Many people feel like manufacturing in China for home decor and home furnishing products may be at the end of its cycle. But the truth is that China continues to be a very viable place to manufacture home decor and home furnishing products.
To be successful in manufacturing home decor products in China, you should first understand China today and the forces that are driving it. Then clearly understand what kind of home decor products China has a competitive advantage with. Finding a good supplier is not always easy as not all the good manufacturers will show at the trade shows. So you may be better off to find an agent to work with that knows the industry. In the home furnishing and home decor business, one of the most important things a supplier needs to do is to be willing to develop products, but not all suppliers are willing to do this. In fact, it may be hard for many factories to get to know the owner and build a relationship with them. This can hurt you when you are trying to develop products or get favorable payment terms.
Despite all the pressure China is under today, China is still a very viable place to manufacture home decor and home furnishing products. In fact, in some cases, it may be the only real viable choice.
Understanding China Today
Many people misunderstand China and especially the China of today. I have lived and worked in Asia since the mid-1980s, and during that time, I have watched first hand a tremendous transformation of China.
China today is no longer the cheap place it once was. Food is expensive. Living is expensive. Hiring staff is expensive. In fact, getting rid of staff in China is also very expensive and difficult.
Chinese manufacturers have a lot of price pressures. This is due in part to the US trade policies with tariff situations and rising costs and government regulations in China. On top of this, as China continues to grow, the government continues to put many regulations on many manufacturers, especially for things like air pollution and other environmental policies. Factories are being required to upgrade their painting facilities or risk being shut down. Many factories cannot afford the required upgrades.
China once had a lot of cheap migrant labor. The migrants came from other parts of China and were more than happy to work in another province and only see their families once or twice a year. But as their hometowns have started to develop, they have also moved home. So besides the price and environmental pressures, there is also a lot of labor pressure. This means that Chinese factories are having to adapt very quickly to continue manufacturing within China.
So if you think that China is still this cheap manufacturing place, you are wrong as many cheaper items have moved to other locations.
But despite all this, there is still a lot of items where China is very competitive. There are many things that China manufacturers do so well that other places cannot compete for the quality and price that can be made in China. That has been China’s advantage for quite a while now.
If you want to read some of the many reasons for this, you can read our blog on Why the US Tariffs Has Not Stopped US Importers Buying from China? by clicking here.
Understand What Products China Is Good At
So if you are looking to buy home decor or home furnishing products from China, one of the first things you need to look and access is if China is competitive in the product you are looking for. If they are and the product is not under a special tariff or has not had anti-dumping placed on it, then the chances are that you will find that China and the Chinese manufacturers will be very competitive.
We manufacture UL lamps in China and Vietnam. But we can usually UL a lamp cheaper in China than we can in Vietnam. One of the reasons is that all the parts we need to UL the lamps are readily found in China. And at least, we have to import most of our parts from China into Vietnam. This makes the UL parts of a lamp in Vietnam higher than in China. There is no way around this as Vietnam does not have the suppliers to make the quality we need. I am sure there is also a similar kind of cost advantage for CE and other lamps. China has so many lamp parts and lighting parts suppliers, so you can find almost everything you need.
Finding a Reliable Supplier
As China has continued to develop, finding reliable suppliers have gotten easier, but it’s is still not as easy as many may think. Many Chinese factories are on Alibaba or other websites, but many of them are very large and looking only for a huge volume.
If you are looking for a factory that does not require thousands of one item or one container for one product, then you may have a harder time finding a factory that fits those requirements.
Here are some of the reasons why finding a factory that does not require huge volume can be difficult in China:
- Language barrier – Many of those factories may have one or two people that speak English, and the chances are the factory owner may not speak English.
- Websites are outdated or nonexistent – Many of these same factories their websites are outdated, or they do not even have a website in some cases. I generally find that technology in China is difficult, and I blame this in part on the “Great Firewall of China,” which makes it hard for foreigners and Chinese to access foreign websites.
