Guide to finding the right clothing manufacturers in China

Learn how to find the right partners in affordable outsourcing destinations. 

Looking to design your own T-shirt or launch a knitwear collection? Outsourcing to China or other low cost countries could be your only option.

In this article, I explain what you need to know when selecting a clothing manufacturer, substance regulations, material quality and managing the product development and production process.

Regardless of whether you are an apparel start-up looking to try out a new product line, or you consider yourself the next Karl Lagerfeld, this article is packed with actionable advice for you. But first, I will explain why buying wholesale clothing from China is rarely an option.

Buying wholesale clothing from China

The Minimum Order Quantity (MOQ) of clothing and textile items is often 300 to 500 pieces per design. That translates into a major investment, assuming that you want to launch an entire collection. Many importers assume that the solution to this is skipping manufacturing to purchase off shelf clothing from wholesalers.

Of course, there are clothing and textile wholesalers in China. In fact, there are tens of thousands of them. However, these wholesalers, trade items manufactured for the Chinese market. Take a look at Taobao.com (China’s Ebay) and see for yourself. You can get a T-shirt for 2 dollars and a pair of jeans for the price of a Big Mac meal. But, China is not a magic land where basic economics don’t apply. In other words, you do get what you pay for.

In fact, you might get a bit more than you really want. At least in terms of regulated substances, such as Formaldehyde and AZO-colors. China’s substance regulations are more lax than those in the west. Thus, buying wholesale clothing from China is rarely (if ever) an option, unless you are willing to risk having your items seized by customs – or face a forced recall.

Important factors when selecting a clothing and textile factory

Not all clothing and textiles manufacturers are equal. Making a random factory selection online, without verifying that the supplier is able to reach your quality requirements, is likely to end up in disaster. Below follows an introduction to the three main factors that really matter, when selecting clothing manufacturers in China.

#1: Substance control and compliance with foreign textile regulations

Clothing textiles are regulated in most countries, including the United States, Europe and Australia. Most applicable safety standards, such as REACH (Europe) and FHSA (United States) regulate substances, such as formaldehyde, AZO-colors and asbestos. Most Chinese manufacturers, especially the smaller ones, are not aware of the substance content in their textiles.

It’s a deeply rooted issue that goes way beyond the manufacturer. All clothing manufacturers purchase fabrics and components from sub-contractors. The number of sub-contractors can range from two or three, to more than one hundred. Ensuring that no non-compliant fabric slips through requires the supplier to test a large number of samples, which most small factories consider too expensive and time consuming.

#2: Textiles labeling requirements

Clothing and textile regulations are not only limited to substances, but also product and packaging labeling. These labeling requirements vary greatly between different countries. However, most countries require labeling to cover Country of Origin (Made in China), textile fiber content and washing instructions.

However, a supplier cannot really be compliant or non-compliant with labeling requirements. In fact, it’s your job to design the textile label, and verify that it’s compliant with applicable regulations in your country. The supplier’s job is to print it. That said, they must be able to provide you with information about the textile fiber content and washing instructions.

#3: Fabric quality

Good suppliers provide high quality fabrics and bad suppliers provide low quality fabrics. But, it’s not that simple. A couple of years ago I learnt that myself, the hard way.

In 2011, we were tasked with managing the product development process of a new polo shirt collection for a European brand. They had already selected a new supplier in the southern Fujian province to manufacture their new designs. It was a good supplier. Clean facility, long history, plenty of capital, modern machinery and a strict quality management system.

The client received the samples and testing began. A few weeks of usage and washing later, it was clear that the material quality was far below the clients' expectations. While they wanted to match brands like GANT and Ralph Lauren in terms of quality, this sample would go straight to an outlet.

Obviously, the client was upset about this, and we submitted a complaint to the supplier. They made another batch of samples. But the result was the same. This was when we realized that this may be a reliable supplier, yet unable to match our buyers quality requirements. It turned out that they were indeed specialized in making low end apparel, and pretty good at it too!

Before you get started, you need to get your fabric specifications in order. Never assume that a Chinese clothing and textiles manufacturer is specialized in making items matching your quality requirements, regardless of their technical qualifications.

