My friend and fellow CSIC contributor Neale O’Connor is a Visiting Associate Professor at the National University of Singapore. As part of a research project, he had his students contact almost 50 suppliers in China to get quotes on USB drives.
You can find the data below. Here are my suggested takeaways from the research. While the pricing points may be of interest if you are a buyer of USB’s, for me the most interesting aspect is the way in which the quotes were received from the suppliers.
Keep in mind that the students asked all the suppliers to quote on the same specs and counter sample. Yet you can clearly see below that no two quotes share the same format. Every price is different, just as every quote format is different. Currencies, MOQ, Specs are jumbled together in way that makes it impossible for a buyer to conduct an apples to apples comparison of the supplier simply by price.
Lead times, MOQ, Specification (quality level) all impact the price. Picking the lowest price offer is most likely not the best option from the 45 choices below.
Since China doesn’t have a standard format for the factory quotes, how to plan an effective RFQ in China (request for quotation)?
Here is a behind the scenes look at how companies like PassageMaker conduct the research to find factory direct sources for our clients. The single most important factor in determining the success or failure of your sourcing program will be finding the right supplier. It sounds obvious, but making apples-to-apples comparisons of vendors at a national level can be daunting. Just look at how messy the data is from the USB suppliers below.
Phase One “Defining”
The “right supplier” is unique to each buyer. Force yourself to list all the desired attributes of the product and factory and rank them. Beyond the holy trinity of price/quality/lead-time also think of attributes like location (do they need to be near a certain port or in area where you have other vendors), Capacity, Service Attitude, Language, Intellectual Property, Warranty Terms, Factory Ownership, Equipment, Export Experience and so on.
Phase Two “Initial Research”
Initial research generates a list of 50-100 potential Chinese suppliers using existing vendors in the AVL (approved vendor list) and web directories and industry/trade show directories.
Assume the vendor is a middleman until proven otherwise, not the other way around.
Avoid factories that refuse to list the name or location of the production facility- they probably don’t own the PRC factory and are a middleman of some sort.
Focus on those factories that can clearly show production experience with your particular product or production method.
Be aware that polished English skills do not reflect production skills. Often the most polished websites are set up by trading companies.
Review the 50-100 candidates’ websites and brochures against client’s desired attribute list. But hold off on asking for price or even contacting the potential suppliers until step 3. If you start asking about price too early you will subconsciously gravitate to the vendors with the lowest price. That may or may not be the best overall option. Narrow the field down to 15 to 20 candidates based on non-price attributes.
Phase Three “First Contact”
At this point, “first contact” is initiated with 15-20 vendors in the following 5-step process.
Step one: Send an e-mail to ask for a quote. That sounds easy enough, but if you don’t follow some simple tips, you will most likely get a mess like the students got when researching the USB prices below.
Time Saving Tips:
a) Give the supplier your RFQ form to fill in which specifies the attributes you care about. That way all the suppliers are filling out the same form with the same fields. This will make it a lot easier for you to compare options.
b) For reference, also ask them to offer a quote in the standard format they use. If they don’t have a formal quote sheet, run away. That’s a red flag that they are not professional.
c) Be as specific as possible in the product description. Ask the supplier to quote to your spec. If they quote off-spec, ask them to explain in detail where their quote differs from your specs.
Step two: Are samples available? If they don’t have samples readily available, they probably don’t deal in your product on a regular basis.
Step three: Granted the sales team will be the most polished in terms of English skills, but how is their understanding of your basic requests? If you ask for information on a red umbrella and get sent a sample of a blue shoe, you are going to have problems with communication down the road!
Step four: Don’t be seduced by the siren’s song of low price. The lowest unit price can be the most expensive supplier after you factor in the cost of defects, missed deliveries and operations headaches!
Step five: Confirm the actual production location and ask for ownership papers of the factory. Be explicit that the production location may be audited and that this location cannot be changed w/out approval of buyer. (You would be surprised at the number of middlemen who will take the buyer on a visit of a factory only to change the location to a less expensive and poorer quality option after the buyer leaves)
The above research should narrow the field down to about 5 highly qualified candidates. As that point you can, with confidence, move to the final steps of negotiation, due diligence/auditing and sampling.
Related Content and Reference Material
Data from Prof. O’Connor’s research on USB pricing is listed below.
