Tuesday, March 31, 2009

The Chinese Wholesale Industry

In recent years China has been become the dominant force in the supply of wholesale goods. With cheap labour costs and almost endless resources at their disposal China can manufacture and supply almost any type of goods. Initially there were inevitable quality issues with goods shipped in from China however the majority of quality-related problems have now been ironed out, and most Chinese wholesalers will now offer a vast range of products that are immediately suitable for European markets.

By working more and more with companies wanting goods for the UK and other parts of Europe, Chinese wholesalers have developed a good grasp of the levels of quality expected by Western consumers. This has advantages for both the wholesalers themselves and the customers they hope to attract. The wholesaler, having developed their product range to European quality standards, now has an offering that can be sold straight into European suppliers without the need for time consuming amendments and improvements. This means that quicker lead times and lower prices can be offered which is attractive to potential customers, and should therefore generate more business.

Meeting stringent European quality standards such as the UK's EN71 testing has been a struggle for Chinese wholesalers in the past because their country doesn't have the same quality requirements. In fact China still have very little in the way of quality testing for their own domestic markets. Therefore wholesalers who had previously only supplied domestic markets and those of similar neighbouring countries found it difficult to adjust to the strict requirements of European customers eg particular standards of metal for wholesale jewellery and non toxic paint for children's toys.

In the early days communication was also a big problem. Although many of the big wholesale companies employed at least one fluent English speaker, who would act as the main point of contact between the UK customer and the wholesaler, messages were often lost along the chain of command. This is another problem that has all but disappeared now with more and more Chinese employees speaking a good standard of English. In some cases Chinese wholesalers with multiple UK customers will have a fluent English speaking Chinese agent stationed in the UK to act as a go-between. This method of communication is very effective as it allows customers to explain requirements to the agent face-to-face and the message is then accurately relayed to China.

A few years ago I witnessed all of the aforementioned problems whilst working for a UK company who manufactured licensed character goods in China for sale in the UK market. I worked as a Product Developer at the time and was in direct contact with our Chinese suppliers on a daily basis. Not only did we have products going back and forth 5-6 times with quality production quality issues, we also had the added pressure of having to adhere to strict brand guidelines set out by the licensor. Pantones, copyright lines, images etc. all had to be 100% accurate otherwise the products would risk being rejected by the licensor which was costly in terms of both time and money.



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