Your business can save money right now by ordering products and materials wholesale from China. But is it a good idea?
The short answer is: yes, if you understand the risks.
Business-to-business (B2B) websites make it easy to buy straight from factories around the world. The biggest website, Alibaba.com, claims over 40 million registered users. Another fast-growing site, Made-In-China.com, claims 720,000 users in the U.S..
Using B2B sites is easy. Alibaba is laid out much like eBay. Hot and new items are posted on the main page – such as potassium sulphate from India and cashmere yarn from China. Links to categories are listed on the side – from Agriculture to Transportation. If you're a designer, try browsing the Fashion section for finished products, materials, and equipment. Here's a bundle of turkey-feather boas from Zhejiang, minimum order 500. If you're a farmer, then check out these dirt cheap tractors.
You won't see any prices on site, as you must negotiate directly with the supplier. This is a good thing as it allows you to bargain for awesome prices – around 35 percent cheaper than anything in America, according to a Made-In-China spokesperson. You can also get to know the people on the other side and make sure they have business practices you support.
Most American small business owners eschew imports, however, for fear of various risks. Some are legitimate, others are not.
First, it might be a concern that it takes more planning to order weeks ahead of time.
Second, people are suspicious of products from China. The world's biggest exporter has a has attracted bad press in recent years for scandals involving melanin in milk, lead paint in toys, and other major recalls. Beyond the scandals, we often associate Chinese manufacturing with cheap toys and fake handbags.
Third, many people are worried that everything in China comes from a sweatshop.
However, most B2B sites work with third party auditors, which guarantee humane working conditions and quality. They also provide background information – and contact info – so you can decide for yourself. Many of the suppliers on the other side of these sites may be small business owners just like you.
Although China exports some dubious products, they also produce materials good enough for the U.S. government, which hires Chinese companies for a wide range of services, such as bridge construction.
If you're ready to commit to a purchase, there are two final safeguards. One is to order the minimum quantity and understand that you might have to eat some loss. The other is the same measure suggested on eBay: arrange the deal through PayPal and cancel payment if your Chinese tractor doesn't run.