Product development process

When you have selected a few suppliers (not only one, as explained further down in this article) it’s time to put them to the test. Keep reading, and find out how to manage the clothing product development and production process:

Step #1: Design drafting, material selection and product specifications

Chinese manufacturers are entirely accustomed to producing items according to buyer specifications. While some suppliers offer design services, they will certainly not help someone to design a new collection based on a random inquiry on an e-commerce platforms like Alibaba.

Before you even bother to contact manufacturers, you need to get your specifications in order. These include, but are not limited to, the following:

• Design drafts
• Design elements (e.g. collar)
• Dimensions
• Fabric type (e.g. 96% cotton and 4% spandex)
• Fabric weight (e.g. 120 gsm)
• Printing or embroidery (e.g. screenprint)
• Pantone colors
• Buttons (design, material)
• Seams
• Textile label (design files and dimensions)
• Compliance requirements (e.g. AZO-free colors)

You may also complement a product specification with physical product samples, in case you intend to replicate a certain color, material or design elements of an existing product. However, certain components, such as buttons, are better left open until you know what the supplier has to offer.

In case you fail to provide sufficient product specifications, you are likely to receive items of very poor quality. Misunderstandings occur easier than you could possibly imagine, and there is no universal definition of what “good quality” is. Nothing should be left out of your product specification.

Step #2: Sample development

This is when it gets interesting, but act with caution. First of all, it’s way too early to make a final supplier selection at this stage. Instead, you shall select at least three or four suppliers that produce clothing samples simultaneously.

In my experience, roughly 50% of the suppliers fail to manufacture satisfying samples. They might lack the precision to get the seams straight, provide low quality material or prove that they don’t really care that much about following your design requirements.

Samples take time to develop, and often require a few revisions. All of a sudden three months have passed. If you have made a final supplier selection too early, you might need to start all over again. That’s why it’s critical to keep several supplier options at hand at this stage. Thereby, you can simply ditch the supplier failing to produce satisfying samples, and move on with those that succeed. Yes, it costs a bit extra to buy samples from four suppliers, rather than only one. But, considering the time and money you will save, it’s well worth it.

Step #3: Compliance testing

Previous compliance means that a supplier can prove that they are able to ensure compliance. While that is a key qualification requirement, it’s not a guarantee for future compliance. Thus, you shall submit material samples for compliance testing, before mass production begins.

But, this is also when it gets really complicated. Fabrics are purchased from sub-contractors, and suppliers rarely keep them in stock. The fabric samples that are available during sample production may not be available by the time you place your order. Even if the fabric used for mass production is visually identical, it may come in another batch (thus it may contain other chemicals) or be from a completely different sub-contractor.

In a worst case scenario, this means that you could end up with clothing made of non-compliant fabrics, even though the pre-production fabrics passed compliance testing. However, despite this risk pre-production fabric testing is critical. One way to minimize the risk further is to have fabric samples compliance tested as soon as the batch used for your items arrives in the supplier warehouse, but before mass production begins. That way you can at least avoid a situation where you are left with an entire batch of non-compliant apparel. Sounds complicated? Not so much, if you follow the process below:

1. Select fabrics and confirm applicable substance regulations
2. Ask your supplier if the fabric used for mass production originates from the same batch and/or from the same sub-contractor
3. Collect and submit pre-production reference fabric samples to the test laboratory
4. Supplier begins mass production and order fabrics from one or more subcontractors
5. Collect and submit batch sample reference fabrics to the test laboratory
6. If compliant: approve production

As one material, and sometimes color, requires a separate compliance test, costs increase if you use many different fabrics and colors. If you are on a small budget, try to limit the number of different fabrics used in your apparel.

Step #4: Sales contract

Before you pay the deposit and production begins, a Sales Agreement shall be signed by the clothing manufacturer. The main purpose of the sales contract is not to get prepared for future disputes, but to prevent them.

First of all, it shall prevent misunderstandings. Thus, it shall include product specifications, design drafts, material specifications and color samples. You may also attach physical samples, for the supplier to sign and stamp.

However, these specifications may be useless unless you put pressure on the supplier to actually comply. This can only be achieved if you make the supplier understand that you will verify compliance, and that you have a bargaining chip at hand, in case they wouldn’t.

