Are you looking to source products but want to find cheaper products from China?
Do you know the ways to find a cheap but good quality product?
All over the world the best business practice in trading is to buy wholesale products at the best price and sell them with profit. Cheap labor, higher production capacity, huge government support are some of the factors that China can produce cheaper products compared to other countries.
Your business needs to look for high-profit margin products. But it is a very challenging task and one needs to know different strategies and techniques to find it.
Well, all your questions regarding buying cheap products from China will be addressed in this blog. We will also discuss the Top 20 cheap products, tips to find cheap products, and what you should know before buying cheap products from China.
Most of the time, the reason for the cheap cost of China products is considered its low labor cost only. All the buyers from the world are well aware of the quality of Chinese products.
In each price range, China offers a great quality product. The obvious reason is low wages as compared to the United States but this is not only the reason. Below are discussed all the facts that genuinely contribute towards the cheap but good quality products made in China.
1. The labor cost is about 20% of the total cost of Chinese Products
Let’s discuss a case study that will help to truly understand this factor.
Just compare two simple products produced in China. One is handbags and clutches and the other is Frisbee or plastic storage boxes. The manufacturing pathway of handbags/clutches will be as follows:
First, the texture of the bag either be wool, cotton, leather, etc. is cut into a shape and sewn with hands or with a high-speed sewing machine. The embroidery, beads, pearls, and other decorative materials are sewn on the bag with hands.
About 95% of work is done by hands while making handbags and clutches. This type of product will be considered a high labor content product with 70% labor cost of the total cost of the product.
Now see, how Frisbee or plastic storage boxes are manufactured. In this manufacturing process, the stencils are present in which plastic is injected, molded, and given the shape of the stencil. When the plastic cools down, it automatically pops out from the stencil within seconds. This is a fast process making millions of products in a single go.
All the work is automated and is taken up by the machine. Workers have to just box it once it is done. The expense is centered on making the mold and that cost is added to the cost of the product. Such type of products is considered low labor products taking 20% of the total cost of the product.
2. Chinese Suppliers work on Low-profit Margins but Higher Volumes
China is known to be the world factory that offers the biggest wholesale markets. The supply of products from China is given in high volumes. Taking this fact into consideration, Chinese suppliers work on low-profit margins with high volume sales.
They cost textile material of handbags, plastic resins of storage boxes and Frisbee, stuffing material of toys. Buyers around the world will buy wholesale products in big volumes thus pricing would be kept as low as possible.
3. Lower tax and higher subsidies by the Chinese government to manufacturers
The only tax that is added to Chinese products is ‘Value added tax (VAT)’. VAT is generally 17% or 13% per product, material, or