China Trade Shows & Sourcing Issues
In this episode of The Amazon Seller Podcast, we interview Meghla Bhardwaj of globalsources.com. Meghla shares valuable insight into China trade shows, the Canton Fair, sourcing from China and several other topics. Check out globalsources.com to connect with more suppliers and get your private label products made.
Liran: Hello and welcome to the Amazon Seller Podcast. Today, we have a special guest with us, we have Meghla Bhardwaj of Global Sources. Meghla is the head of the content for Global Sources, Thank you for coming on the podcast.
Meg: Thank you so much for having me Liran, I’m excited to be here.
Liran: We’re excited to have you on. Andy who is on here as well. Andy and I are both speaking at Global Sources this October, we’re very excited about that. I have heard some really good things about the Global Sources summit especially from the standpoint of networking and meeting some really high quality seller. Maybe you can tell us a little bit, for those who may not know a lot about Global Sources, tell us a little bit about what is Global sources really do and how long has it been around?
Meg: Yes, absolutely! Global Sources is a sourcing platform and we help importers find a need exporters in China and the rest of Asia and we do this via our online supplier directory at globalsources.com and also via our trade shows that are held in Hong Kong and we also have magazines. Global Sources started with trade magazines way back in 1971, that’s more than 45 years ago and our goal at that time was to bring manufacturers and overseas importers together and then we launch our website in 1995 and then in the early 2000’s we started organizing our trade shows. Traditionally most of the users of our website and the attendees of our trade shows were importers, retailers, distributors, anybody who’s really interested in importing products from China and then in the last 3-4 years, we’ve seen an increase in the number of Amazon Sellers and E-commerce sellers coming to our shows and using our services so that’s when we started a series of initiatives specifically targeted at Amazon Sellers to engage with them a little bit more to understand their paying point so that we could offer better services to them and we also realize that there is a need for education within this community because a lot of the people are very new to sourcing and there was a lot of information about E-commerce marketing, how to launch products, how to select products but there was not a lot of information about sourcing, so that’s when we started Global Sources Summit, the first edition was April of 2016, we’ve been doing this for 2 years and we organize the summit every April and October and it’s co-located with the trade shows, so the idea is you can come to the summit, learn from all of these experts, most of the experts are from the US and the sourcing experts are from China and then at the same time, you can start sourcing products from Chinese manufacturers on the show floor. It’s 2 event, one trip.
Liran: Got it, and that’s a great idea because whenever I’ve been to China, it’s always a great opportunity to network with other sellers that are there at the same time but of course it’s not at the, typically if you’re looking at the Canton Fair for example, there isn’t something necessarily sort of tied into that so I think it’s a great idea to tie in networking and learning along with sourcing. One of the things that I’ve heard about the summit is that generally or the trade show is that the Hong Kong suppliers are of higher quality so is that actually the case and why is that?
Meg: First of all the Global Sources Trade shows, the exhibitors are Chinese manufacturers, they’re not Hong Kong companies, they’re mostly manufacturers from Hong Kong but there are more manufacturers at our trade shows, I think that’s one key difference with Canton Fair. Of course, Canton fair is huge but there is a higher proportion of middle men and trading companies at Canton Fair so sometimes it can be difficult to differentiate trading companies from manufacturers whereas at the Global Sources fairs, there is a higher percentage of Chinese manufacturers. There are also trading companies but they are usually the more established companies, the bigger companies.
Liran: Got it, and so when I’m walking the show, how can I tell if I’m dealing with trading company or manufacturer? And then should I really care, should I avoid a trading company? or only use them if I have to and I can’t find the manufacturer direct or how do I really know, I know I’ve been at the Canton Fair and I know there a lot of trading companies there so what’s the sort of downside? How do I tell the difference? Sometime suppliers aren’t gonna necessarily gonna tell you the truth or maybe I’m wrong, maybe I’m wrong, maybe they do tell the truth. Maybe you can give some insight on that.
