Novices Learn the Ins and Outs of Sourcing
New apparel entrepreneurs who want to import from overseas got a crash course on offshore sourcing at a seminar organized by Fashion Business Inc., a nonprofit association in downtown Los Angeles that helps new designers and clothing makers get off the ground.
The handful of attendees learned about the advantages and disadvantages of producing in foreign countries, common terms used in the importing world, international payment methods, the latest data on import quotas, and production timetables.
“If you’re looking at the bottom line, overseas sourcing saves you money,” said Beverly Wu, an assistant manager with Cyber Merchants Exchange Inc., which presented the two-hour seminar. Cyber Merchants, based in El Monte, Calif., organizes the semiannual ASAP Global Sourcing Show at MAGIC International in Las Vegas.
The biggest advantage of overseas production is the low cost of labor in countries such as China, Vietnam and Nepal.
“The cost in China today for a factory worker is $50 to $80 a month. In Sri Lanka it may be $50 a month,” said Frank Yuan, chairman and chief executive of Cyber Merchants, who spent 25 years importing apparel before founding his company in 1996. “A simple T-shirt may cost $1 each to produce in the United States. In China, it might be $1 for a dozen.”
Wu outlined a typical production timetable for manufacturing garments in an offshore factory.
Manufacturers should allot at least 107 days to get goods from the factory to the United States. There are 30 days to get fabric produced to your specifications; five days to transport the fabric to the factory; 30 days for the factory to cut, sew and package the goods; three days to ship the goods from the factory to a Chinese port; 15 days to ship goods from China to the United States; and three days to clear goods through customs. Everyone should factor in another 21 days to deal with any problems or glitches, Wu said.
Wu discussed various international payment methods, noting that letters of credit are most often used by U.S. importers dealing with foreign factories. In a letter of credit, a U.S. bank tells a foreign factory’s bank that the manufacturer will pay the factory’s bank upon receipt of the goods.
To find a good factory, Wu suggested U.S. companies work with buying agents who are familiar with the country and the industry. Such agents can also help manufacturers comply with labor issues and ensure the quality of goods. Typically, agents will charge 5 percent to 10 percent of the value of an order for their services.
Another recommendation was that manufacturers should draw up detailed technical packages that include specs, colors, fabric swatches, sewing procedures, packing instructions and delivery deadlines.
“The bottom line,” Wu said, “is to find a good factory and agent who are willing to work and grow with you.” —Deborah Belgum
