Manufacturing in China 101 – The Good, The Bad and the Ugly – Episode 33

Manufacturing in China 101 - The Good, The Bad and the Ugly

If you are looking into getting a manufacturer in China for your business, episode 33 of the Business and Life Conversations Podcast is for you. Elise Daniels, who has had over 10 years of experience in dealing with Chinese manufacturers through her business Exodus Wear, joins us to tackle everything you need to know about manufacturing in China. She discusses the pros, cons, shares some of her good and bad experiences in dealing with manufacturers and gives us tips and tricks on what trade shows to attend and how to manufacture in China collectively.

Important Links Mentioned in the Show:

Elyse Daniels Instagram

Synoply Blog

Elyse Daniels Email

Angela Henderson Website

Angela Henderson Active Business Facebook Group

Angela Henderson Facebook Business Page

Angela Henderson Instagram

Prefer to read Manufacturing in China 101 – The Good, The Bad and the Ugly? Here’s the transcript:

ANGELA:

You’re listening to the Business and Life Conversations podcast, with Angela Henderson, episode 33.

Hey there, you’re listening to the Business and Life Conversations podcast, my name is Angela Henderson, and on this show we talk about improving your business, life or both. By having amazing and rich conv with brilliant guests. Who will inspire you and who will give you tips and tricks, to help you grow both in life and in business.

Hey, there and welcome back to another episode of Business & Life Conversations podcast. I’m your host, Angela from Angela Henderson consulting and as always, thank you so much for being here. Today is going to be a fascinating conversation with Elyse from Exodus Wear because we’re going to dive deep into manufacturing in China. What are the pros, what are the cons, how to find a manufacturer, what trade fairs could people go to in China to get started? And Elyse is also going to give us some wonderful tips for those of you thinking about manufacturing in China collectively.

Now, I get a lot of questions about manufacturing, and really manufacturing in China is an increasingly popular option for businesses wanting to take advantage of low labour costs, technically skilled workforce and good infrastructure. However, leaping into manufacturing in China without experience can be costly to any business. Finding the right manufacturer, setting up the process and getting goods delivered to your door can also prove complex, time consuming, for those with a limited experience within the Chinese market. Novice mistakes can lead to sub optimal products that do not meet your specifications and a bill for goods you cannot even use. This is why I brought Elyse on to the podcast today so she can share with us her wealth of knowledge of manufacturing in China.

Before we get into the world of manufacturing in China, I just want to take a moment and let you know that this episode is sponsored by Profit Pillars which is my ready to implement eight-week program designed for women in business to give your business the bulletproof advantage it needs to protect itself from overwhelm, frustration, and heartbreaking failure. With the step by step approach and built-in accountability and implementation, this is the only business growth program that shows you how to put passion and purpose together to generate profits for your business.

Now, all you need to do is go to www.angelahenderson.com.au and check Profit Pillars to join the wait list of next enrollment which is coming soon. I won’t make you wait any longer. Let’s go ahead and jump into this wonderful conversation with Elyse. So, welcome to the show, Elyse, and thanks so much for being here on a Friday.

ELYSE:

Thank you so much for having me, Angela.

ANGELA:

As a guest with the show, I do this with every single person that comes on board, we’d love to get to know a little bit about you before we dive into again, the manufacturing in China. So, can you tell us a little bit more about your business. How long you’ve been in business for? Who’s your ideal client? What do you rock and roll with? Also, since obviously you’re manufacturing in China, I’d love a fun little tip, I need to know what is your favourite Chinese food.

ELYSE:

I started my business Exodus Wear when I was 21, so, that was in 2009. Exodus Wear manufacturers custom jackets specialising in making them for the leavers wear market. In Australia, we have this tradition that in your senior year you get a custom jacket or jersey which has your nickname on it. So, I had the brilliant idea at age 21 with no fashion experience, no manufacturing experience, no China experience to go start a business in this and so consequently has spent pretty much the last decade making every mistake you can possibly make when it comes to manufacturing in China. Fortunately, I’ve learned a lot along the way. So, hopefully, that is, I’m going to be able to help your audience.

When it comes to my favourite Chinese cuisine I have to say that I can’t go to Hong Kong without visiting Ding Tai Fung and getting a vegetable wonton noodle soup, it’s my absolute favourite.

ANGELA:

Oh, gosh. It does sound delicious, and considering we’re recording this just a few hours out before lunch, I could definitely start going for some wonton soup. Totally.

ELYSE:

It’s so cold today in Sydney. So, for me, whenever I’m cold I’m like, I could just cuddle a big bowl of soup.

ANGELA:

Big bowl of the wonton soup. That’s your all-time favourite. As you’ve said, you’ve been doing this since you were 21. Lots of lessons, I’m sure, you have learned, as you’ve said, along the way, but for those out there that are like, “Okay, I’d like to avoid some of those lessons if I can,” even though we all need to go through lessons in time. Can you talk to us a little bit about just why, I guess for me is, why did you choose to China versus any other country? Because there’s obviously, India’s coming very strong behind China at the moment, you’ve got Indonesia who’s also doing a lot with manufacturing. So, what was China for you?

