- Published on Tuesday, 21 August 2012 12:57
by Mike Bellamy in 'China Sourcing Information Center'
In my blog post “Too small to go factory direct?” I explain that the hard reality is that not all buyers have large enough orders to build a successful buying experience with a China factory. That article also helps buyers evaluate if they are small or not.
At the recent Global Sources China Trade Show in Hong Kong I had the opportunity to visit with many smaller buyers. When I meet them, many of them were almost ready to give up when they learned the factories at the shows were not interested in their small orders. Luckily, part of one of my seminars at the show was on the topic of “strategies for small buyers” and I walked the small buyers through their option.
For example, if you are too small to go factory direct, don’t waste time trying to convince a factory to do business with you, consider checking out the wholesale markets instead. Granted, buying on the spot is a whole different ball game from buying factory direct, but it can work out.
Here is a case study.
A small business in Australia desired to buy a few 1000 kaftan dresses per season which will be sold via “buying parties” where girlfriends get together to talk about fashion and buy products in the comfort of their homes. Kind of like a hip version of a Tupperware party.
The cut n sew is simple, no intellectual property to protect and not large enough to interest a manufacture. So the wholesale market was a good fit. In this case, I introduced the Australians to the Shenzhen wholesale market. First they selected the raw materials in bulk. Then delivered the materials to a small cut-n-sew job shop next door to the materials market for processing. At the end of the chain, they came back to inspect the finished goods, make final payment and arrange shipping with a 3rd party logistics company.
This buying trip worked because the buyer was very hands on and structured the payment to protect their interests. It is simply not possible to come in to the wholesale markets, select some product and leave the next day, hoping that what you saw is what will ship. As there are no formal contracts, no stable suppliers and no code of ethics, it is very much a shark infested water where dealing with the Chinese wholesale markets. But as small buyers, it may be worth the effort.
Many of the small buyers I met at the show were interested in fashion items like leather goods, fabric and shoes. For your reference, here is the list of the relevant wholesale markets in Guangzhou. Compliments of Howard Glaser of CBI Consulting. On a side note, the reason Howard knows these markets so well is because he does surveillance of the markets on behalf of foreign brands to keep track of counterfeits! So please don’t try to set up a supply chain at the wholesale level if you have IP to protect.
The largest leather goods wholesale markets are located in GUI HUA GANG and SAN YUAN LI in BAI YUN DISTRICT. Specific markets include Bai Yun International Leather Goods Wholesale Market, YI SEN Leather Goods Wholesale Market and IN YI Leather Goods Wholesale Market. Any good taxi driver will know the address.
SHA HE APPARAL WHOLESALE MARKET , BAI MA APPARAL WHOLESALE MARKET and SHI SAN HANG APPARAL WHOLESALE MARKET are the big ones. Once again, the taxi driver should know the address.
HUANG NAN SHOES CENTER is located at GUANG ZHOU DA DAO NAN.
GLOBAL SHOES CENTER is located at HUAN SHI XI ROAD.
DA DU SHI SHOES CENTER is located at JIE FANG BEI ROAD.
To give you a sense of the scale of these wholesale centers, imagine 20 buildings each 20 stories high with 20 shops on each floor! Yes, there are easily 8000 wholesalers in just one of these markets!
Wishing you successful China sourcing!
Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. He is also the author of "The Essential Reference Guide to China Sourcing" and founder of PassageMaker Sourcing Solutions.