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Whether you're looking for packaging, spare parts, new products or expanding your supplier network, most businesses recognise that China offers affordable and abundant options. But the question is, where do you start?  

Here's a quick guide to help small and medium sized businesses in their search for new suppliers.

1.  Shortlist and verify your suppliers 

Online directories 

Alibaba.com 

Alibaba.com is the most commonly used B2B marketplace to find suppliers all over the world. The online platform is available in 17 languages, with plenty of wholesale suppliers. Here are some tips on finding a reliable supplier on Alibaba.com: 

·       Alibaba Trade Assurance: This is a free programme that protects the buyer from payment to delivery. Alibaba guarantees your money back if there's any product, payment or delivery disputes. This credit-rating system also motivates suppliers to maintain timely production and delivery.  

·       Request for business certificates: You can request for businesses certificates or determine if the supplier is a verified or gold supplier on Alibaba.com. This means that the company profile,

·       Request for a sample: If you're placing an order for the first time, committing to a large order online may be risky. Most wholesale suppliers would allow a sample order so that you can inspect and verify the quality of your product.  

·       Communicate clearly and respectfully: Besides using Google translate, having an awareness and respect of different cultures promotes clearer communication and better business relationship with your supplier.  

1688.com 

1688.com is China's largest domestic wholesale platform with 10 million Chinese suppliers, 16 industries and 1700 product categories. Although the online platform is in Chinese language, smaller overseas buyers are turning to source on 1688.com for these reasons:  

·       Lower minimum order quantity (MOQ) 

·       A variety of products  

·       Competitive pricing 

·       Direct from Chinese manufacturers  

To learn more, download the complete guide to sourcing from 1688.com.

Trade shows 

Canton Fair (China Import and Export Fair)  

Started in 1957, the Canton fair is the oldest and largest trade fair in China. The fair is held biannually in Guangzhou, China during April and October. With plenty of industry categories and 35,000 exhibitors, the trade show is broken down into 3 phases to cater to 200,000 buyers. You'll need to apply for a Canton Fair invitation to attend.  The fair also has an online exhibition which will be extended for 6 months until 15 September 2023. 

2. Settle your logistics

You can pick a logistics partner depending your needs: 

• Your business model – Are you drop shipping? Are you delivering to your own warehouse?
• Your product – Is it high value? Does it need to be stored in certain conditions? 
• Warehousing – Are you purchasing large quantities? Do you require a place to store your products? 
• Speed of delivery – How fast do you need to receive your products?

You may wish to engage a logistics partners which your supplier works with for better coordination. Alternatively, if sourcing for a product and logistics partner is too much of a hassle, you can engage a sourcing agent.

Sourcing agent

If you're willing to spend more, a sourcing agent is an easy and convenient option to help you with sourcing your products, communicate with the supplier and handle your logistics. An experienced sourcing agents will also be able to negotiate on your behalf, especially if you're entirely new to sourcing in the China market.

3. Find the best way to pay your suppliers

A. Consider which currency to pay your Chinese suppliers

Most Chinese suppliers will request for payment in US dollar (USD), while others may (rarely) request in renminbi (RMB) or your home currency (such as SGD).

If you have a good relationship with your supplier, consider requesting for payment in offshore renminbi (CNH). CNH is slightly different from RMB, where CNH can be traded in the international market while RMB is controlled inshore by the China government.

Why is it beneficial to pay in CNH?  

USD quotes are usually higher to buffer in exchange rate fluctuations. Considering that the exchange rate of CNH : RMB is 1:1, using CNH alleviates currency risk for the supplier. This helps when renegotiating prices whenever there're changes in when and how much you decide to purchase from your supplier.

B. Decide on a payment provider

If you're involved in import and export business, it's best to use a multicurrency account to avoid multiple exchange rate conversions when you collect and make cross-border payments. In Singapore, it's a buyer market where you have a handful of providers to choose from.

Here's a 60 seconds guide to choosing a payment service provider

    Cost 

        a. Is there an exchange rate mark-up?   
        Compare your payment provider's rate against the market rate (the market rate is the exchange rate you see on Google).  

        b. Are there any fees involved? 

    Speed 

        a. When do you need your money to reach the recipient? 
        Depending on the country and currency you're paying to, most banks and payments provides will send your money within a few hours and up to 2 days. If it takes longer than 3 days, you may want to check with your provider on the status of your payment.  

Security 

        a. Is your transaction secure?  

        b. Is your provider regulated by the local authorities? Do they outsource their operations and cross-border money services to their partners? 
        You can visit MAS directory to check if your payment service provider is regulated in Singapore.  

Volatility 

        a. How much will you lose or pay for a currency pair?  
        The strength of a currency depends on how the market moves, it can be affected by world events, economic changes and politics.   

Ease 

        a. Are you looking to make business transactions on-the-go? Over mobile or desktop?  

        b. When you have questions or account issues, do you have local account support? Can you reach your provider? 

WorldFirst helps 1 million businesses move money around the world. The World Account by WorldFirst allows businesses to collect in 10 global currency accounts (USD, SGD, AUD, CAD, GBP, EUR, HKD, NZD, JPY, CNH) and pay to 130+ countries in a fast, secure and easy way. Our payment solution is also integrated with 1688.com to allow businesses and individuals to pay 1688 merchants securely and instantly. We're a licensed payment provider by the Monetary Authority of Singapore (MAS).