ELYSE:

Really, you have to think about ten years ago, China was and truly still is the main manufacturing hub of the world. So, if you are going to start somewhere, China is a great place because there are just so many infrastructure and support networks in China that are set up to encourage people to manufacture there, whereas a lot of these developing nations are still setting up things like their fabric supply markets and the manufacturer of raw materials. So, for me, it wasn’t really even a question about looking elsewhere, and I also feel like travelling to China, the proximity of Australia to China, all of that stuff just influenced me to think, “Okay, well, this is probably the best way to go.” In particular, like travelling to Hong Kong is not too difficult, they are English speaking. So, for me, I didn’t really consider other options.

We do now manufacture in Pakistan, Sri Lanka, and China and I have definitely noticed that there are positive and negatives to choosing the country that you manufacture in.

ANGELA:

What would you say is, one of the first things, what are the pros for manufacturing because I know we could talk about the other countries you’re talking about, but for me in particular I really want to hone in on the China today. What are the pros for manufacturing in China that you have found throughout the last, what? Nine years? Is that right?

ELYSE:

Ten years. Coming to ten.

ANGELA:

Yes.

ELYSE:

It comes back to this concept of the infrastructure. Just to give you a simple example, like we manufacture in Sri Lanka as well. We have fantastic workers there, we love our factory, it’s all amazing, but truly they just don’t have the same infrastructure that China does. What I mean by that is, there’s no one manufacturing the raw materials, so the fabrics that we need to put into our products. The hardware, the decoration like PU materials. Whereas if you go to China, there are whole districts. Like I’m talking about places that look like cities which are just designed to sell fabric.

You can go into one complex which is a building out of seven, and it’s so big that the cars drive in and out of the bottom of the building. It’s like a huge hall. It’s insane. In there, there’ll be like 1,000 different stalls of people who are all sourcing and manufacturing fabric. So, for me, it almost comes down to, while it would be nice to be able to perhaps manufacture in a different country, until the other countries catch up and have enough demand and enough of a, I guess, supply chain, it’s just not going to be possible. So, China definitely at the moment still has that competitive advantage that they’ve really gone from start to finish and made it possible to manufacture absolutely anything you want in China.

ANGELA:

I guess what you’re saying is one of the pros is just that the level of the amount of options, I guess, you have within China. So, that’s one of the pros?

ELYSE:

Definitely. I think you can pretty much have in your mind that your product can be made in China. It’s just a matter of like finding the right way to do it, whereas perhaps if you love the idea of, “Well, I want to manufacture in Bali so that I can go to Bali every year for my factory visit.” That’s a nice thought but it may not necessarily be the reality.

ANGELA:

What other positives are there in regards to the pros in manufacturing in China? Obviously, there’s a lot of my clients who do beautiful handmade items. They are absolutely stunning and they’re very firm about wanting to maintain in Australia, and I totally support that particular decision. However, I’m also mindful about how many hours they can sit at the sewing machine and be able to fulfill.. They’re not really ever going to be able to scale because of the fact that there’s only one of them and a sewing machine. Or even if they brought on other Australian sewers, potentially, again, it’s eating into the profit margin, etcetera, but when you go to China, I mean, I can only assume and I would love for you to validate or not validate that other pros about manufacturing in China or things like again, the lower cost point. That they do have amazing skilled workers. That they’ve got the ability to have higher outputs and quick turnovers. That their overall customer service is quite impeccable, and that is, like you said before, easily to assess and access that Chinese market.

ELYSE:

That’s correct. Look, I think it all comes down to what your goal is because I know that there are some people who make a product that’s handmade, they make it themselves, they can do a certain capacity, it generates a certain amount of income and they’re happy with that. I am happy for people who can identify what makes them happy. So, if that’s what you really want and that’s the level you want to go to, of course, continue doing that, but if you’re thinking, “Well, I want what I’m currently making but I want to have an empire and I want to make a big business and I don’t want to be the one at the sewing machine all day long,” you realistically have to think about how you’re going to mass produce the product.

I think mass production can sometimes sound like a nasty word because it’s like, “Oh, that’s mass produced,” but you can mass produce something that’s 100 units, and you can still input all the beautiful fabrics and the decorations that you currently use, but you’re just really training someone else to do the same skill set that you’ve got. So, for me, I think definitely, China is much, much more open to working with smaller quantities now. So, I think maybe ten years ago, it was this kind of thing, “Oh, I need to just churn through 10,000 units and it’s going to have to be like cookie cutter and it’s not going to bespoken beautiful.” Whereas now I think China is much more open to working with, I guess, crafts people who are doing the small runs of beautiful designs and they can kind of see the value in that ongoing relationship. I think China definitely has extremely highly skilled workers. So, it is possible to get things made that are beyond just like a basic t shirt with like a logo printed on it.