In order to verify compliance, you need to follow up with Quality Inspection. I’ll get back to that in a bit. The payment is also critical. If you pay a supplier 100% in advance, they no longer have an incentive to remake or repair defective items, in case the quality inspection fails. This is why the final balance payment shall be withheld until the quality is verified.

Step #5: Quality control

Manufacturing is not a science. Quality issues are certain to occur, to a varying degree. They can’t be completely eliminated, but they can be managed and reduced to a degree that they don’t affect the viability of your business.

Forget about returning defective items to China. Low cost manufacturing is cheap for a reason. Instead, you must verify that your clothing reaches your quality requirements before it’s packed and shipped. Thus, a Quality Inspection shall be executed in the manufacturer’s facility, after production – but before shipment.

There are a number of defects that may occur when manufacturing clothing. Below follows a list of defects I have stumbled upon:

• Poor seams (e.g. not straight, loose threads)
• Discoloration
• Skewed embroidery
• Incorrect dimensions
• Loose buttons and zippers
• Dust and dirt

However, certain quality issues cannot be detected during a single factory inspection. For example, poor quality fabrics may lose fitting, only after a few washes. This is why extensive sample testing, and actual usage, is critical, before production begins. 

This article is re-published with permission from Frontier's content partner, ChinaImportal, an e-commerce platform that assists businesses looking to import products from China.

See the original article here.

Importing brand-name products from China. Shortcut or dead end?

Found a factory in China that makes a brand-name product and plan to buy directly from them? Read this article to find out why this is a terrible plan.

By Fredrik Grönkvist

Why bother with creating your own brand when you can free ride on one that’s already well established? Many naive importers assume that importing brand-name products from China is a short cut to success. It couldn’t be further away from the truth. In this article we explain why it’s not possible and how an attempt to import branded products can ruin your business.

You’re not going to outsmart Steve Jobs

We receive many enquiries every week from small businesses looking for anything from Apple iPhones and iPads to Sandisk Memory Sticks and brand-name apparel. While many of these products are manufactured in China, large corporations like Apple maintain tight grip on their supply chain.

Considering the amount of money these companies put into development and marketing, do you think it makes sense for them to allow third-party importers to purchase their products for rock bottom prices just to dump the prices? The factories which produce branded products are legally bound to only sell to the owners of the brand or licensed distributors. So, unless you are a licensed distributor (a costly and difficult venture) you can't access these products.

The same thing can also be said about Chinese brands such as Huawei or Xiaomi. Huawei is a market player in Europe and America. They have huge resources to manage distribution on their own. Xiaomi has yet to launch their products internationally. However, their products are manufactured for the Chinese market and thus not compliant with European and American product safety directives, such as CE and CPSIA.

“What about night shift production?”

There are plenty of stories about contract manufacturers of brand-name products running night shift production. The products are “essentially the same” as the original since they are produced in the very same factory. But that’s not the only benefit – the prices are so low that even a small order can generate a decent return on investment. Sounds too good to be true? It is! Let me ask you something. If tech giant Sony is struggling to make a worthwhile profit in the TV industry, why would you think you can? There’s no “night shift production” in China. It’s a fairy tale told by scammers to lure naive business owners. Besides, even if it  existed it wouldn’t be legal. Why? Because parallel importing is illegal in most developed markets.

There is only one way to buy brand-name products: purchase them from the official distributor in your country or market. However, if this comes as news to you, then I honestly doubt that you are ready for such a business venture. Companies such as Samsung and Apple are, and can afford to be, picky about who they do business with.

China retail prices are usually higher than in the US and Europe

Guess what, an iPhone 5S costs up to 25% more in China compared to the USA. Sounds strange? It’s not. The difference between rich and poor in China is huge. It doesn’t make sense for companies to cut their prices. Those who can afford it will buy regardless of price. Well, almost. Either way, the average Zhou won’t be able to afford an iPhone even if Apple lowered the price with one or two hundred dollars. In other words, forget about importing brand-name products from China.

