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Frequently asked China Manufacturing questions answered

Frequently asked China Manufacturing questions answered

There are some questions that we get asked by most customers, so we thought it would be helpful to share these on our blog:

1. How long are Chinese lead times?

Lead times will vary by the size and type of the order, but 90% of production orders manufactured by China Works normally take around 30-35 working days. Tooling takes a similar amount of time for most orders.

Most projects have a learning curve, so we would normally add another week or two to initial orders – to account for unexpected issues or problems.

2. How long will our order take to ship over?

This depends on the shipping type, but a rough rule of thumb is as follows (the following figures are provided for China to UK)

Shipping normally takes 35 days door to door

Airfreight normally takes 7-10 days door to door

Courier normally takes 3-5 days door to door

3. What additional costs should be added to the factory’s price?

The factory’s price is normally ex-works or FOB (Free on Board). Ex-works means the price of the goods at the factory gates, so shipping, UK and China handling, duty and VAT need to be added. FOB means the price of the goods delivered to your ship or plane so shipping, UK handling, duty and VAT need to be added.

All of the additional charges can be provided by a Freight Forwarder (if needed we can recommend a couple of Freight Forwarders that we’ve worked with for years)

Some factories (normally those that makes off-the-shelf standard items) offer terms on a DDP (delivered duty paid) basis, which means the price delivered to your door. This is however less common than ex-works or FOB.

4. How can I calculate duty for my product?

Duty is dependant on the type of good being shipped over. To find out the duty for your product you need to work out the relevant Commodity Code (Customs and Excise can advise, or look online). In our experience (of bringing over plastic or metal components) duty is normally in the range of 3-6%. Duty needs to be added to the ex-works price and unlike VAT is non-refundable.

5. How can I estimate shipping costs?

If a factory quotes ex-works or FOB, then you’ll need to work out door to door shipping costs. These can be a little chicken and egg in that you won’t know how heavy or big your order is until it’s ready. However it should be possible for your factory to estimate the order weight/volume, meaning any Freight Forwarder should be able to provide door to door quotes.

Note that shipping costs can vary a lot (up or down) over time and you will realise economies of scale as you start shipping greater volumes (a 20′ container is around £1500 – £2000; a 40′ around £2500 to £3000).

6. What are the normal payment terms?

The majority of factories will require 50% upfront to kick-off an order. The remaining 50% is typically then due once the order is complete, or before the goods lands in the UK. Some factories will allow you to pay the remaining 50% when you’ve inspected the goods, but this is very rare for first time orders. Payment terms can be improved with factories as you develop a longer term working relationship.

7. How do you make your money?

We charge £30 per hour for initial investigations, factory selection and providing a quotation. A typical job takes 5-15 hours, so a customer can expect to pay in the region of £150 – £450. Once the customer has progressed to order we (or our partners) add a commission of 10-20% to the factory prices based on the order volume and service level required.

8. Is it better to go to factories direct or via a China sourcing agent

This depends on on your level of experience in dealing with Chinese suppliers, the type of goods you’re buying and how much time you have to dedicate to the project. If you’re buying standard items and have many years of buying experience you may be better off buying from factories directly. On the other hand if you’re buying complex OEM goods, and/or are new to China sourcing you may be better served by an agent. Agents will also have existing factory relationships, which you can leverage (rather than finding them yourself on China sourcing directories).

9. What minimum order quantity is required?

Most factories will require an order of at least $5,000 to proceed. Some will produce smaller orders, but this may not give you priority over other customers resulting in project delays. A normal order size for China Works is in the $10,000 – $20,000 region, with some orders much small and some much bigger

10. What do China Works do?

We help customers manage their end to end China manufacturing projects from initial factory sourcing, quotations, samples, tooling, production orders, quality control and logistics. We were founded in 2006 and have since built up a comprehensive network of factories in the greater Shanghai area, specialising in the production of plastic, metal, woods, glass and ceramic components.

11. Where are you based?

We have a team of 7 engineers based in Shanghai and a team of 3 client managers and product designers based in London. Our Shanghai team are fluent in English and our customers are welcome to discuss their projects with them or the UK team

12. Is China suitable for inventors?

Yes and no! Over the years we have worked with over hundred inventors and in the majority of cases it is probably better for these customers to start their production in the UK. This will give them more control over their project, while it’s still in it’s early stages and subject to change. Also most Chinese factories are looking for volume, which is something that most inventors are not typically in a position to provide.

Exceptions to this rule are for inventions where the designs are complete; production can only take place in China; and initial order quantities are expected to be reasonably high

We hope the above helps with your China manufacturing project, and feel free to contact the China Works team if you want to discuss in any more detail

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