Again, it comes down to the infrastructure, it comes down to language. China in itself has pushed so much to have English taught as a second language, then you’ve got to factor in other things. We have the China-Australia Free Trade Agreement at the moment, so, normally when you’re importing products into Australia, you’re going to have to pay a duty tax on them and that tax changes from country to country that you work with, but previously, a lot of products that came in from China had a 10% duty tax. Because of the Free Trade Agreement, we don’t have to pay duty now. If you think about just that ten percent extra on to your margin, it’s quite considerable. That in itself is a really big thing to think about because sometimes I’ll compare my prices between my factories from other countries and I think, “Oh, yes, the price in Pakistan is really cheap,” but then I think, “Well, hold on a second,” by the time I add on duty and I add on this, it works out to just be better to go with China which may seem a little bit more expensive, but you kind of like have cost savings elsewhere.

ANGELA:

Great point. Again, especially with the Free Trade Agreement, as you said, when you start to have bigger quantities, that ten percent adds up very, very quickly when you start looking at your margins and everything like that. Now, what are the cons for manufacturing in China? Maybe you kind of overcome some of those hurdles because you’ve been doing this for close to ten years, but for those starting out, obviously, there’s risk associated with that intellectual property, etcetera. Can you tell us what the cons for manufacturing in China have been for you and what people need to consider?

ELYSE:

I think one of the biggest problems but also potentially it’s a pro is that China currently is not that creative. They’re very good at copying, which obviously can lead to your product being stolen and sold out the side door of the factory, which has happened to me, but I think, one of the cons is that it’s very hard to work with a factory and develop a concept with them. It’s almost like you have to sometimes go direct to the factory, would like the end result that you want them to copy but I actually, we’ll start to talk more about this if we get time. I don’t think that that’s the way to actually develop and prototype a product. It’s like this catch 22 where it’s like you don’t want them to be so creative that they can go develop competitive lines to what you’re creating, but you also want them to be creative enough that they can think outside the square and so if you’re having a challenge with like a component in your design and you’re thinking like, “What is another solution to this?” Sometimes the factory isn’t the one that comes up with it and you’re the one who has to do it. So, that’s difficult.

The other thing obviously is because of the fact that we are in different countries, there is a sort of attitude that they can get away with things. They’re not really being like, watched that closely and honestly, some of it comes down to almost culturally, they’ve been taught that it’s not necessarily being dishonest or doing the wrong thing if they’re trying to make like a little bit extra money for themselves. So, sometimes something that will happen is like, I strongly suggest to people, don’t get so hung up on negotiating price at the start because I just feel like it comes back to bite you later. Because there’s this cultural, this mentality in China that if you’ve like kind of pushed them so hard on price, it’s almost their right or they’re entitled to try and make up margin in other areas. It could be something like, they’ve found a fabric that looks exactly like your fabric, but they’re able to get it cheaper. So, they will change your fabric without speaking to you because it’s an attempt to like recover some of that margin.

ANGELA:

Got you. That makes sense. Yes.

ELYSE:

Then, say then there’s an issue with that fabric and you say, “Why did you change this fabric?” They will literally come back to you and be like, “Well, you screwed us so hard on price. We’ve had to find other ways to make money.” There’s almost no apology there. It’s like, “Well it’s actually your fault because of the way that you set this up, we had to go and do this to try and survive. Don’t blame us”. That is something that I’ve really struggled with because in Australia, I think, we have a much more upfront way of doing business. In China, they have this thing and it’s called saving face, and it’s almost this inability to own up to a mistake. It’s like they will avoid telling you something until it escalates beyond being a problem that it’s crazy.

We’ve had this happen where the factory will run out of capacity. Say we’ve put in more orders than we normally would have. They won’t say to us, “Hey, we’ve run out of capacity.” They will let it get to the point that they’re running four weeks behind schedule and you’re like, “What’s going on?” Then eventually, when there’s no other option for them they’ll be like, “Oh, we ran out of capacity.” You’re like, “Why didn’t you tell me four or eight weeks ago when I put in the order that potentially there was going to be a problem?” But they obviously don’t want you to move the order to another factory, but then the end result is that it becomes an argument over, “Who’s going to pay for air freight?” Whereas maybe if you had discussed it early on you could have said to your customer, “Are you willing to wait a little bit longer?” Or you could have juggled or done something. Whereas I feel like instead of working together, it turns into this situation where they’re so afraid to like, be blamed for anything going wrong, that it actually creates a bigger problem for everyone to deal with in the end, which is a silly way of doing business.

ANGELA:

What’s something you’ve done to try to overcome or minimise that over the years?

ELYSE:

I always say your main focus should be on finding a factory who supplies you with an accurate quality product on time. Don’t worry so much about the negotiations upfront because I see so many articles and people talking about, how to negotiate with China, but I just feel like if you start from a place of cheap pricing, it’s going to come back to bite you later with substandard quality product, you’re going to be working with the factory who is going to cut corners and all that sort of stuff. For me, I focus on, get the manufacturing right and make sure everything’s going really well.

