How to find good manufacturers in China?

Sourcing from China can offer great cost savings, but finding a reliable manufacturer is often challenging. Quality issues, communication barriers, and hidden fees can quickly turn a good deal into a nightmare.

To find good manufacturers in China, use trusted platforms like Alibaba¹, attend trade shows, request product samples, verify certifications, and establish clear communication (how to build trust with Chinese factories²) to ensure quality and reliability.

But sourcing isn’t just about finding any manufacturer—it’s about finding the right one. Let’s explore what you need to know.

Which Chinese company is bigger than Amazon?

While Amazon dominates globally, some Chinese companies surpass it in certain markets and metrics.

Alibaba is considered bigger than Amazon in terms of gross merchandise volume (GMV), although Amazon leads in revenue due to its direct retail model.

Warehouse Inspection by Customs Officer

Understanding Alibaba’s Global Impact

1. Business Model Differences:

   • Amazon: Operates as a retailer and marketplace, holding inventory and offering fulfillment services.
   • Alibaba: Acts primarily as a platform connecting buyers and sellers, without holding inventory.

2. GMV vs Revenue:

   • Alibaba’s GMV (total sales transacted through its platforms) is higher than Amazon’s, but Amazon generates more revenue due to direct sales and services like AWS.

3. Market Reach:

   • Alibaba dominates the Chinese e-commerce market, while Amazon has a stronger foothold in the U.S. and Europe.

Why is Amazon blocked in China?

Many people are surprised to find Amazon’s presence limited in China, considering its global dominance.

Amazon isn’t officially blocked in China, but it withdrew from the Chinese e-commerce market due to fierce competition from local giants like Alibaba and JD.com.

Why Amazon Struggled in China

1. Intense Local Competition:
   Chinese platforms like Taobao, Tmall, and JD.com dominate the market with better local understanding, faster logistics, and tailored services.

2. Regulatory Challenges:
   Navigating Chinese e-commerce laws and digital regulations posed hurdles Amazon couldn’t easily overcome.

3. Consumer Preferences:
   Chinese consumers prefer platforms offering integrated services like WeChat Pay and Alipay, areas where Amazon lagged.

Though Amazon's global site is still accessible, its marketplace operations in China ceased in 2019 due to these challenges.

Do I have to pay import tax from Alibaba to the USA?

Importing goods from Alibaba can be cost-effective, but many new buyers are unsure about taxes and duties.

Yes, you typically have to pay import taxes, customs duties, and possibly other fees when importing from Alibaba to the USA (Chinese tariffs on US imports³ and Section 301 tariffs on Chinese goods⁴), depending on the product type and value.

Understanding Import Duties and Fees

1. Customs Duties:

   • The U.S. Customs and Border Protection (CBP) determines duties based on product classification (HS code) and value.

2. De Minimis Threshold:

   • Imports under $800 may be exempt from duties under the de minimis rule, but this depends on shipping methods and product types.

3. Tariffs on Chinese Goods:

   • Due to the U.S.-China trade war, many products from China face additional tariffs. Check the current tariff rates for your product.

Pro Tip:
Work with a freight forwarder or customs broker to ensure compliance and avoid unexpected costs.

Why did Amazon leave China?

Amazon’s exit from China shocked many, considering its global influence. But the reasons were clear.

Amazon left China in 2019 due to fierce competition from local e-commerce giants like Alibaba and JD.com, cultural barriers, and regulatory challenges (amazon's withdrawal from china reason⁵).

Key Reasons Behind Amazon’s Departure

1. Overwhelming Competition:
   Alibaba’s Tmall and Taobao offered lower prices, faster shipping, and better local integration, making it hard for Amazon to compete.

2. Cultural Disconnect:
   Amazon’s business model, focusing on product variety and quality, didn’t align with the Chinese market’s preference for price competitiveness and social shopping experiences.

3. Regulatory Environment:
   Navigating China’s complex regulatory framework and internet restrictions added significant operational challenges.

4. Strategic Focus Shift:
   Rather than compete domestically, Amazon shifted focus to cross-border e-commerce in China, allowing Chinese sellers to sell internationally via Amazon Global.

Conclusion

Finding reliable manufacturers in China requires diligent research, understanding market dynamics, and navigating regulatory landscapes. With the right approach, you can build strong partnerships that support your brand's growth.