Meg: Definitely! The first part of the question, “how do you differentiate a trading companies and manufacturers?” You’re right, sometimes suppliers are not upfront about it and it’s very common for trading companies to say that they have a factory, In fact sometimes they will even bring you to a factory but it’s actually their brother’s, wife’s, cousin’s factory or something like that In China what you need to do is trust but Verify, I think that’s the principle that you should really follow. On Global Sources what we do is we verify the business license that has been issued to suppliers and so if you go to the website, you’ll see this little icon that says verified manufacturer, what that means is that we have checked that the government has issued this supplier a license to manufacture or set up a factory, and it’s not easy to get that license because you got to show that you have a certain amount of capital and you’ve got to show that you can invest in a factory so it’s not easy to get that certificate. That’s one thing that you can do to really tell if a supplier has the license for setting up a factory, but that of course does not necessarily mean that the supplier manufactures all the the product themselves because it is common for a supplier to manufacture one product category in house and then source other product categories from other supplier. So what you need to do is confirm that the supplier actually manufactures the product that you are looking for in house if you are really looking for a manufacturer. At the trade show there a couple of things that you can do, first of all, look at the product range that is on display at the booth, typically suppliers or manufacturers they produce similar products so if you see, let’s say all wooden product at a booth then you can be sure that this is a manufacturer of wooden products and they have a factory to make wooden products but if you see a booth that has a wide variety of products that might not be manufactured at the am factory or that requires very different production processes and it is more likely that the supplier is either a trading company or that they manufacture some products in house, at their own factory and they outsource other products. Most of the exhibitors at the Global Sources fairs are also online on our website so you can go to our website and check if they have the verified manufacturer’s icon, that’s one way to check if exhibitors at the show are manufacturers or they have the license to manufacture.
Liran: Got it! I know that Canton Fair works in phases with different categories, the Global Sources summit, the conferences in conjunction with shows, what kind of products expect to find? Are there sort of different categories at different times or how does the Global Sources shows work?
Meg: Yup, there a re 4 shows that we host every April and October. There are 2 electronic shows, consumer electronics and mobile electronics and the consumer electronics show is the first show of the “season” that runs from October 11th to 14th and interestingly the dates of our shows are the same in April and October so it’s easy for buyers to remember. We start off with consumer electronics, 11-14th and the second phase of the trade shoe season is mobile electronics, October 18-21 and then the third phase, the third set of shows are lifestyle and fashion and both of those shows are held together October 27-30th. The Global Sources Summit is co-located with the 3rd phase or lifestyle and fashion products. Most Amazon Sellers they like to sell private label home products and gift products, that is a more relevant category for Amazon sellers which is why we host the summit together with that show.
Liran: And it seems that the shows sort of a different times exactly than the Canton phases so serve, hop back and forth, is that the case?
Meg: Yes, and actually there’s not only Canton Fair but there are other shows that are held in April and October, for example there’s TDC (HKTDC) in Hong Kong which they also do electronics and gift shows and all. And all of the shows in the region during that time are actually timed in such a way that the buyers can easily go from one to the other and the dates are kind of overlapping but there’s not too much overlap with each trade shows, so for example if you’re going to Canton Fair phase 2 which is gifts and home, that is in between Global Sources’ phase 2 and phase 3, so you can do Canton Fair phase 2, come to Hong Kong – do our gifts shows and then go back to Canton Fair for Canton’s phase 3 which is right after our last phase.
Liran: Makes sense! A good opportunity to take advantage of retirement in China because a lot of people are drawn to go to the Canton Fair but why not the same time go see some other shows, go check out the shows in Hong Kong and attend this summit. Let’s jump into one of my favorite topics, I’m talking about quality issues, I think my personal opinion on this is that you will always have to deal with this issue but it’s sort of like how you deal within, how you control this as far as quality issues with Chinese suppliers? I guess the first question I’ll ask is, when I’m producing a product, why can’t every product, every unit just be perfectly new condition that I expected to be? Why do we have this quality problems where I need to make sure I send an inspection company and they always find stuff and it’s never perfect and I need to maybe have some push backs and conversations with the suppliers, why is that? Why can’t you just place an order and just expect to get the brand new top, good quality product that you expect to get?