Then, there are ways to work together to achieve better price point. It’s like, if you’re doing more volume, then it’s easy to go back to the factory and be like, “Hey, look, we’re doing more volume, you should be able to achieve some economies of scale now, let’s talk about our pricing.” Or, “Could we do something in terms of like buying more fabric so then that way we get a better price on the fabric supply and I feel like you can work together as opposed to I feel like people go in and they’re so enticed by really cheap pricing and think, “Oh my god, I’m going to make so much money.” but inevitably what I’ve seen is that when you try and focus too much on how much money you’re going to make upfront, it never ends up panning out that way.

ANGELA:

I think there’s many examples that you could say just in life. I’m a business consultant, obviously, and I hear people will go, “Oh, yes, but you cost X amount but so and so costs half that.”  I’m like, “You are probably correct, but again, it’s going to come down to you’re probably end up coming to me anyways because they don’t have a successful business, they’re not trying, they can’t connect you with other people,” etcetera. So, then they just wasted all this money and all this time. Again, I do think that again, people will ultimately cut corners a lot of time because again, it’s coming down to save and trying to save money in their head, but not looking at the long-term plan strategy and not looking at quality versus doing that quantity type scenario.

ELYSE:

It’s as simple as you get what you pay for. So, if you’ve got some miraculously cheap products that you’re managing to buy, it’s probably going to be cheap. It’s probably not going to look that good and you need to work out your position and how you want your product to be perceived in the market. Are you just churning out a cheap product? Or, if you are transitioning from almost this handmade, bespoke product into something a little bit more mass produced, well, don’t expect to get huge cost savings if you want to make it up to the standard that you’ve been making. Keep that in mind. If it cost you X amount to make, just because you’re now making 100 in China doesn’t necessarily mean it’s going to be a fifth of the price. It’s more so about achieving that economies of scale and achieving that level of mass production where you can step away from doing the manual labour and then as you grow, you can start to think a little bit more about how to get those cost savings in.

ANGELA:

Other cons for manufacturing, obviously, really one of those big cons that you just talked about is about the saving face, and that sometimes again, pride is getting in the way of potentially the growth of your business or making deadline. That’s one of the cons. Would you also say that them having, I guess, your own intellectual property, is that another also risk that you have that you come up with this great idea, you guys have created it, you’ve executed, you’re now ready to scale and potentially next thing you know they take that idea and run with it? Have you found that as also a potential con for manufacturing in China?

ELYSE:

I think that’s just a con for business in general. Just because you’re controlling your manufacturing now, and say you’re hand making every single item doesn’t mean that someone in Australia couldn’t buy your product and take it to a factory in China and copy it. I think people get so caught up on that, but in business, my experience is that you constantly have to be innovating and evolving. If you rely on the one idea that made you successful and you never do anything else, inevitably people catch up anyway, so, it may not be the factory in China who’s selling it out the side door, maybe someone else who’s like caught up to you. So, this is how I always say to people that they need to work with this, is like, if someone starts copying you, take it as a bit of a compliment and then don’t get so hung up on fighting them about not copying you because I have worked with a lot of people where they want legal advice about how they can stop people copying their designs. I’m thinking, huge companies..

Yes, well, like huge companies like Chanel have huge departments and billion-dollar budgets just trying to fight counterfeit and they themselves can’t do it. So, really, the only attitude is that each season they have to come out with a new better collection that’s got a point of difference that people are going to want and inevitably it will take time for other people to catch up and by the time everyone else’s caught up, they’ve created something new.

ANGELA:

I really liked that because I too am a firm believer that again, the haters are going to hate, the copiers are going to copy, and you’ve got choices to make’ either get brought down by their emotional actions and their inability to be created themselves or again, I find successful entrepreneurs and business owners are those that just let that emotion stop and just move on to the next thing. So, I do agree more. I think it was just more on the lines of, in your experience that they need to be mindful. What you’re saying is, yes, you need to be mindful of it, it’s probably going to happen, but again you’ve got to keep rocking and rolling at the end of the day.

ELYSE:

Exactly. I do encourage you to have a contract, but it’s more so to set expectations. It’s also to put, I guess, a seed of doubt in the minds of everyone that there is the option should you choose to do something about it that you can, but we all know a contract is as good as the money that you have to fight it. Unless you got a big war chest of money that you’re going to use to fight this with a potential risk that it won’t actually go your way, plus all the time that you’re going to spend on it, my experience is that, people who generally go down that path, maybe they feel good at the end of it if they won, but when you look at the cost of winning, which is literally the financial cost, the time cost, the destruction from running your business, generally, you never really ever win.

That’s where sometimes I think, yes, have the contract as a bit of a deterrent that hopefully the factory will think, well, I’ve signed this and maybe they could come after to me one day, but realistically, if you start to see something happening, you’re working with the wrong partner and you need to just think what’s next. I mean, try and come up with the next thing, which is, it’s tough, but that’s business. It’s not meant to be easy, otherwise everyone would do it.