Counterfeit products, payment frauds and confiscated cargo

Those who attempt to import brand-name products from China are in general very inexperienced. In other words, they are easy targets for scammers. Thus, it should not come as a surprise that this industry, if it can be called that, is completely infested with scammers. While some of them won’t hide the fact that they are trading with fake products, other claims to supply authentic brand name products for amazing prices.

There are only three possible outcomes when importing “brand-name” products. You either receive fake goods or the scammer takes your money and runs. Well, you might say receiving the fake goods is at least something. No, it is a big problem because it is illegal to import fake goods for a commercial purpose (as in actually selling them). 

Apart from violating IP laws, counterfeit items are NEVER compliant with many juridisctions' product regulations and directives. Considering that fake products are often manufactured by criminal syndicates, this should hardly come as a surprise. Non-compliance with product certification standards (i.e. CE, REACH and CPSIA) can be just as disastrous as getting caught importing fake products.

Ensuring compliance with regulations in your country or market is critical. Importing non-compliant items is illegal and may result in having your items refused entry by the customs authorities – or even major fines in case someone is injured or property is damaged. There are several reported incidents involving fake products, phone chargers in particular, causing serious injury or even death.

Create your own brand

I hope have convinced you to not even consider importing branded products from China. Forget about free riding on other companies' names. If you are serious about importing products from China you should create your own brand. While it’s no short cut, branding a product ads a ton of value. Branding a “Made in China” product is easy. Most suppliers can offer a custom logo or product packing layout for a low cost.

This article is re-published with permission from Frontier's content partner, ChinaImportal, an e-commerce platform that assists businesses looking to import products from China.

The ultimate guide for sea freight and shipping from China

By Fredrik Grönkvist

Figuring out how sea freight works is challenging particularly for small businesses. This guide is a well-rounded introduction to shipping and sea freight.

Unlike most sourcing agents I didn’t have a clue about how sea freight worked by the time I set up my first business. Another thing that struck me was the fact that it was, and still is, very hard to find decent information on how sea freight and shipping from China is actually working. I know that this is a big concern for small businesses importing from China and I receive questions about this topic on an almost daily basis.

My hope is that this article is going to provide the reader with a well rounded introduction to shipping and sea freight. In this article, I’ll introduce the reader to the shipping process and some of the things that you better keep an eye on when importing from China.

Incoterms 

Shipping Incoterms are international standard codes that decide when and where cargo shall be transferred between the supplier and the importer.Incoterms may look a bit confusing at first sight, but they are not hard to get at all. Basically an incoterm consists of two components: a three letter code and a city name. The three letters incoterm code specifies “how far” the supplier shall ship the cargo. Basically how much of the shipping you pay the supplier to handle. Based on the incoterm you select, you can let the supplier handle the shipping of products to a nearby port in China or all the way to your front door. I recommend inexperienced importers to select an incoterm that takes the cargo as far as possible. 

FCL & LCL shipping

Sea freight is not exclusive to those importers who purchase large quantities from China. If you want to import by the container then FCL (Full Container Load) shipping is the right choice, it’s also the cheapest mode of transportation if counted by cost per kilogram. However, for smaller buyers LCL (Less than Container Load) is available. In fact, you can basically ship cargo with very small volumes - even less than one cubic meter. See an in depth guide to FCL and LCL shipping here.

Who’s managing the sea freight?

There are two options here, either the supplier or you. I’ll begin with explaining the latter. Letting the supplier manage the shipping is common among inexperienced importers and even we let the supplier manage the shipping from time to time. It’s very simple and all you need to do is to tell the supplier that you want them to ship the cargo as CIF “Port of destination” (you actually have to specify which port you want it to be delivered to) and they’ll do the rest. The downside is that you’ll probably end up paying a bit more than if you would have managed the shipping by yourself.