Meg: Yeah. First of all, we need to understand what exactly is quality, and what is quality control? How is it defined in manufacturing? Quality is basically, there’s no universal definition of good quality, I don’t think there is such thing as good quality and that’s because quality means different things to different people. When a production manager of a Chinese manufacturer, what he considers to be good quality may be different from a buyer in the US with their definition. In manufacturing, good quality is defined as the conformance to the requirements and most quality issues happen because these requirements have not been communicated very clearly to the supplier, miscommunication I think is the number 1 cause for quality issues and as an E-commerce seller, as an importer, don’t believe that your supplier understands your specifications or expectations clearly because first of all you are communicating with somebody who doesn’t speak English, it’s not their first language and then you’re most likely talking to the sales person at the factory who has to communicate your requirements to the production manager and it’s not uncommon for things to kind of get lost in translations or requirements not clearly communicated to the assembly lines. What you need to do is first of all, make very sure that your product specifications are very very clear, for example if you are looking for blue fidgets, don’t say I want dark blue fidgets but specify the pantone code of the blue color that you want. Not only should you define the product specifications but you also need to define variations that are acceptable and the quality issues that you think are minor, major or critical, that also needs to be defined right upfront.
Liran: Right, and I think like you said, that’s probably one of the biggest mistakes that sellers make is they don’t set this qualifications because like you said we all have this idea of what quality is in our head and you go on Global Sources, website and you see your Bluetooth speaker and you just expect that it’s gonna be a Bluetooth speaker without any marks and it’s gonna have good sound quality for what you expect and it just works and it doesn’t have sort of any representation that it’s not quality to you and you just expect it to be there without necessarily setting up that criteria ahead of time of what is acceptable. Is a scratch under 1 mm on the Bluetooth speaker acceptable or is it 3 mm or etc and that’s definitely one of the things I have to learn the hard way in dealing with China is really setting up the criteria upfront just like you said and that’s something I’m kinda going through with one of my suppliers now as we’re doing inspections and finding issues, we’re using those inspections to set the criteria, to make sure we set the right criteria for the following order, fix the issues and try try to improve the quality on the next order and give them a sample that we want represented for the final product, I think that’s really important.
Meg: Absolutely! And I think if you tell suppliers early on that you’re conducting inspections, that also helps minimize the problems later on especially if you tie inspections into payments, if you say that 30% advance and then 70% of the payment will be done after the pre-shipment inspection passes, so that really helps as well.
Liran: One of the things that I do as well is if the first inspection fails then the second inspection, the supplier pays for, that’s another thing that I think is good to at least try to negotiate and set up upfront. Recently I got some push back from a supplier and I said “Ok fine, if the second inspection fails, you pay. If the second inspection pass, you pay”. This is all part of getting push back from a supplier so. Talking about inspections, one of the things that I’ve recently learned to do is to do a pre-inspection even before placing an order with the a supplier, do you recommend doing that like a pre-production audit?
Meg: If you are going all in, if you’re doing your own brand, developing your own products then absolutely Yes. You should do a factory audit, you should make sure that the supplier has the capability and all of the production process is in place to manufacture the product especially if it’s something like a technical product or an electronics product for example or something that requires a specific mold or coating, yes you wanna make sure the supplier has the capability to carry out those processes.There are types of inspections so if you are ordering container loads, I would also say that during production check, it’s also known as a “DUPRO” that should be conducted, that usually takes place when 10 to 30-40% of the goods are completed and they are kind of packed. Similar to a pre-shipment inspection, the units are selected randomly from the production line and then they’re compared to the specification that the buyer has provided.
Liran: I guess the idea of doing that is that if there’s a problem, let’s catch it early on as supposed to trying to fix a whole bunch of problems with a lot more units later on.
Meg: Yeah, absolutely. It’s easier to take corrective action before production is finished. After production is finished and if you catch a major issue then it cost time and money and you might have to potentially cancel the order if they show it’s very critical.
Liran: Got it, and let’s say I found the supplier, went to the show, went to Global Sources, I found a supplier, I’ve done inspection and I see it’s good quality, can I save money in the future by saying “They produce good quality, I know this is a pretty good supplier” or do you recommend doing an inspection in every single order?
Meg: Every single order, no doubt. The supply chain is so complicated for most products and there’s so many sub-suppliers of a factory, there’s so many different, there’s so many factors that affect the quality or that can impact with what’s going on with your product so I would say, you have to do an inspection for all products for all of your orders because you never know what could go wrong where, maybe the supplier changed the supplier who supplies the raw materials for example and there are some issues at the raw material manufacturers factory. Supply chain is complicated for most products so I would say, always do at least at the very minimum, do a pre-shipment inspection. Once you have developed a relationship with a supplier, you might skip pre-production or during production inspections and definitely the factory audit is only for new suppliers but definitely do pre-shipment inspections for all orders.