ANGELA:

Everyone would be millionaires walking around, living the four hour work week, but unfortunately, there’s normally more blood sweat and tears at the beginning and even throughout. Listen, obviously, some of those cons like we talked about, also, I’m assuming shipping can be difficult at times if you’ve got an order and it’s running late and there you’ve got air freight over versus potentially sea freight, quality control, I’m assuming, can also probably be a con potentially because you’re again, you’re that distance apart, and potentially also the language barrier and just the overall cultural differences, would you confirm those or deny those?

ELYSE:

Correct. I think the biggest challenge of offshore manufacturing is there’s just so many variables. You can do everything 100%, right, and look, I’m ten years in and I still have issues. We manufacturer across six factories in three countries, and I’m all about a backup for the backup and a backup for the backup. Even sometimes all of that can fail. That happened to us this year where we had freak situations, we had flooding in Sri Lanka, we had flooding in one of our factories in China, we had another factory that was over capacity. We had Pakistan manufacturing for the FIFA World Cup. So, all of a sudden, like no one was available to do anything. I found myself in a position where I was like, “I cannot believe that every single failsafe that I’ve got here has actually just failed on me.” So, we were running behind production schedule, we were air freighting, God knows how much stuff. It was horrendous.

So, it doesn’t really matter. Sometimes you think, “Well, I’ve done everything that I need to do to make this happen correctly,” and there’ll be some external variable which comes in like the dollar crashing, anything could happen. Storms in Botany that mean that customs and at the port the goods are taking longer to get off the ship. I think so many customers don’t understand the complexity of what you’ve gone through to get this one product to them. I know that to me, this is something we struggle with, especially with high school students who don’t really have an awareness of the fact that, hold on a second, I just went and made this custom jacket for you from scratch. I personalised it with your name, I got it in another country. I did all of this stuff and because of the way that retail is like these days where it’s like, if you want something now you can get it, you don’t even have to pay for it you can Afterpay it. If you don’t like it you can just return it and it won’t cost you anything. I think the way that retail has become has almost made consumers a little less understanding of the complexity of what actually goes into delivering a product to someone, so, that can be a massive challenge and..

ANGELA:

Also let’s be honest, high schoolers too unfortunately their head space isn’t necessarily 100% empathetic towards others. They are still a little bit self-absorbed sometimes. They are leaving school, they’ve got a whole bunch going on that sometimes I’ll just say, just with your demographic. They might not understand like, they just want it now. “After joining I want this.”

ELYSE:

Exactly. You need to look at the internet culture of trolling, of being like, I guess no consequences to what you write on the internet. So, this is something we struggle with so much to the point that we sometimes want to just turn off our Google Maps listing or turn off our reviews because we have thousands and thousands of happy customers who are too lazy to write a positive review for us, but now, there is this culture that if there is one single thing that goes wrong, whether it is that their jackets are delayed, they can be absolutely vicious. They will create fake accounts, they will send a WhatsApp message to their whole group of friends and be like, “Let’s all go on and give this company a negative review.” So, in the space of like an hour, we could have like 50 kids all go put a negative review on our Google Maps.

I literally feel like saying to them like, “Okay, so you know there’s flooding in Sri Lanka and that means people are actually dying. They’ve lost their livelihoods, they have lost family members,” but to them all they see is, “I ordered a jacket and I paid for it. Where is it?” There is no empathy or no greater understanding of the why. Why something delayed because there is definitely this instant gratification that is happening at the moment and definitely there’s almost this feeling of no consequences to what you write on the internet that has created this terrible little formula for us where people don’t understand how much work it takes to make a single custom jacket personalised for you and that, yes, sometimes things go wrong and so they won’t be empathetic and they will write something and they don’t understand that I as a business owner, they’re impacting my livelihood because now, other people will read those reviews and think, “This company is not good,” and then I’ll have to explain and say, “Look, we have so many happy customers.” I’ll email our customers and say, “Hey, would you mind taking the time to write a review?”

They’ll even write me an amazing review and email and I’ll say, “Hey, do you mind just putting that on Google?” They won’t do it and it’s like, why can’t people be more motivated to do the good reviews?

ANGELA:

Again, I think they understand that world of business, but again, when people don’t get something they want, they’re quite, like you said the trolling can begin. Now we’ve covered obviously, what are the pros of manufacturing in China? What are the cons for manufacturing in China? Now, for those listeners out there they’re like, “This sounds right. It’s a reality. There’s probably going to be some cons. I’m going to have backup plans. This all sounds good.” But for those listening out there, how does someone go about finding a manufacturer in China? What do they need to do? Is it best that they go through an agent here in Australia? Is it best that they head over to China themselves? What would you recommend to people about how to find that manufacturer in China and get things rocking and rolling for them?