Video 1: Finding Suppliers
Video 2: Evaluating Suppliers
Video 3: Negotiations
Video 4: Project Management and Quality Control
Video 8: Avoiding Scams
|Quote||Name||Price||Min. Order||Delivery Terms||Essential Details|
|1||ISINO Industrial Development Co.Ltd||SGD4.03||1000||2 years warranty|
|2||Nextkey Technology Co. Ltd||USD3.499||100||Delivery date is 2 to 3 working days after order is confirmed. Shipping cost depend son the total quantity and delivery address.||12 months warranty. Quotation price valid for 4 days. Payment is made through T/T to company account. *Price quotation based on 1000 pieces.|
|3||Hongkong Xinkang Industry Co Limited||USD2.65||–||Shipping fee of 1000 pcs is US$100 with door to door delivery. EMS, DHL UPS and TNT available for shipping. Delivery within 3 to 7 days.||5 years warranty.|
|4||ShenZhen Wing Digital Co.,Ltd||SGD0.9||200||Shipping terms: EMS,DHL,UPS,FedEx; FOB Price; Delivery time 4-7 days; 5 Years Warranty||For order of 1000pc, additional 10% off with free 50 pcs|
|5||Shenzhen Kongs Technology Limited||SGD3.43||1000||$120 DHL delivery|
|6||Shenzhen Full USB Co. Ltd||SGD1.00||500 pieces||– 3 Days – Free Delivery||– Free printing of logo – 2 year warranty – Return/Refunds if broken along delivery|
|7||Shenzhen Alpha Technology Co Ltd||SGD3.3||nil||-7 Days – USD 238||Logo engraving included|
|8||Zhenghong (HK) Technology Co Ltd||SGD4.15||nil||– 3 Days – Free Delivery||– One Year Warranty – Logo Engraving included|
|9||East Sky Industry Co.,Limited||USD 3.27/USD 3.54||100 units||– Mass production will be done within 4-5 working days(after our Chinese New Year Holiday) – We are on Chinese new Year holiday from Jan.,25,2014 to Feb.,8,2014 and start to work on Feb.,9,2014. ***Production and delivery is 15-20 days depending on the complexity of the design (info from company website)||– Our price is for 100% genuine memory capacity,if you find any upgraded USB from us, you can send back to us and we will send back to you new one. – Our quality is very good, we can control RMA rate as 0.1% or below.|
|10||Shenzhen Ninesong Technology Co. Ltd||SGD3.5||50||3-4 days, Free Shipping||Payment by Western Union, T/T, Letter of Credit, Alipay, Paypal, 3 years warranty|
|11||Fortune Port Technology Ltd||SGD2.00||200||5-7 days||3 years warranty, 30% deposit in advance, Western Union, TT, LC, Alipay, Paypal|
|12||Fuzhou Everkings Import & Export Co Ltd||SGD1.5||100||3-7 days after order made, plus free samples||2 years warranty, L/C, T/T, Western Union, MoneyGram, Paypal, Escrow|
|13||GIGAFLASH LIMITED||USD3.75||1000||NA||Price valid 2 days from now|
|14||VTD Technology International Co., Ltd||SGD4.1||100||Door-to-Door Delivery;Incl. of shipping insurance (coverage unstated);Excl. Singapore Import Tax||Printing on one side only;Payment must be made through Western Union;Part payment allowed:at least 30% before production begins;remainder pior to shipping out of the factory (photo verification provided)|
|15||Nantai Technology||SGD4.25||1000 pcs||Delivery charge $100||Warranty of 2 years|
|16||Flason Electronic Co.,Limited||USD4.05||100||Not specified||– Flash price is not very stable, so the final price will be subject to the day’s market price you confirm the order. – Payment terms: TT or Western Union – Warranty Term: 2 Years|
|17||Weterm International Co., Ltd||USD3.47||Not specified||FedEx shipping cost:US$135 *delivery time: 5-6 working days||*both sides full color logo included *each in a poly bag *price valid before Chinese New Year Festival|
|18||Shenzhen Baizhi Electronic Co., Ltd.||USD4.84||1000 pieces||FOB||Free engraving, data pre-load and autorun|
|19||Shenzhen Oriphe Technology Co., Ltd.||USD3.18||1000 pieces||USD216 via FEDEX||Free engraving under 3 colours|
|20||Shenzhen Dingsheng Electronic Co. Ltd||USD2.80||100 Pieces||Lead Time: 3-4 days, Free delivery||Free packaging, Free samples|
|21||ISINO Industrial Development Co.Ltd||SGD4.03||1000||Delivery Not included||2 years warranty|
