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By Richard N. Frasch and Charlotte Zhanghaixia Westfall

Horace Greeley, the famous early American newspaper editor and founder of the New York Tribune in the mid-1800s, famously responded to the question of how to become rich with the statement “Go West, young man!” The same advice is often slightly reformulated and given today as “Go East, young entrepreneur!” Although people today can argue about the correct direction to go to China from the United States, the essence of the statement still holds true today!

Many people predict that China will be the largest economy in the world in the 21st century and will soon surpass the United States. Although the relative cost of manufacturing in China has risen in recent years, the country is still often the cheapest location for American retailers and manufacturers to source goods or parts.

This article is first in a series exploring how U.S. companies can source goods in China, and it focuses on how those companies that cannot afford to establish overseas offices or manufacturing operations can effectively and efficiently source suppliers in China. We will focus on how a smaller U.S. company can and should go about locating suppliers in China.

1. Internet Search

The easiest and most cost-effective place to start a search for suppliers in China is on the Internet via search engines such as Bing or Google, and B2B sourcing platforms like Alibaba, Global Sources, and Made-in-China.com. Thousands of suppliers are listed on these sites, and you can streamline your search and increase the number of legitimate sources by filtering results for only those entries labeled as “gold member,” “verified supplier,” “onsite supplier,” or “accredited supplier.” Good reviews offer some indication that the supplier is legitimate. Some B2B sourcing platforms have endorsed service provider lists and supplier blacklists. For example, Alibaba has a list of banned members.

Some sites also offer special services to further protect buyers. For example, Global Sources has credit-check services and supplier-capability-assessment services that will provide suppliers’ key business information including company status, production capabilities, and product quality.

Be aware that verified suppliers at these sites may only mean that the companies are verified to exist; it does not necessarily mean that their reputation, production capability, or quality have been verified (for example, a gold member at Alibaba is a paid status). Further, while these sites have large directories of “suppliers,” some are simply traders or wholesalers, not manufacturers. You won’t get the best price from traders or wholesalers, so you need to do your own diligence on potential suppliers.

It is worth mentioning that Global Sources also has China Sourcing Reports (CSRs) that have in-depth studies focused on specific sourcing industries in China. In the CSR, you can find qualified suppliers and their verified contact information. This report also provides industry overviews, top-selling products, and other pricing and market information, although such information may not always be up-to-date.

2. Social Media

Social media is not necessarily an ideal platform to identify suppliers. Only some suppliers have a social media presence, but they can be a good source for feedback or reviews of potential suppliers. Therefore, be cautious when relying on such platforms and remember to do your own due diligence as the information provided is often unverified, reviews are often anecdotal, and sample sizes may be small.

Also, there are now many professional LinkedIn groups focused on sourcing in China:

In addition, some forums such as the Alibaba forum, Smart China Sourcing at Global Sources, and China Sourcing Blog offer good tips. Finally, be sure to check on any complaints other people may have shared at Ripoff Report.

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About Rick Frasch

Rick has significant legal and business experience in contracts, financings, institutional lending, international business transactions (with an emphasis on China), venture capital and mergers and acquisitions. Most recently, he was the VP of Business Development and Legal Affairs for Globitech, Inc., a semiconductor manufacturer, and prior to that, a partner in venture fund KLM Capital Group. Previously, he served as the general counsel of Talegen Holdings, Inc. (1993–1998), the former holding company for the insurance operations of Xerox. Rick has also served as the Chair of the Executive Committee of the Business Law Section of the California State Bar (1991–1992) and was a corporate and banking partner at the law firm of Pettit & Martin (1981–1993).

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