ELYSE:

I’ve done it all. I’ve done using agents, sourcing direct, going to China, and my biggest piece of advice to people is to start as you intend to go on. If your goal is, “You know what? This is just a little hobby business for me, I love my day job, I never want to quit it, I just want to have a little bit of extra income, I don’t want the hassle of dealing with everything,” then yes, maybe an agent is the way that you want to go. But if you’ve created this amazing product that you want to build an empire off, realistically, at some point, you’re going to have to manufacture direct. I almost feel like while starting, most people think, “I’ll start with an agent and then I will go direct,” and I have done this before, but you have to understand what an agent’s job is and how they can protect themselves in the supply chain.

An agent’s obviously going to go put in all of the groundwork to set up all of your factory, your manufacturing, all of that stuff. Now, they’re not going to go hand that information over to you because then it just cuts them out of supply chain completely, and realistically, how can you make money off that model? So, most agents are quite secretive and generally won’t give you a lot of information about what’s happening. Now, they’ll try and sell that to you as a, “We take care of it all for you. We don’t want you to be bogged down in the detail. You worry about what you’re good at, and we’ll worry about what we’re good at,” but the reality is they’re thinking, “We don’t want you to know this information because then you could potentially use it to bypass us.”

So, first things first, pick which way you’re going to go. Yes, it might be a little bit more painful to begin with, but if you’re thinking, “I want to build an empire out of this product,” you need to source direct and you might as well do it from the beginning because you might find that in three or four years if you try and move from an agent to a factory, it’s going to be just like starting from scratch anyway, and at that point you’ll have customers and reputation and you could really jeopardise that if you don’t make that transition right. So, just bear the branch of the pain at the start and set it up properly. When it comes..

ANGELA:

Sorry, go ahead.

ELYSE:

I was going to say, when it comes to finding a factory, I don’t think it’s that hard because the internet just makes it so simple now. So, I love to use sourcing websites like Global Sources and the Hong Kong Trade and Development Centre, my favourite being Global Sources because they run a trade show for pretty much everything. When you’re sourcing on their website, you can actually filter by people who are going to be attending upcoming trade shows. So, finding a factory is all about building a relationship.

If you use a sourcing website as like the initial research tool, make contact, I really think the next step is that you actually need to go and visit them. It makes it really easy if they’re going to be in Hong Kong at a trade show for you to go as opposed to like, maybe a trip to mainland China might be a little bit more confronting for you, especially if you’re travelling on your own. So, definitely use one of the websites and then make the effort of going to at least Hong Kong to go to a trade show and build the relationship face to face.

ANGELA:

What are the primary trade fairs over in Hong Kong that people should be looking at potentially going to?

ELYSE:

Global Sources is one of the main trade show organisers, and then also Hong Kong Trade and Development Centre. I would say they are the main ones for Hong Kong which is the easiest when it does come to going to a trade show. If you’re going to a trade show in mainland China, travel obviously is a little bit more difficult. You can get a business visa from the trade show, they’ll give you a letter to take the steps to do all of that, but Hong Kong is such an easy stop over location that I always say to people, “If you’re really serious, you don’t necessarily have to go on a trip to China or have your next holiday there.” Hong Kong is a great stop over to Europe or to anywhere else and you can hit a trade show in one or two days. It’s a really easy introduction to making those first steps.

You don’t have to make it so complicated that you need to do like a two-week trip around China visiting all these factories. It can be as simple as one or two days in Hong Kong, visit some factories via a trade show, and then if things progress you can always go back and do a more intense sourcing trip.

ANGELA:

Which I also think is good because some people might be sitting and going, “Yes. I’m going to go to one of the trade fairs in Hong Kong and we’re going to go full force,” and they get the trade fair and they’re like, “You know what? Actually, maybe this isn’t for me.” So, instead of spending two, three, four weeks, whatever trekking around China and ultimately still going, “This probably isn’t for me,” I think it’s a great way for people to at least get their feet wet, start to make relationships and start to suss it out but at a more cost effective for your business, ultimately, overall, if you go into Hong Kong probably versus China.

ELYSE:

I 100% a great. That for me is always a test to how serious someone is because it’s very easy to sit at your desk and to use sourcing websites and contact factories and think of ideas and all this stuff, but sometimes you do have to put your money where your mouth is. Most people, this may be a generalisation, but most people will take some sort of trip each year, even if it’s an interstate trip in Australia. The cost to flights to Hong Kong, there are some really good deals that you can get if you book at the right time. Especially if you’re only going for one or two nights, the hotel costs are not that expensive.

So, realistically for maybe like $1,000 or $2,000, you can go and meet with a tonne of factories, you can do a lot of groundwork, and really suss out like, “Okay, how serious am I about this?” As opposed to constant emailing backwards and forwards. Look, as a factory owner, they’re going to take you much more seriously if you rock up in person, as opposed to one of the, let me tell you, millions of emails they’d get every day from people being like, “Oh, I have this product and I want to make it,” and nothing would ever come from that. So, it’s definitely an advantage to you in negotiations if you show that you’re serious by rocking up to Hong Kong.