|22||Gigaflash Limited (Vida Design Ltd)||USD3.85||1000 pieces||FOB Port (HK SAR)||Laser Engraving of Logo Included, 1 year warranty, With RoHS, CE and FCC marks, 7-8 day Lead Time|
|23||Nextkey Technology||USD 2.598||500pcs||Lead time for mass production: 3-4 days after payment received. Shipping cost: depends on the order quantity and delivery address.||1 year warranty The price is valid for 2 days Lead time for sample: 3-4 days after payment received. Sample price is USD10 more, but we will return sample cost when you place order with us. Payment: T/T to company account|
|24||Flashbay||SGD7.84||1000 pieces||6 days from receiving payment||10 years warranty|
|25||Industrial Co., Ltd / Shenzhen Alpha Technology Co., Ltd||SGD3.3||1000||Shipping cost by DHL, CIF Singapore: $2383. Lead time: We only can provide usb to you about 2/16, as we are in CNY holiday now ,and we will come back to work on 2/9, thanks.||Payment: T/T in advance to our bank account|
|26||Bestar Industrial HK Limited||USD4.05||1000 pcs||FOB Shenzhen||Free warranty: 2 years. Payment via TT: 30% deposit in advance, balance due before shipment.|
|27||East Sky Industry Co||USD3.27||1000 pcs||FOB Shenzhen||Production time: 4 – 5 working days|
|28||SHIXIN Venture Trading Co., Ltd.||USD3.55||No MOQ||FOB Shanghai, delivery within 3 – 7 working days||Payment via TT: Before shipment.|
|29||Xiamen Huachang||USD2.19||1000 pcs||FOB Taiwan via EMS / DHL / China Post / HK Post||International warranty: 5 years.|
|30||New Rich Industry Development Co., Limited||USD2.50||1000 pcs||FOB Shenzhen, delivery within 3 – 5 working days|
|31||Shenzhen USB High Electric Co., Ltd||USD3.00||1000 pcs||FOB Shenzhen||Production time: 3 – 5 working days|
|32||Shenzhen USB High Electric Co., Ltd||USD3.10||100 Pieces||Delivery way : DHL , UPS ,EMS and FEDES;3、Lead Time : Money can be received later 10days can delivery 4、Sample lead time : 1~3days|
|33||Shenzhen Honorwell Technology Co., Ltd||SGD3.90||1000 pcs||usd 170 for DHL delivery||Production time: 6-7days|
|34||Weterm International Co., Ltd||US3.22||–||FedEx shipping cost:US$135; delivery time: 5-6 working days||price valid before Chinese New Year Festival.(we will on holiday from 25th Jan to 6th Feb for CNY)|
|35||East Sky Industry Co.,Limited||US3.27||1000 pcs||Shipment cost by DHL (door to door) to Singapore||Plastic box (95*45*21mm): US$0.12/pcs added on above quotation.|
|36||SHIXIN Venture Trading Co., Ltd.||USD3.55||NO MOQ||Delivery time :3~7 working days|
|37||Ebay||USD$4.03||1000 pieces||Address to be per the one on the PayPal or Credit Card (this is according to the policies PayPal and Credit.Do not ship to any international addresses à But upon enquiry (see above), they are willing to ship to||30 days have receiving the item; Money back; Buyer to pay for return shipping|
|38||Lion City Gifts located in Singapore||SGD$5.75||50 pieces||Free local delivery to 1 location||Nett price. Free white cardboard box.|
|39||itforlessusa from eBay located in New York, United States||USD$4.03||1,000 pieces||Ships to Singapore||Return policy within 30 days of receiving item with money back but buyer has to pay for return shipping. Payment to be made through wire transfer or western union. 1 year warranty.|
|40||Flason Electronic Co.,Limited||USD 4.66||Within China, paid by customer||Warranty Term: 2 Years|
|41||晟济旗舰店||SGD3.7||No MOQ||Within China, paid by customer||Unconditional return within 7 days, money back within 2-3 days|
|42||深圳市泰达兴科技有限公司||SGD0.8||10||Within China, paid by customer||Warranty: 3 years|
|43||Xia Men Hua Chang||USD2.99||1000 pieces||FOB shanghai by EMS/DHL/China post/HK post||international warranty . 5 years|
|44||New Rich Industry Development Co., Limited||USD2.50||Not specified||Delivery time :3-5 work day;DHL (CIF to your door by DHL)|
|45||Flashbay||USD16.27||25||Delivery is $55.00 for any quantity to Singapore.||All product prices include branding with your artwork on both the front and back (where possible). There are no origination/setup charges.|