Buying Bulk Stock Products (Off Shelf) from China

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Planning to buy bulk stock products from wholesalers in China? Depending on your industry, and target market, buying off shelf goods may be a dead end. ‘Make to order’ is the standard mode of operations when outsourcing production to manufacturers in Asia. Manufacturing is a risky and time consuming process, so wouldn’t it just be a lot easier to buy goods that are already available in stock?
The answer is sometimes yes, but mostly, no. Whether or not off-shelf procurement is a viable strategy, depends on various factors, including the type of product, and your market. This, and much more, is explained by Zhu Jing, Co-founder of Jingsourcing.com. But first, I’ll get you updated on the basics.

Part 1: What Importers Must Know About Buying Bulk Products

Manufacturers in China, and most other places in Asia, operate according to a ‘make to order’ principle. This means that the supplier doesn’t keep products in stock. In fact, most suppliers don’t even keep raw materials and components in stock. Instead, they procure the necessary raw materials, from their subcontractors, as it’s needed to produce goods for their own customers. At least, this is how it works for goods made for export markets.

But what about all those online wholesalers and traders, selling bulk stock products? Yes, they exist. However, they are primarily selling goods made or the domestic Chinese market. This is problematic, for the reasons explained below:

1. Off shelf products, made for the domestic market, normally don’t comply with overseas labelling requirements. In the United States, for example, all products must be marked with the Country of Origin (i.e., Made in China). There are other labelling requirements that apply to specific categories. For instance, apparel importers must ensure that care labels, sizes and the fiber descriptions are compliant with local labelling requirements.
2. Products, made for the domestic market, are not made to comply with overseas safety standards. While China has it’s own product compliance marks (i.e., CCC mark) and standards, these are not interchangeable withforeign compliance marks (i.e., FCC and CE) and safety standards.

Part 2: Interview with Jing Zhu of Jingsourcing.com

You are working with small buyers worldwide. Are they normally interested in buying custom made products, or ‘off shelf’ goods?

People have different definitions for what a “small business” really is, so I’d like to start out with clarifying what we consider being a small business. Here it comes: We define “Small volume buyers” as a business with a total order value of less than US$2,000. That includes different SKUs. Thus, different products, not just one.
For these buyers, they normally have no other option but to buy, what you now call, bulk products. That’s because customization results in a higher Minimum Order Quantity (MOQ), not only for the product itself, but also for the packaging. There are also tooling costs. If you need your own design for, say, plastic products, you’ll need to invest thousands of dollars in an injection mold.

So, what is the ‘breaking point’ for when you should consider buying ‘newly produced’ goods?

Other small businesses that buy more than just US$2,000 per SKU (not mixed orders), tend to at least procure custom printed packaging, with their company information and artwork. Sometimes, they may also buy custom designed product. These products are “newly” made to order, which is how it usually works.

How common is it that Chinese factories actually keep a stock of products?

In my honest experience, and I am born and raised in the factory landscape in Zhejiang province, factories don’t keep more than goods worth a thousand US dollars. However, say that it’s a really low value product (like $1 per pc), most suppliers will not have 1000 units ($1000 worth of goods) in stock. There are, however, two exceptions to this rule:

1. The supplier may have ‘over produce’ from previous orders. Thus, they may want to sell this to other buyers.
2. There are defect products in stock, that has been refused by previous buyers.
Editor’s note: There are some exceptions, with suppliers that are to a certain degree specialize in offering “off shelf goods”. However, tread carefully, as I certainly agree that the vast majority of off shelf goods belong to the two categories above.

But, aren’t most off shelf products made for the domestic Chinese market?

There are “stock” products, made for both the domestic Chinese market, and overseas markets. Off the shelf products are often daily usage commodities, that aren’t subject to much development. These are products that stay the same. Hence, the produce can in some cases be used for both the domestic market in China, and export.

Are importers in some countries more prone to avoid “Off shelf” products, than others?

Yes, there are trends. For example, Importers from the United States and Europe are more likely to order custom designed products. At the very least, US and EU importers design their own packaging, with their own artwork, logo and company information. It’s also common that they brand the product, even if it’s not their own design. It’s called private labelling, as you might already know. This is the case even for small businesses.

Buyers from Asia, South America and Africa might be a bit less focused on branding. In my experience, mass produced products are mainly exported to developing markets. Maybe because it’s still possible to run a good import business in these countries, selling generic goods, without branding or customisation. But, I think in the years to come, more and more businesses from these emerging markets will realize the benefits of customisation and branding. They will start thinking in the same terms.

Now, take a ‘ready made’ toy for example. Children’s products and other toys are regulated, for example, by CPSIA in the US and EN 71 in the EU. Toys ‘made for China’ are not manufactured according to these regulations. Hence, this makes it practically impossible to buy, for example, off shelf toys from China?

Yes, that is correct. Please let me develop this further. Product safety standards and procedures exist in China, but it’s an area that is still developing, and moving quite fast. It can be hard to keep track sometimes. So, what this means is that toys, for example, are not always reaching the substance and safety requirements in the EU and USA.

I can tell of an example. Inflatable rubber horses. Those that kids like to ride on in the pool. The very same design, ‘newly produced’ for the EU or US market, is 35% more expensive than a unit made for the Chinese market. It’s not that the quality, in terms of what it looks or feels like, is different. The difference is that US and European importers cannot buy products made of materials that is, for example, phthalate free. Or, heavy metals free.

As of now, EU and US safety standards are higher than domestic ones. This is important, because a lot of off shelf products out there are made for the domestic Chinese market.

So, when is it right to buy Off shelf products, and when should buyers consider other options?

Products that are not as strictly regulated, like packaging, gifts, crafts, household goods. These are far “easier options”. Products that are strictly regulated, like electronics and toys are very hard to buy in small volumes. There is a risk that importing these products can result in the shipment being seized by customs in the buyer’s country, if they don’t have the valid compliance documents, like certificates and test reports.

You are the co-founder of Jing Sourcing, based in Yiwu. What can your company do for businesses looking to buy Off the shelf products?

From our office in Yiwu, we help buyers, from the whole world, to source products from both manufacturers and the local market. As some of you may know, Yiwu is famous for its wholesalers and ‘off the shelf’ bulk product traders. As such, we can serve the needs of many types of buyers, including those that are looking to buy for less than US$1,000 per SKU.
However, our methods are of course very different when it comes to products that are more regulated, for example Toys and Electronics. In these cases, we assess the supplier’s capability to ensure compliance with relevant safety standards and regulations. We can also manage other procedures, for example administering samples and compliance testing.





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