DHGate.com is an online marketplace of wholesale products from China. The company is located in Beijing and Diane Wang is its founder and CEO. Prior to launching DHGate, she founded Joyo.com, a consumer-shopping site that Amazon purchased in 2004.
She says that over a million customers use DHGate for sourcing China-made products. We asked her about DHGate and why non-China companies should buy inventory from there.
PeC: Why should smaller companies, from the U.S. or elsewhere, look to source inventory directly from Chinese suppliers?
Wang: “In the past, small businesses were left out [of importing products from China] because of the complexity of an outdated world trading system.
“Online platforms that streamline China-sourcing help revive and rejuvenate small retailers and wholesalers, leveling the playing field between the smallest businesses and the largest. The goal of such online marketplaces is simple: Make it as easy for a small business to buy products overseas as it is for a consumer to buy a book from Amazon.
“We’re seeing that now is the right time for this. The technologies are well developed and the markets are mature. Buying direct from manufacturers overseas is now safe, efficient, and can be even easier than ordering from a local distributor.”
PeC: How can a U.S.-based merchant know the quality of a China-made product?
Wang: “As with all industries in all countries around the world, there are always cases of poor management or lack of total oversight when it comes to quality. And just like in the U.S. or Europe, when serious quality issues arise in Chinese manufacturing, regulators step to assess the situation and put appropriate safeguards in place to protect consumers.
“One of the great things about the Chinese manufacturing sector is its size. That means there is a lot of choice for consumers. Buyers should always take the time to choose their suppliers carefully. The most important step buyers take in the process of selecting a source should be to check feedback about sellers. All reputable online platforms have built in review systems. You should also check open-ended comments posted by other buyers. The comments will tell a story about attitude, credibility, and the extent to which that seller is really focused on building a good reputation.”
PeC: What are the best items to import from China?
Wang: “I always recommend that merchants buy products that they know well and have an interest in. Since the goal is to resell items, it’s best to stick to what you know, even if those products won’t have the biggest margins. By focusing on products you’re really familiar with, marketing and managing your business will be much easier.”
PeC: How can it be cheaper to buy things from halfway around the world?
Wang: “One of the best things about the global economy is that it allows different countries, cities, businesses and individuals do what they do best. If you can imagine how much time and energy it would take if each household or individual had to produce all of the things they use each day—light bulbs, clothing, maybe an automobile or bicycle, the electricity to run appliances or a computer, it would be impossible for us to enjoy the quality of life we currently have. So different people do different work that they specialize in, and because they make more of the same things, they become more efficient making each item less costly to produce.
“Now if you take that example of a household that tries to be entirely self-sufficient and blow it up onto the global scale, you can see that some regions might be better suited to produce certain goods. For example, countries in arid regions import foodstuff and even water. In colder areas, roses from the southern hemisphere are delivered on Valentine’s Day. Because of a large workforce and major investments by both Chinese and international sources, China has become the world’s manufacturing plant.
“The amount of goods produced in China is astonishingly high. And with all that production, comes incredible economies of scale. So even if it costs more money to ship from Beijing to Boston, the items are available for purchase as such a low rate it becomes economically viable.”
PeC: How can a merchant know what, if any, products he or she should import from China?
Wang: “The first thing to do is plan how you’ll run your business and understand the time and money that will need to be invested. Second, do some research on the products you’d sell and find out what competition is already offering those goods. Decide how you’ll differentiate yourself. Finally, look into the different online platforms that streamline buying products from China. Important things to look for include the number of products and sellers, customer feedback and reviews, and any charges or fees that may be associated with a transaction. It’s also a good idea to see which platforms help ensure your satisfaction by having escrow or arbitration services.”