ANGELA:

I’m a huge believer of human connection. I believe that with human connection, your business will ultimately succeed. It’s the one thing I put down to my success in both my businesses, but yet people are so reluctant to do it. They don’t want to get behind the computer, technology, technology, but I do agree that if you’re serious about this, what could come of it is not only that, but other people you have potentially meet from Australia. Just I mean, the door opens for you when you actually go and give hugs and a handshake, is what I put it down to. The connections built, trust is built faster. You can see people’s body language, their eye contact, how they interact with other people. You can’t get that through an email. People can fake so much through an email, but they can’t fake it in person.

ELYSE:

Exactly. When you’re also dealing with a language barrier, so much confusion can come from writing things in email. I am such a big believer in trying to do as much communication face to face. Now, that obviously doesn’t mean that you have to be in Hong Kong or China every week, but as an initial starting point, it’s so much easier to explain something to someone and even having tangible items with you that you can explain what it is that you’re trying to achieve. Whereas I think in Australia and a lot of Western countries, we have this culture of email where we think, “Oh, there’ll be a record of it and people can take their time and read it,” but when you’re manufacturing a product, sometimes it’s not that easy to describe in email what it is that you’re trying to achieve. Sometimes you need to feel something. Or sometimes you need to demonstrate how something works in order for someone to understand what it is that you’re trying to do. That’s right, 100% I agree with you. Nothing can beat that face to face interaction.

ANGELA:

If, for example, I took my youngest daughter, Chloe Glenella yesterday to the doctor, and she’s been snoring for the last like, forever. I was like, “Man, does she have sleep apnea? Like how can a five-year-old have sleep apnea?” but I’m thinking again, it’s not uncommon. So, I went to the doctor and I was able to take, I had set the alarm on my phone to make sure I got up in the middle of the night to record what was happening. She said, it is amazing even from a doctor’s point of view that back in the day you would try to describe things and use hand gestures and do all of this, yet they still couldn’t really nail what happened but she said now in that instance, me being able to go to her human to human and share with her what that sound actually was, she was much easier to help me, point me to the direction that diagnosis happened, but point me to the direction of getting the hearing test and then going to a specialist.

So, again, being that human to human contact and being able to demonstrate your product or in my case, Chloe’s snoring sound in the middle of the night, it sped the process up so much faster.

ELYSE:

I see people waste years of their life. Honestly, I think one of the biggest mistakes I see people make is that they don’t involve a factory early enough in their design process, so most people I see who I work with who have a product idea have spent years refining it, making it perfect. Thousands of dollars on moulds, thousands of dollars on prototypes, thousands of dollars on these, hundreds of hours, only to take it to a factory and a factory will be like, “Oh, yes, we could do it. It was like a 10,000 minimum,” and you’ve got 12 unique components that each need $1,000 mould, and blah, blah, blah. I think, “Wow, you wasted so much time.” Whereas my method of prototyping and designing is to involve the factory at the very beginning of your concept and to demonstrate the outcome as opposed to the product.

So, I have a little side hustle myself, where I’ve created this filming kit for content creators. I had the idea and within 48 hours I was talking to a factory. I had a stuck together like, literally masking taped together prototype that was missing half the componentry that I needed, but there was enough there for me to demonstrate what I was trying to achieve. We have been able to go backwards and forwards and work together to use existing componentry to get the desired outcome that I want, but I only have to order 100 units of it. Now, that’s amazing. As opposed to, if I had gone away and created what I thought was the most amazing product in the world. It may be the most amazing product in the world, but is it a viable product that you can actually manufacture? Possibly not, because like I don’t need to go buy 10,000 units of a product that’s a side hustle that I’m just doing for a passion. That’s where I think so many people get stuck.

There are beautiful prototypes sitting in people’s garages all over the world that they’ve tried to create and launch a product that probably should exist in the world, but won’t because of the way that they approached, trying to get it manufactured.

ANGELA:

I’m all about failing fast. Come up with a prototype. Again, it’s not about what platform your business is on and what social media you’re doing, it comes down to product. Are you solving a problem for people and will it sell? If not, fail fast, move on to the next one because so many people get stuck on these products that again, they haven’t even validated if it’s going to be worthy, but yet they’re spending thousands of dollars on websites, thousands of dollars on SEO, on things that aren’t even what people want. So, I couldn’t agree more with come up with it. See if it’s there, buy small quantities, get it out there and if it does well, scale, if it doesn’t, get rid of it.

ELYSE:

Exactly, but even before you do that, user test it. I see so many people who feel that they need to have their products perfect before they can user test it because they’re too embarrassed to show people, I guess, the rough version. I’m the total opposite. I literally, with my masking taped prototype, approached strangers and asked whether or not they would user test and give me feedback. The thing is, yes, it was embarrassing to be like, “Could you just hold on a moment while I masking tape my rim together?” but what it allowed me to do was to iterate my product so quickly because instead of going through this whole process of designing and then realising that there was something wrong, I would have someone user test something and it would be evident really, really quickly if there was something wrong with the tripod or if there was something wrong with the connector pole. Then I would contact the factory, within like seven to ten days I’d have a new component to test.

