Buying customized goods from manufacturers can be a hassle. It takes months to even get a sample, and you need to buy hundreds of units per product design, or even color.
Long lead times and high MOQs are a major barrier of entry for cash strapped startups, looking to import from China.
So why not just skip the factory and go to a Wholesaler instead? For starters, there no MOQ to worry about. Pick and mix whatever products you want. And you don’t even need to wait for six months to see them.
It sounds fantastic.
But things are not always what they seem. In fact, buying Wholesale goods from China may not even be an option for your business. If you are based in the US or Europe – you can be quite sure that it’s not.
Keep reading, and learn whether or not ‘buying Wholesale from China’ is on the table for your business.
1. Looking for a Wholesaler? Go to Yiwu.
Wholesalers can be found all over China. However, if you are looking for one geared towards export markets, there is only one place to go – Yiwu.
Yiwu is an old trading city, in China’s eastern Zhejiang province. The city is home to thousands of big and small trading companies and wholesalers.
As it is established as a cluster for export oriented wholesalers, you will find that the ‘infrastructure’ is far more developed, when it comes to finding local agents, quality control companies and export agencies – all of which are needed to buy, inspect and ship products from the wholesaler, to your warehouse.
But, if you keep reading, you will find out why ‘buying wholesale’ may not even be on the table.
2. Wholesalers sometimes offer lower MOQs than manufacturers
There are a few reasons why buyers are interested in buying wholesale goods, rather than buying private label or customized products.
First, a wholesale product can be checked on site. It’s sort of like driving down to your Wal-Mart or IKEA. No need to vet suppliers, develop samples and pay a large deposit – before you even see the products.
In addition, wholesalers can offer lower Minimum Order Quantities (MOQs), as compared to manufacturers.
Many Wholesalers even allow their buyers to order just a few pieces, per product. Compared to a manufacturer MOQ of 300 to 500 pcs per product – or even color – buying Wholesale is simply more viable for small businesses.
Well, at least in theory.
3. Many wholesalers lack export licenses
I’ve explained why Wholesalers appeal to certain buyers. Now, I will explain why everything may not be as great as it seems.
First, many Wholesalers lack export licenses. As such, they cannot directly export, or even sell, their goods to foreign buyers.
The simple reason is that most traders are entirely aimed towards the domestic market in China. They simply don’t have any overseas customers, and have therefore never had the need to obtain an export license.
Luckily, there are (legal) ways to export goods, even without an export license – but many sellers may see it as too much of a hassle.
4. Wholesale products are not compliant with US, EU and other overseas product regulations
Products made for the domestic market in China, are not manufactured in compliance with overseas, for example EU and US, product regulations.
Depending on the product, these regulations may cover the following:
a. Chemical and heavy metal restrictions
b. Safety standards
c. Technical standards
China has its own set of product regulations, which do not necessarily correspond with those in other countries.
In most cases, they are very different.
Say that you want to import electronics sold on Taobao.com. Well, it will not be made in compliance with US or EU regulations.
The same thing goes for toys, kitchen utensils and many other ‘sensitive products’.
As such, buying Wholesale goods is simply not an option. At least not if you are based in a developed market, and intend to buy a product in any of the following categories:
- Toys & Children’s Products
- Kitchen utensils and other food contact materials
- Watches and jewelry
5. ‘Made for China’ products are not compliant with foreign labelling requirements
For example, apparel sold in the United States must be labeled with the textile fiber composition, include a set of ASTM care labels, and include a country of origin mark (i.e., Made in China).
And, it must be in English.
Apparel made for the domestic market in China, which is what you often find in wholesale markets, are not made to comply with foreign product labeling requirements.
And why should they?
Almost every product category is covered by some sort of labeling requirement. This is also true for many developing markets in Africa, Asia and the Americas.
Just one more reason for why ‘wholesale’ may be a no go for your business.
6. You cannot brand or customize a ‘Wholesale product’
In a market that existed a long, long time ago, far, far away, you could actually get away with selling generic ‘no name’ goods from China, and actually make a decent profit.
Those days are over.
Today, the money is in branding your product. Just look at the Watch company Daniel Wellington, and other successful eCommerce companies, that seemingly came out of nowhere in the last few years.
They all have one thing in common. Branding.
At best, Wholesale goods can serve as complementary – but you will have a hard time building a sustainable business on it.
Questions and Answers
Below I answer some common questions about buying from Wholesalers in China, and other countries in Asia.
What’s the difference between a Wholesaler and a Trading Company?
A Trading Company acts as an intermediary between the manufacturer, and the buyer. However, the Trading Company does not keep products in stock. Instead, they simply forward orders from buyers, and take a commission for doing so.
A Wholesaler keeps ready made products in their warehouse, that can be shipped the next day. Notice that many self proclaimed wholesalers are actually trading companies.
Where can we find Chinese wholesalers on the internet?
You can find wholesalers in the traditional export supplier directories, like Alibaba.com and Globalsources.com.
However, you will find a much larger selection on Chinese websites, such as Taobao.com.
Another option is to visit a trade fair in Hong Kong or Mainland China, such as the Canton fair.
Do Chinese wholesalers have export licenses?
Some wholesalers in China, especially in Yiwu and Shenzhen, are focused on exports rather than domestic sales. This group tend to either have their own export license, work with an export agent or use Alibaba OneTouch, to ship goods overseas.
That said, the vast majority of wholesale companies in China are exclusively focused on the domestic market. This applies to both Taobao stores, and traditional wholelsale stores.
Are there any wholesale markets outside of Yiwu?
Yes, there are wholesale markets all over China. Primarily in China’s largest cities, such as Shenzhen and Guangzhou.
Is it possible to re-label ‘wholesale products’ to ensure that we comply with local labeling requirements?
Technically, it is possible to re-label an off-shelf product. However, few Wholesalers are interested in sending goods back to the factory for branding.
Even if they accept labeling, this comes with a higher MOQ, which defeats the purpose of even buying from a wholesaler to begin with.
Can we buy wholesale products at trade fairs in China?
No, trade fairs don’t serve as markets. Instead, they serve as a platform for suppliers to showcase products and capabilities for potential buyers.
At best, you will get to see product samples and catalogs. You will not be able to make purchases at the trade fair.
Is it necessary to do a quality control on wholesale products?
Yes. The risk of quality issues and defects is certainly not lower when buying ‘wholesale products’ from China, as compared to goods that are made according to the buyer’s specification.
Do we need to ensure compliance with safety standards when importing wholesale products?
Yes, wholesale products don’t get a free pass when it comes to product safety. The only difference is that the authorities may, at least in same cases, accept test reports and other compliance documents held by the supplier, rather than the Importer.
However, as mentioned, wholesale products are generally made for the Chinese market – not for export to the United States, Europe or Australia. As such, Chinese wholesalers rarely (if ever) have test reports or compliance documents valid overseas.
In practice, buying wholesale products is often not even an option for most Importers based in the US, EU or other developed markets.
Do you want to launch your own private label or custom designed product?
It can be hard to go from a design drawing to finished product. To help you manage the entire process – from creating a specification, to sampling and quality control – we created a Starter Package:
a. Private Label & OEM Product Manufacturer Lists
b. Product Specification Templates
c. Product Label Samples
d. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire process