Lessons from YiWu

At a recent trade show, I met a new-to-China buyer who purchases generic electronics from across the PRC.  He looked very nervous when he came to me for help. He said: “2 months ago I gave a 20% deposit to a supplier of 10K USD along with the PO. The goods were to ship out today.  I emailed and called them a few weeks ago for an update but didn’t hear any news back.  I called again a few days ago and now the phone line is not working.  They did reply to my email and said there has been a delay (no explanation) and that I shouldn’t worry.”

 

I stopped him and said, “let me guess, is this supplier in YiWu?”

 

“Yes, how did you know? ” he said.

 

If I talk to 10 people who are having problems, 5 out of 10 are in the greater YiWu area.  This is the hot bed of commodity type items at low cost. Think plastic Christmas trees to knock-off car parts….if HK is the financial HQ of China sourcing, and Shenzhen is the HiTech Hub, then Yiwu is the flee market. The market is huge, and much that is sold at the market is not actually made in Yiwu. So you have lots of small trading companies and brokers serving small buyers (often from 2nd tier markets like Africa, Russia and Middle East) who buy on the spot and take the goods back home after doing inspection with their own eyes while on-the-ground in China. I mean no disrespect to the foreign buyers who utilize this method of trading, it works for them and I am amazed at some of the mark up being cleared by these when they get home to places like N. Africa and India.   They key to their success is that they check the goods and pay the seller on the spot. Some sellers even rent stalls at the market, get orders from foreign buyers not wise enough to do due diligence, then the stall renter (who says he is a factory owner) goes out and finds factories to fill the orders…after, not before, getting an order.  If the buyer doesn’t stick around to check the product for quality and delivery schedule in person in YiWu, things get ugly quick.

 

Wishing you successful China Sourcing!

Mike Bellamy

Author, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book/)

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