Arlen Robinson [00:01]
Welcome to the Ecommerce Marketing Podcast, everyone. My name is Arlen and I am your host. Today we’ve got a very special guest,
JK Beaton, co-founder of China Product Pros, shares insights on product sourcing from China. He emphasizes the importance of working directly with factories rather than trade companies to ensure consistent quality and lower costs. JK also advises brands to negotiate with factories and ask questions to understand the challenges and find solutions. He highlights the risk of products being held ransom at port and recommends filing a trademark in China to prevent this. JK discusses the significance of on-site visits and inspections to maintain quality control. He also mentions emerging trends such as factories moving towards automation. Welcome to the podcast, JK.

JK Beaton – China Product Pros [00:43]
Thanks, Arlen. I’m always unsure what to do during the intro. It’s like when people sing happy birthday to you, and you don’t know what to do. But great intro. I appreciate it. Thank you.

Arlen Robinson [00:51]
Gotcha. No problem. It’s interesting that you mention that. We’re in the process of switching formats for some episodes. Moving forward, the intro will be recorded separately. My business partner will join me for some upcoming recordings, and I’m excited about that.

JK Beaton – China Product Pros [01:03]
Okay.

Arlen Robinson [01:20]
Yeah, so things will be a bit different. But today, we’re diving deep into your bread and butter: product sourcing. We’ll cover the red flags you see, as it’s somewhat of a wild west with our global economy and supply chain. We’ll discuss product sourcing, cost of goods sold, and how to get your brand the best possible pricing and vendors. We’ll also explore how to avoid pitfalls in product sourcing. But before we dive in, can you tell us more about your background and how you got into what you’re doing today?

JK Beaton – China Product Pros [02:21]
Yeah, absolutely. I’d be happy to. I started China Product Pros with my wife three years ago. We’re a full-suite agency. But before that, I began sourcing as a university student in China. I was majoring in Chinese language and culture and helping friends back home find products on Alibaba. That was the start. After spending nearly five years in China, I returned to Canada in 2010 and continued working with China. I worked with a clothing company, a major university, and various Chinese business partners, including manufacturers.

My wife and I launched our own brand in 2016 in the home storage space. During COVID, our brand took off, and we hired someone on the ground in China to represent our interests with factories. It went really well. Friends in the space started asking for help with their suppliers because they knew we had boots on the ground in China. That’s how our company started, tapping into our superpower. My wife’s background is in international trade and logistics, and I speak Chinese. We built and grew our team, and now we’re around 11 or 12 people. We’ve been having fun helping brands save money, find better products, and bring transparency to the process.

Arlen Robinson [04:38]
Okay, great. That’s some good stuff. It helps that you’re familiar with China’s business ecosystem and cultural norms. When dealing with business people there, understanding their ways can prevent misunderstandings. It’s good to know you have a foothold on how to navigate things properly. So, let’s start with some common red flags to look out for when sourcing products from China and how to navigate them.

JK Beaton – China Product Pros [05:42]
Yeah, absolutely. Whether you’re a mature brand or starting fresh, it’s crucial to know who you’re working with. Are you dealing with a trade company or a direct factory? A trade company is a middleman, often increasing prices by 10% to 40% and leading to inconsistent quality. They might switch factories for better quotes, resulting in varying quality. Working directly with a factory ensures consistency and builds a stronger relationship over time. Big factories in China now usually have English-speaking staff, so the need for trade companies is diminishing.

Arlen Robinson [07:21]
Okay, gotcha.

Arlen Robinson [07:30]
Speaking of cost of goods, let’s say a business in the US is manufacturing locally but shifts to China to lower costs and increase margins. What are some effective strategies for lowering the cost of goods sold without compromising quality?

JK Beaton – China Product Pros [10:43]
Absolutely. First, talk to your factories more and don’t be afraid to negotiate. In China, negotiation is expected in business transactions. You should negotiate for better prices, packaging, payment terms, and prioritization of orders. Frequent communication through WeChat is effective. Ask for pictures and videos during production to monitor progress and address challenges. If a factory can’t reduce costs, ask why. Understanding their challenges can help you find solutions, like modifying a labor-intensive product to save costs.