- Social Media is Chinese-based – You will be hard-pressed to find any of these same companies on the social media that many other countries use as Facebook, Instagram, or Twitter. They will probably be on a Chinese version of social media, which you are not on or able to access due to the language barrier.
- Relationship-based business – Chinese believe in mainly relationship-based businesses, so many suppliers may depend on the relationships they know to get their business. If you do not know someone or cannot get any recommendations, it may be hard to find some good manufacturers.
Work with a Good Agent
Some people feel like an agent is too expensive, and they want to work directly with the factory. But a good agent can be invaluable to you, and your business’s and they will help you with relationships and find those right manufacturers that would be almost impossible for you to know on your own. This will, in turn, save you time and money.
Here are some good qualities of a good agent:
- Specializes in Your Home Decor or Home Furnishing – An agent specializing in your field will generally be a lot more valuable than one that does not. This is inherent in that they should then understand your business and help direct you better than one that does not know anything about the home decor or home furnishing business.
- Knows those good factories that are hard to find – A good agent would also know those factories which are hard to find. The ones that give a good price and quality but do not have a website or are on social media. The ones that will do the volume and quality you want.
- Has important relationships in place – An good agent would have an important relationship in place. This can help you immensely in product development and other things you may need.
- Has an office in China – Many agents are based in the USA or another country and just travel to China. The problem with that is that you can do that yourself. You want someone that as people in China who can do the work that is required.
If you are looking for help with Home Furnishings or Home Decor products, please feel free to contact Anita by visiting our Contact Us page.
What to Look For In a Factory
When I go into a factory there are always a few things that I will look for.
Some of the things I look when visiting a factory are:
- Container loading – I will usually ask a factory, “how many containers do you ship a month?” Sometimes these factories will give me a crazy number like 100 containers. To be shipping 100 containers a month, there should always be a few containers at the factory loading or ready to be loaded. If the factory tells you 30 containers, you should see a container load that is ready to be loaded or will be loaded that day. There is no way they can load 100 containers in a day. It just takes too much time and is not possible. You can quickly judge this by looking at their production – are there many things in production and their packing facilities? Producing a container load of goods takes time. So if they tell me something I know is not true, then I begin to wonder what else are they not telling me?
- Willing to Develop Products – Some factories will not be willing to develop any new products no matter how big they are or how good they are. There can be many reasons for this, but developing products is expensive and does not always work out. At least in the home decor and home furnishing business, developing new products is very important, so we are always looking for this.
- Cleanliness and Organization of the Factory – Depending on the factory and what they are producing, I will look at the overall factory organization, equipment, and cleanliness. This does not mean it is a good factory, but it does tell me something about the management team. Some factories are very well organized, and others are not. A disorganized factory does not mean it is bad; in fact, some of them are very good. But you will also need to judge how much time you have to help the factory to make sure your products are correct.
- Check the Packing Area – I always go to the factory packing area. In fact, this is one of the first places I like to go, as in the factory packing area you can look at the cartons and really see who they are selling to. If they tell you that they are shipping a particular customer, and you see no cartons for that customer, you need to find out why? You can tell a lot about the factory from the factory packing area if you know what to look for.
Why Many Good Factories Do Not Show At the Trade Shows
There is this common belief that all the good factories show at the Chinese trade shows. But this is not always true. Many factories do show there, but many do not.
Here are some reasons many good manufacturers do not show at trade shows:
- They are already full or have enough orders – If a factory is full or has enough orders, this can signify that this is a good factory. They are the ones that usually have repeat customers, so they do not feel they need to show at the trade shows.
- Trade shows are expensive – Trade shows everywhere are expensive. The factory may feel that showing at a trade show does not warrant their time and investment. I have found that many factories that show at the trade shows may feel that if a customer does not work out, they can find someone else. If a factory is doing an order one time and there is not much repeat business, this is a sign that the factory has some problems as quality, price, or something else.
- They are too small – Many of the larger factories will show at the major trade shows in China. For some of them, they may get a lot of government pressure to attend. The smaller factories are too small to get this pressure, or they are just too small to bother to attend. This does not mean they are not a good factory as some of these smaller factories are the best manufacturers in China for our industry.