Liran: Got it. There’s lot of ways to source in China so what’s the difference, I know you can go online, if I can go online or maybe if I can use let’s say if I have a sourcing agent, what’s my advantage of going to a trade show? Am I gonna see different products there? Am I gonna have an opportunity to see new products there or is it the same product I find online? What’s my benefit in spending the time, the money, the long flight on going to China versus just using online sources?
Meg: I think if your just starting out then you can probably source online especially if you don’t have a capital to invest in the business than start online, just make sure that you’re doing you pre-shipment inspection and verifying the suppliers but I think as your business grows and you want to establish your brand and build your own private label business and maybe expand to other product categories, I think attending trade shows is very beneficial because it really speeds up your sourcing process. When you are in this trade show, you can literally touch and feel all of the products from different suppliers and very quickly, you can see the quality differences whereas when you are sourcing online, you have to wait for the supplier to send you samples before you can decide whether or not the product is suitable for you and also trade shows can help you research a product category so if you’re just starting to source a product and you’re not very familiar with the specifications, you can go to a trade show and research the product specifications and identify the right questions to ask prospective suppliers, that’s another advantage. Many exhibitors don’t actually release products online, the new products are actually displayed at trade show, these are not posted online until the shows are over because they fear that other suppliers will copy their products so you can also get a first mover advantage by being the first to discover these new products.
Liran: Do you find that’s kinda critical maybe in certain categories compared to others, let’s say if you’re interested in electronics for example, I would think that first mover new products are kind of the lifeblood of your business, so is that more so you think in certain categories?
Meg: I think electronics, yes for sure but even for home products and gift products, for example at the Global Sources lifestyle show, we focus a lot on curating products so what we do is we ask suppliers to send in their most innovative new products to us and then we have a team of in house experts and we also have designers from outside, they actually look and review all the products and then shortlist 50 hundred products and then we have a different section where we display this cool products. I would say electronics definitely but even for other categories it might work.
Liran: That’s pretty cool. You actually curate innovative or the products that you would like to see from the suppliers that Global Sources thinks are cool or up and coming new type of products.
Meg: Yes correct, that’s what we think USP’s of the shows I would say that there are more innovative products at our shows as compared to Canton Fair or it’s easier to identify the more innovative products in our shows.
Liran: That’s definitely a benefit of why you wanna be at a trade show in person versus maybe waiting 6 months or a year ’til you might see that product inline or you might see it on Amazon and then you are kinda behind the eight ball trying to chase other sellers who got there before you.
Meg: Yeah, absolutely.
Liran: so what would you say if I’m planning to go to the Canton Fair, I’m gonna come over to the summit and attended Global Sources shows, what do you think a seller needs to do to prepare for a trade show? You know when I was at the Canton Fair for the first time like you said it’s huge and it can be overwhelming maybe if you don’t know what exactly you’re looking for, so what are the strategy is that a seller should really do? what’s the game plan to have in place before attending a show so you can have a successful show?
Meg: First of all, you needed to decide what product categories you’re interested in and then identify all of the relevant shows, take a look at the dates, if you wanna attend the summit take a look at the dates for the summer and plan your trip accordingly and then you also might want to visit your suppliers in China during that time so you might want to come to Asia for 1 and a half, 2 weeks or a week at a minimum so that you have some time to visit your factories as well and then after you’ve decide which categories and which shows you wanna attend then I think the other thing that you need to do is list the products that you are interested in ‘cuz as you said you know Canton Fair and even Global Sources is a very huge fair so sometimes you end up wasting a lot of time just roaming around the aisles. It helps to list the products that you are interested in and list the product features and your requirements beforehand so that when you talk to exhibitors, you’re very clear of what kind of suppliers you’re looking for and you can walk away from the booth in a minute or 2 if you know that a supplier is not right for you. I think it’s important to clearly know what you are looking for before you go to a trade show, that’s the most important thing.
Liran: Right. You wanna come prepared, you wanna know which categories you might be interested in, you wanna do some research. Now, if I go to the Global Sources website, can I see in advance the exhibitors that are gonna be at the show so maybe I can research what products they have and maybe I have some communication with them and then choose to go meet them in person, find out their booth number, is that something I can do?