I’d go out again and I was able to get to where I wanted to be so much quicker as opposed to..

ANGELA:

By asking.

ELYSE:

Yes, like ordering 100, selling it and going, “Oh, this is wrong with it and so now let’s throw out 70, buy another 100.” You really just have to overcome that embarrassment, involve your factory and involve your users in the process of designing your product.

ANGELA:

Perfect. To wrap up, let me ask you this, if there’s three tips you could give anyone listening right now about manufacturing in China, what would your top three tips be?

ELYSE:

I’ve probably mentioned all of this already, but I think it would be worthwhile to just highlight these three things. Number one is definitely to start as you intend to go on. While it’s really tempting, and while you might get sold this concept of having an agent do everything for you, work out your goal, what is it you’re trying to achieve with this product and then do the hard yards. So, if it’s an empire, source your factory direct yourself from the very beginning, if it is a side hustle and you’re always going to keep it that way and be honest with yourself. Is that really what you want or that’s what you think you want. Pick which way you’re going to go and then really follow through with it.

Number two, test how serious you are. Realistically, if you are going to be wanting to manufacture your product in China, you should go there. Like I said, most people do some form of holidaying or travelling every year, make it a priority that that next trip falls in line with a trade show and you at least do a stopover in Hong Kong or even have a holiday in Hong Kong or China, and do a little bit of business at the same time as the holiday that you would normally have.

Then number three would definitely be, involve your users and the factory in the design process. If you’ve got an idea for a product, don’t go spend thousands of dollars and don’t spend thousands of hours perfecting it unless you’ve actually spoken to a factory to say whether what you want to create is possible and whether you’ve spoken to potential customers and if they actually want to buy what you you’re trying to create because there’s just no point creating a product that you think is amazing but that no one else wants to buy.

ANGELA:

Fantastic. It has been an absolutely amazing wealth of knowledge from you today in regard to manufacturing in China. And I know many listeners are going to gain a lot of benefit from this. So, I can’t thank you enough for spending part of your Friday down in cold Sydney to be here with us today. If people want to know more about you, where can they find you?

ELYSE:

I’m not fantastic at social media, but you can find me on Instagram as Elyse Daniels. The other interesting thing that I’m doing which people may or may not want to watch is that I’m vlogging my life as an entrepreneur at the moment. I do it under a different brand which is called Synoply which is S..Y..N..O..P..L..Y. I wanted to separate it from my main company because sometimes I talk about what’s going on.

ANGELA:

Yes.

ELYSE:

You can definitely follow that and look something else that I love to hear, is I love to hear about people’s product ideas and I love to be given prototypes to test. So my dog at the moment is actually doing some user testing of a dog bed that one of my people that I’ve been working with is trying to create, and so for me I love product. There’s nothing more special or exciting than having someone come up with an idea and then actually helping them bring it to life. So, if you’ve got a product idea and you want me to test your crazy contraption, send it to me and I will give you real and honest feedback.

ANGELA:

Perfect and what would be the best contact for them to be able to do that, if they’re listening?

ELYSE:

You can just contact me via Instagram or LinkedIn, otherwise I don’t mind if you have my email address it is elyse E-L-Y-S-E @exodiswear.com.au .

ANGELA:

Perfect, too easy. Well, thank you so much today, Elyse. And for the rest of you, my team and I will also be putting together the whole transcription for this episode at www.angelahenderson.com.au with all those wonderful links, trade resources etcetera that Elyse has spoken about today.

And of course, I cover all sorts of business related and life topics inside my Facebook group, The Australian Business Collaborative where we’re just about to reach over 4000 businesses members. So, feel free to join us whether or not you’re from Australia, U.K, wherever you’re from. Feel free to join us, it’s a very supportive business group for all. And for the rest of you, have an awesome day, no matter where you are in the world and I look forward to connecting with you on our next episode of Business and Life Conversations with Angela Henderson. Have a great day everyone. Bye!

Thanks for listening to the Business and Life Conversations podcast with Angela Henderson, Manufacturing in China. www.angelahenderson.com.au.

Angel Henderson Consulting

​​Founder of the highly successful online store Finlee and Me, Angela taps into the decade's worth of knowledge of how to grow a thriving enterprise and pours it into her business consulting clients. As a business consultant, she partners with start up and small businesses to grow their brands through hands on support, ensuring foundations are laid in order to leverage growth. Her skills were honed at the helm of Finlee and Me, where she learned everything from branding, PR, sales funnels, email marketing, website, copy, SEO and more. She knows what it truly takes to have a strong brand, consistence sales, steady growth and over all dedication. Angela has been featured in the media including Talking Lifestyle with Ed Phillips and David Koch, Inside Small Business and on numerous Australia and International podcasts.

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