Understand Not Every Supplier Will Develop Products
Many factories in China will refuse to develop products, and they only want to sell their own production.
Here are some reasons why a factory will refuse to develop any new products:
- Development Costs – It is expensive to develop products. No one makes money on product development, and even with the first order, there is not much money made. It is really the repeat orders where the manufacturers can make money.
- Been burned in the past – it could be they have had many people come in and promise them large order if they developed or invested in this or that. And they have found that it normally does not work out, and they lost a lot of money in the process. Even if you pay them double costs for the samples plus all the mold charges, there are still many developmental charges the factory must bear.
- Economies of scale – They may have their factory set up to have an economy of scale advantage in that to keep their workers producing the same thing, they have some cost advantages, so they refuse to change their production line constantly.
In China Today You May Need To Work To Get Their Attention
Many people have this feeling that somehow in China today, factories are begging for the export business. But the truth is that now many factories are concentrating on the local Chinese business instead. You can see this in that a factory owner may not even try to wine and dine a foreign client and, in fact, may leave that completely up to their staff. Many times the person they leave that up to is a very young girl who speaks English. This girl usually has no power at all and is just there to report back to the boss.
In the past, when factories concentrated on the export business, it was easy to get to know the factory’s boss. But today in China, this has changed as the boss is concentrating on the local, not the export business. This means several layers you need to go through to talk to a person who makes the decisions and building a relationship with that person is not always easy.
Here are some reasons why many Chinese factories are concentrating on the local market instead of the export market:
- Earn more money – Most factories in China today earn more or the same amount of money as the local market.
- It is less hassle for them – They also feel like the local market is less hassle for them. They are easier relationships for them to build, as there are no cultural or language barriers.
- They can set payment terms – They can set the payment terms and get paid. Most local business in China is done on cash, not a credit basis, to be sure of payment.
Understanding Payment Terms In China Today
Many foreigners are under the impression that China’s manufacturers are willing to give favorable payment terms to anyone who works with them. This use to be true in the past when the factories were doing mainly the export business and not the local market.
I have also found that many of those foreign companies with favorable payment terms have been working with that supplier for a long time, and trust and relationships have been built up over the years. This can make a huge difference in what payment terms a company is receiving.
Do not be surprised if suppliers in China are now asking for payment terms before they are shipped.
Some reasons why Chinese manufacturing is not always giving favorable payment terms:
- Past bad experiences – Many suppliers have had bad experiences in the past. Almost all have been burned with nonpayment. So now they are cautious.
- They have choices they did not have before – As many of them have built up the local market or have a few trusted customers, or they may feel they have a choice that they did not have before.
- They cannot extend credit – as I mentioned before, many factories are under a lot of price pressure. This also means that they cannot extend credit as they are under too much financial pressure.
Why China Is Still a Place To Manufacture Products
Despite all the trade wars and everything else that is going on in China, it is still a great place to manufacture many products. In fact, there are still many things that China manufacturers that other countries cannot compete with.
As more and more companies have tried to source their products elsewhere, many find that China’s manufacturing and prices are much better than other locations. So do not think that manufacturing in China is completely dead. It has certainly been hurt, but it is still a viable place to manufacture many home decor and home furnishing products.
How do I import products from China?
There are many steps you need to take before you import any products from China. This should include the following:
- Know what you want to export and why
- Do your homework and find the right product
- Understand your product
- Find the right supplier to produce your product.
- Check all your customs regulations in the country you want to import the products to.
- Understand your landed costs.
- Understand your selling price.
You can read our blog on 6 Common Product Sourcing Errors, What You Need to Know for more information by clicking here.
Who are China’s top trading partners?
Presently the United States is China’s top trading partner, with about 19 % of all Chinese trade going to the United States. With the US Tariffs and sanctions, this may change. Hong Kong is just behind the United States at about 12% and Japan at about 6%.