by Mike Bellamy
Sourcing expert Mike Bellamy steps up to the plate to answer this month’s Ask the Experts questions.
Photo by Phong Nguyen on Unsplash
Lathuso asks: I need motorcycle spare parts on credit. Currently, I am selling oil for motorcycles and now my customers are asking for spare parts. Can l get stock on credit, then pay as l sell?
Mike Bellamy: Here are two blog posts that give some insight into how suppliers view payment terms & credit: "China Sourcing: What Are Reasonable Payment Terms?" and https://www.smartchinasourcing.com/paying-chinese-suppliers/
In short, if you are a big buyer spending big money, then you can extract preferential payment terms. If you are ordering less than 10,000 USD each time, and a seller offers you net terms (pay after delivery), be very careful as it could be a scam!
Shipping woes
I.A.G. asks: The shipping companies have created an impossible situation by constant increase in sea freight. They have done away with all business norms and offer space to the highest bidder. How do you deal with this high seas thuggery?
MB: So true. That’s one reason why so many US companies are seriously looking at “re-shoring” or trading China for Mexico if they are unable to pass the increased costs on to the consumer. BUT the fact that China remains the world’s production line for so many product categories is a testament to how hard it is to just pick up and move production to another part of the world. China made it so easy to source for so long, the shipping companies are using their leverage to capture the fat in the supply chain that used to end up in the US buyers’ pockets.
Finding manufacturers
Conor asks: I am looking for graphics card manufactures and I seem to keep ending up with trading companies or distributors/wholesalers. I am only starting out, so my orders will only be around 10-50 to start with but if all goes well I would increase this to around 100-200 per month. What is the best way to find actual manufacturers?
MB: It’s easy to source from China, IF your orders are large. Buying factory direct with small order sizes is no easy task. But if you want to give yourself a fighting chance, I offer 5 potential strategies in this full length video tutorial: https://vimeo.com/522155488
Ask the Experts is curated by Mike Bellamy
Originally from upstate New York, Mike moved to Asia in 1993. Mike studied Chinese in Harbin & Beijing in the 1990s and spent over 20 years living and working in Japan, China and Thailand.
At AsiaBridge Law, Mike serves as the Senior China Business Advisor to both Fortune 500 companies and small businesses. Recognized as an expert on China sourcing, he has been interviewed by the Wall Street Journal, CNBC, Financial Times & Bloomberg. Mike is also the author of The Essential Reference Guide to China Sourcing.
Every month, our panel of sourcing experts will be getting together to answer the toughest sourcing questions you send in. Visit our Ask the Experts page to submit your questions for Mike and the panel. The most challenging and most vital questions will be covered in a subsequent edition of Ask the Experts.