Arlen Robinson [15:06]
Yeah, that’s good to know. Asking questions can uncover factors affecting costs beyond just profit margins. Now, I’ve heard of the term “ransom at port.” Can you explain what that is and how a brand can avoid their products being ransomed at port?

JK Beaton – China Product Pros [16:10]
Sure. This refers to a situation where someone in China trademarks your successful product and then claims your goods at the port. To prevent this, file a trademark in China. It’s relatively inexpensive, around $500 to $1,000, and ensures peace of mind. Unlike the US, which is a first-use system, China operates on a first-to-file system. Even if you’ve used the brand longer, whoever files first has the rights.

Arlen Robinson [17:47]
Wow, interesting. How common is this issue of ransom at port? Are there companies in China specifically looking for such opportunities?

JK Beaton – China Product Pros [18:26]
Unfortunately, yes, there are. It’s not overly common, but it does happen. There are firms in China that specialize in fighting for sellers in these situations, as well as those looking to exploit such opportunities. It’s a risk, but for the cost of filing a trademark, the peace of mind is worth it.

Arlen Robinson [19:21]
Okay, good to know. Regarding product quality, how do you institute quality control throughout the supply chain to ensure products meet specifications?

JK Beaton – China Product Pros [20:05]
Be proactive during the sampling stage. Go slow and get a pre-production sample that mimics the final product. During production, have check-in points and frequent communication with the factory. If you can’t be on-site, get a third party to do a pre-shipment inspection. This ensures issues are identified and resolved before paying the balance and shipping the products. Hiring an agent can provide a high ROI by allowing you to focus on other aspects of your business.

Arlen Robinson [24:45]
Okay, that’s good to know. While video and chat can facilitate global business, there’s still value in having someone physically present at the factory. If you’ve never visited your factory, doing so can strengthen relationships, improve communication, and enhance quality and pricing.

JK Beaton – China Product Pros [25:18]
Absolutely. Visiting your factory and meeting the people you work with can significantly improve your relationship and business outcomes.

Arlen Robinson [25:54]
As we wrap up, how do you see the landscape of product sourcing from China evolving? Are there any emerging trends that brands should be aware of?

JK Beaton – China Product Pros [26:13]
We’re seeing a lot of factories move towards automation to keep costs down and improve quality and production times. Be mindful of shipping timing, especially around Chinese New Year, as freight costs can be much higher. Adding Chinese holidays to your calendar can help you plan shipments better. It’s also important to stay aware of how global events and trends can impact your supply chain.

Arlen Robinson [28:09]
Interesting. That’s a great tip. It’s important to avoid shutdowns and plan shipments accordingly. Well, JK, this has been an enlightening conversation. Before we let you go, can you share a fun fact about yourself that we might find interesting?

JK Beaton – China Product Pros [29:05]
Sure. The first concert I ever went to was the Backstreet Boys.

Arlen Robinson [29:13]
Okay, gotcha. Were you a fan back in the day? How did that come about?

JK Beaton – China Product Pros [29:16]
I was part of a camp with a bunch of pre-teens, and they took us to the Backstreet Boys concert. It was fun, and I had a good time. It was a cool experience.

Arlen Robinson [29:41]
Awesome. Well, thank you for sharing that. Lastly, can you let our listeners know the best way to get ahold of you if they want to learn more about product sourcing?

JK Beaton – China Product Pros [31:11]
Absolutely. You can reach me by email at [email protected] or find me on LinkedIn under John Kyle Beaton.

Arlen Robinson [31:24]
Okay, gotcha. We’ll have the link to your website in the show notes. Thanks for joining us on the Ecommerce Marketing Podcast today.

JK Beaton – China Product Pros [31:35]
Awesome. Thank you, Arlen. It’s been a pleasure.

Arlen Robinson [31:37]
Thank you.

Podcast Guest Info

JK Beaton
Co-Founder of China Product Pros