Meg: Absolutely, most of our exhibitors are online, on the website globalsource.com so you can go there and even schedule appointments with exhibitors, you can also see where there booth is, I would also say that before you attend the show, get a map of the floor so that you know which categories are where and which hall in advance so you can be more efficient at the show.
Liran: Got it, SO you wanna make sure you do your homework before you go to the show, do your product research and I think it’s important to spend the time like in the evening when you are at the show to go back and look at the products that you saw, that you think are interesting and then go back and sort of verify the data on Amazon because one of the mistakes that people are doing is they are trying to, they have a product first and they try to sort of back it into Amazon without looking at the research in Amazon, what is the demand look like? What is the keyword? Search what I’m look like, what does my competition like? What are prices like, reviews etc. and specially reading those reviews because if you can find out what customers, what quality issues customers have in the review and these are the thing that you can potentially bring up to the suppliers you speak to and then for the show, do you find that people need a translator for Global Sources or that generally most of the suppliers their have an English person or speak English?
Meg: Mostly they have English speaking people so I don’t think you need a translator, if you are going to factories, you might consider a translator specially if you’re planning to visit the assembly line and you want to talk to the people whoa re actually doing the production like the production staff or the assembly line manager then you might consider but for the trade show, you usually don’t need a translator, most suppliers will have sales person at their booth that speaks English.
Liran: Got it. That’s good. I kinda found the same thing when I went to Canton Fair, I didn’t feel like I really needed a translator, felt like most of the booth had an English speaking, either somebody they had hired or somebody on their staff and I’m personally very excited, I’ve heard good things about the shows for Global Sources, it will be my first time attending there and also my first time attending the summit and Andy and I will be speaking at the summit so maybe we can finish the podcast with you talking a little bit about the summit like what can I expect to learn ant the summit? How is the summit different than the hundred other Amazon conferences that exist throughout the world? I feel like there’s one every month. Tell us a little bit about the summit itself, what can I expect to learn? What are some of the topics that will be covered?
Meg: First of all, one of the key differences with other conferences is that we have a lot of sourcing related contents. The summit is targeted primarily with private label sellers, we’re sourcing from China, I think a lot of the other conferences, they have content relevant to any type of sellers – retail arbitrage, general merchandise but we specifically focus on private label sellers sourcing from China and then we have a lot sourcing related contents that I feel many other conferences don’t have, most of the conferences focus a lot on the marketing aspects of the business so that’s one advantage and then the second advantage of course is that it’s co-located with trade shows so you attend the summit and at the same time you can start sourcing products. I think we have a great speaker line-up, you’re coming there, I love the topic that you’re gonna cover which is relationships in building a business not only with suppliers but your employees and everything that’s a fantastic topic and then Andy is gonna be speaking as well and we have other speakers, friends Jordan, Cynthia Stine, Kevin King we also have Paul Miller who’s gonna be talking about licensing which is a very hot topic nowadays and it’s a growing business model and then I’m also excited about a speaker we have who specializes in chatbooks for E-commerce, I think she’s the only person currently that focuses on chatbooks with E-commerce, Michelle Barnum Smith and then we have Tracy Hazzard who focuses on product development and then we have a couple of quality related speakers as well. It’s a great line-up, most of the attendees at the summit are tend to be more established and larger sellers because they are coming over to Hong Kong from the US or from Europe and they’re investing time and money so they typically more advanced. It’s a great opportunity to learn from this more established sellers as well.
Liran: Right, my thought process is even if I’m not at that level, I wanna hang out with people that are the higher level than I am because I’m gonna hopefully some of that wisdom and knowledge and skill set is gonna rub off on me, I’ll be able to network and build relationships with those sellers and be able to continue to network and learn and share different strategies with those sellers. I would say even if you may not consider yourself sort of a higher level seller, you’re gonna be in a room with a bunch of people who are very serious because they spent their money and time to go to Hong Kong and spend their time learning and spend their time sourcing at the show. I think for me networking has been a huge aspect of my business and so I would encourage you to get out away from your laptop and go out and network and there’s a great opportunity to be able to both network and source at the same time and learn. SO if you are interested in attending the summit, we actually have a, Meghla has been generous to give us a $100 off code so it’s globalsources.com/summit and if you use the code “amazing” you’ll save $100 off the ticket price so we hope to see you there, I would still encourage even you’re not gonna go into the summit to attend the shows but I think if you’re already there, why not get the education and the networking with the sellers that are there.