Seed for Success | Empowering Women Entreprenuers

Finalist Karla Duncan of Head2Toe realized early on that she would benefit greatly from the advice of a logistics, import/export, and manufacturing mentor. Enter Rosemary Coates, a manufacturing and supply chain expert, who will be guiding all three of our finalists through this aspect of their process. Rosemary is perfectly positioned to provide this type of advice, and is a China expert, which is exactly what Karla needs! Get out your pens and notepaper, because this post is chock full of vital information for small business owners!

I have a special interest in helping Karla Duncan with sourcing and manufacturing because that is my professional specialty area and because I have a grandson who is developmentally challenged.

I had a delightful conversation with Karla about Head2Toe Publications. Karla is planning to produce language-themed book boards and toys for developmentally challenged children.

In past jobs, Karla worked with suppliers in the US who were sourcing products from China. I encouraged her to source directly from Chinese manufacturers because of the significant cost savings – up to 70% over retail pricing from US resellers. China has become the world’s low cost manufacturing center and in spite of all the bad press about lead in toys and poor quality, most Chinese manufacturers try hard to follow specifications. In addition, there are certain steps you can take to minimize risk.

If Head 2 Toe Publications was a large manufacturer, I would recommend a Chinese sourcing broker or International Procurement Office that could research, recommend and supervise the production inside of China. This is especially effective, because business in China revolves around personal relationships. This social commitment approach to doing business is known as guanxi. For example, an introduction that is made by someone who personally knows both parties, carries with it a commitment to support the on-going relationship. Typically you have to be introduced by someone trusted before you can seriously talk business. A sourcing broker or IPO can provide this service for you.

For small businesses like Karla’s, I recommend starting with Alibaba (www.alibaba.com) a web site that matches buyers and sellers/manufacturers. Alibaba is well known and widely used throughout China. On Alibaba, you can post a request for information from suppliers. Interested businesses will contact you via email through Alibaba. Karla is likely to get many responses from vendors who produce toys.

Here are some guidelines for posting a sourcing request on Alibaba:

*Write your requirements very clearly and simply
*Provide precise product specifications, including things like fabric weight, material quality, thickness, National Retail Federation standards for colors and sizes, etc.
*Be prepared to answer lots of questions from Chinese suppliers. They are trying to quote and produce the exact product you need. It’s best to correspond via email, again using clear and simple language. Don’t assume they will automatically understand what you want. Your goal should be to help the suppliers understand exactly what you want
*Expect large minimum quantities to be quoted…typically multiples of 1000. While you may not have planned to order in such large quantities, it may be economical to do so. (Chinese manufacturers are very good at producing large quantities with repetitive processes)
*Ask for digital pictures of the kinds of products they produce

Once Karla selects 2 or 3 potential vendors, she should ask for samples to be sent for examination. This should be done before committing to purchase anything. Samples are typically no charge to you, but you will have to pay shipping (typically via UPS or DHL and usually $30-$70for a small box). Samples can be imported into the US duty-free.

Negotiating a final deal, preparing a wire transfer, and importing into the US are subjects for a later blog.

Rosemary Coates, Managing Director, Supply Chain

The AKA Group

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