suppliers?
Now, Alibaba, I know a lot of people have some experience with Alibaba, Aliexpress, and whatnot but remember that’s only a directory.
And so you make sure that you do all your due diligence. Have the contract signed before you send them any money.
Pay attention to that.
So different sites, AliExpress, made-in-chine.com, DHGate, JD.com, GlobalSources, they’re all great.
You have great suppliers there but you also have a lot of bad suppliers.
So be very careful when you are working with that.
Additionally, this is something that a lot of people don’t like to do nowadays, especially since we are all online marketers now.
Attend Trade Shows
But trade shows, even local trade shows or domestic trade shows that you’ll find if you in the US or in Europe, Germany.
Well now in a lot of places you have local trade shows. And a lot of international suppliers who will go to this.
I suggest that everyone do attend these trade shows.
Just like this conference, you’ll meet them face to face and you’ll usually get a lot more done than doing it online.
And you don’t have to spend a lot of time and money traveling to China because they will come to you.
So source out, find out where are the local events and attend them. Talk to the suppliers there.
It will save you a lot of money and a lot of time.
Negotiations For Sourcing Your E-commerce Products from China
Now, remember when you are negotiating with the supplier, all your suppliers want to make some money.
They have employees, they have an assembly line and they have to rent to pay.
So you know, make sure that you don’t squeeze them too hard.
Make sure you leave them a little bit of room so they can earn some money. And they’ll be very happy working with you.
What I like to do is upfront, when I’m testing a product, as long as there is enough profit margin.
Or even if I’m gonna have to lose a little bit of money just to test a product, I’ll do it.
As long as that supplier supplies me with a good quality product and then I get good customer feedback.
So I don’t usually negotiate and say, “Hey you know give me some huge discount.”
Always Get Multiple Quotations
But what I do is I actually always make it a habit to get 3 – 5 different quotations. And this is something I learned from all the Fortune 500 companies.
It’s built into the standard operating procedure that you always must get multiple quotations.
And I will just take out the top one and the bottom one and work with the ones in the middle. And usually, you will come up with something pretty reasonable.
I’ll just let them call whatever they want and as long as it’s something I can work with, I’ll let it go.
After that, once I start working with them, then I can go back to them.
Now you see what we can do, let’s talk about pricing.
Now you have a little better rapport, a little bit of a relationship built. And that will always get you a whole lot more.
Whether it is payment term or whether it is doing something extra on the packaging, why not.
So make sure that you do that and very important that you want to make sure that they have the ability to rework.
And this is one of the reasons why you want to work directly with the manufacturer because if something goes wrong, they can take back all the products, replenish, send you a new batch or rework on the product.
And make sure that you are able to deliver high premium quality to your customers.
Very important and this is something that people don’t talk about, the ability to rework will make and break your import business.
So when you negotiate, make sure you be professional.
You create a win-win situation, don’t nickel and dime your supplier.
Be a very straight shooter, tell them directly what’s on your mind and so on.
Be very decisive.
A lot of people take too much time and they lose patience. The supplier loses patience.
They get maybe dozens of emails, phone calls, every single day and they really don’t have a lot of patience, especially the good ones.
So make sure you decide very quickly.
And looks like we don’t have a lot of time to cover everything.
Tip: Do Your Due Diligence
But very quickly, due diligence, make sure that you audit them. Re-audit them annually, check out their inventory control, quality manual and or you want to hire an experienced team to do it, okay.
And make sure that you have some binding contracts.
And if you have a large order above $10,000 make sure that all the specification, everything else is included.
Usually, you’ll have to pay 30% upfront. But like I said, once you start having that relationship, then you can negotiate for more.
A lot of my suppliers now, they don’t ask me for any type of deposit, they just wait and then tell me.
“Alright, your product is ready, wire the money.”
And that’s where you want to get. It will save you a lot of cash.
So looks like I’m gonna be out of time.
Make sure that you send me an email and I will send you all my slides right here.
Just send me the email to [email protected].
And thank you very much for your time and it is great being here.
I look forward to hearing from you.