In the recent months, we received several complaints about their Chinese suppliers not being able to deliver on time or delivery with quality guaranteed. After further discussions and research, we feel that the buyer really need some advices as they are not familiar with textile production in China.
Why your supplier can not deliver or deliver quality products? Possible reasons:
1. The supplier quoted a price, then material price goes up. He might have asked you to increased the price, and you rejected; He might be so shy to ask for a price hike, but he is not to deliver anything. The margin of Chinese textile products is only 4%. In case of any raw material prices, the supplier might lose money to deliver if the buyer refused to increase price.
Due to competition, the mark-up of textiles product in China is only around 4 to 5 percent (net). This is quite different from US, Canada, Europe and Australia, where mark-up is at least 20 pct based on my personal information, With 20% mark-up, you do not lose money easily.
while with a margin of five percent, you can hardly stand any uncertainty.
2. The buyer might be buying throgh a bidding process. The buyer has sent inquiries to teens of suppliers and get the lowest quotation. Then he accepts the lowest bid. The supplier might intend to get the order first, then he will try to squeeze his suppliers. If he fails, then he will not delivery anything, though this is no good as he is supposed to be honest and fulfil his committment.
It is import to note that it is not the right way to buy textile products by bidding and hard squeezing. The difference between buying a Mercedez Benz and 10,000 t-shirts lies in that the Benz car is already made, quality is the same to everyong. This means production is done before the buyer places the order. But for garment, production is done after the order according to buyer’s color, measurement and other technical requirement.
In case the Buyer is really paying peanuts, the supplier has no option but to save every penny to reduce cost. From the yarn to knitting and finishing, cost is uncertain.
Let’s take 100D/144F polyester as an example, yarn of AAA quality is around 20 cents more expensive than yarn of AA quality. If you are paying well. the supplier does not feel it is necessary to use AA to save cost. In the dyeing also, dyestuff cost differs greatly.
In short, you pay for what you will get. If we can coin the computer term WYSIWYG (What you see is what you get, then it would, in our case, be WYPIWYG (Wha you pay is what you get).
Advices:
1. Do some research, find a few good and reliable supplier and maintain a long term relationship. No guy is so stupid as to screw a long term clients;
2.Do not buy from the guy who offers the lowest price. You smile when you see his prices, but you weep when he is not performing.
3. Try to get some information on material cost, knitting cost, dyeing cost, sewing cost etc so that you do not give your supplier a ridiculously unreasonable target price. In such case, you supplier will doubt your sincerity. If any buyer gives a target price that is below cost, this could mean:
a.He is not professional:
b.He is not serious; or
c.Both above.
4.Do not look for any supplier that is vertical. In textiles, the supplier has to spend billions of USD if he wants to do vertical production. If he is really vertical, then his prices will be double market prices as it costs him dearly to operate a giganti mill. For instance, if you want to buy finished fabric, you can not buy from any company with vertical production. If you buy from a dyeing house, then the dyeing house is buying greige fabric from a knitter. If you buy from a knitter, he is paying to get the fabric dyed from the dyeing house. What’s the difference?
However, you might argue that you want to buy from a company that is running both knitting and dyeing. Good! The prices will surely be 20% higher. This is the secret of Chinese textile production.
5. Trying to find a long term partner is the most easy way to success. Your Chinese partner has connections and relations with local producers. As they know the market and raw material prices, the mills will quote to him a price that might be 30% lower than if they quote to you. It is naive to think you can buy cheaper if you are buying directly from the manufacturer.
Chinese culture is different from America and Europe. People do not trust strangers and will quote unreasonably high prices. Chinese business people prefer to do business with people they know and people that can locate in order to reduce risks.
More advice if you write to me and send me your request.