As mentioned, you can also manage the shipping by yourself. This doesn’t mean that you have to swim all the way to China, pick up your cargo and then swim back home. It can be done from the comfort of your home and office by hiring a shipping and logistics agent. These companies are everywhere and they tend to offer discounts in return for a fairly small yearly service fee. The shipping agent can then manage your shipping,  from the Chinese supplier to a nearby port or a specific location within your country (i.e your warehouse).|
Do I need to pay any fees or taxes in China? 
No, you don’t need to pay any “export tax” when importing from China. However, you will need to pay for transportation to the port of loading in China and the cost for export clearance papers. Both of these are included in every incoterm from FOB (Free on Board) and above so you don’t need to even bother with this unless you select EXW as your incoterm.What about insurance?Insurance is included when you select CIF, that’s why it’s called “Cost Insurance Freight”. However, the definition of the insurance may vary between different shipping companies. When you let your supplier manage the shipping you are not in control of which shipping they select, which is probably the cheapest. I suggest that you contact a local shipping agent if you want to know what the insurance actually covers.Delivery timeThe transit time from China to most locations in Africa, Europe and the US is roughly 29 – 35 days. However, keep in mind that it can take a few days – sometimes up to a whole week – before your cargo is loaded in the port of loading in China. The same thing is true in the Port of Destination, it usually takes two to three days before your cargo is cleared and ready for pick up.

Sea freight is indeed quite slow and this means that importing from China certainly requires a lot more long-term planning compared to domestic product purchases. This has also been a major cause for the recent surge in reshoring in Europe and the US. In general I recommend businesses to place an order at a minimum 3 months before they need the products in their warehouse.What happens when the cargo arrives at the Port of destination?
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How to manage micro distribution in emerging and frontier markets

There is increased interest in micro distributors and the potential they hold within an inclusive business model.

By Tielman Nieuwoudt

Well documented micro distribution models include the Coca-Cola MDC (Micro-distribution centre) in Africa and Unilever’s Shakti model in India. Micro distributors can be found in emerging and frontier markets where markets are fragmented and modern trade (e.g. Walmart, Tesco) is still in the very early stages of development. Below are a number of issues to consider when activating a micro distribution model.

Advantages of micro-distribution

Entrepreneurial spirit - A micro distribution system allows companies to tap into the entrepreneurial spirit that is so evident in many emerging markets. However, entrepreneurs must have a long term view to ensure the same consistent quality service is provided to customers.

Flexibility - Micro distributors tend to be more flexible in responding to customer needs. For example, they trade longer hours and can also provide weekend and night deliveries. They can act as a credit provider to low income customers. They “live and breathe the streets” of the communities they work in and are in a much better position to control accounts receivables.

Issues to consider prior to implementation 

Channel focus - A micro distribution model is not a one size fits all solution for all channels. Micro distributors generally focus on selected channels in traditional trade e.g. mom & pop shops, Dukas (East Africa) and Spazas (South Africa).

Complexity - Due to the complexity of sale and distribution, micro distributors will likely struggle to service modern trade effectively. It is best to reduce the complexity (e.g. reduced stock keeping units) for the micro distributor, including expected tasks and activities. It is important to understand what the micro distributor can successfully take care of in the supply chain.

Role definition - Companies needs to determine which aspects of the business they would like to control. For example, the Coca-Cola model separates order generation from delivery. This allows the company sales person to focus on more value adding activities (e.g. meeting customers, getting orders) and the micro distributor to focus on warehousing (neighbourhood warehousing) and distribution.

Supply chain impact - When implementing a micro distributors system, companies must assess what impact the distribution model will have on the rest of the supply chain. For example, compared to larger distributors, micro distributors will require smaller drops sizes that will impact the warehouse and transportation infrastructure and processes.

Shared infrastructure - Profit margin are normally thin and it is important to determine if there are any opportunities to share infrastructure (e.g. warehouse, transport) with other non competitive manufacturers and distributors. This can significantly reduce cost and make the distribution model viable.

Regulatory issues - Companies also need to assess the impact that regulatory issues will have on the micro distribution system. This could include business licenses, zoning and transport bands (e.g. restrictions on delivery trucks during peak hours).

Standardization - During the design phase, companies need to standardized processes and systems as it will reduce set-up and training costs. For micro distributors, distributor turnover (the number that close down) is high and it is important to evaluate how set-up and training costs could be reduced.

Support - Micro distributors also have limited resources (e.g. capital, employees) and normally require a bundled approach (e.g. training, finance, process design) to ensure their operations are sustainable and viable.

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