China Business – You can only buy MOQ (Minimum Order Quantities) – WHY?
All those people who keep posting questions as to why they have to buy MOQ and cannot just buy smaller quantities?
The answer is quite simple. Most factories in China do not carry any stock. They manufacture to Order. When they receive an order, they set up the machines and start manufacturing.
We have a plastic bag factory in China. Let’s assume you want 5,000 with 3 colour print shopping bag. First, the machines are set to manufacture the required size. This means, stop,start,stop,start the machinery, until the required size is produced. Then, after they are made, they go over to the printing shop. The printing press is set up, (usually takes about half to one hour).and printing starts. Once again, it is a stop start process, until the plates are lined up to print the required logo in 3 colours. Once achieved, the presses keep running. At the end of this, it takes about 1-2 hours to clean the machines of the ink colour used, as the next print job may be a different colour. So, it could take about half a day to print just ONE job. For a quantity of 100,000 bags, this may be O.K. But for 5,000? NOT economical
Then, next, there are PORT CHARGES. Let’s assume these are $100. Divide $100 by 5,000 bags, adds about 2 cents per bag. On 100,000 bags however, it only adds 0.1 cents per bag.
I think you get my drift here.
If I was to quote you $100 per 1,000 bags for a quantity of 5,000 would you buy them?
If I quoted you $40 per 1,000 bags for a quantity of 100,000, sounds better doesn’t it?
If I quoted you $20 per 1,000 for a million bags, even better.
There are static fees and charges for any manufacturing process, and the less you want, the more it will cost to manufacture these. Charges like machine time, wastage, Trucking Fees, Port Charges, Freight etc.
Manufacturers world-wide, work with large quantities.
If you own a little shop somewhere, and want small quantities, go buy from a local wholesaler who buys larger quantities from an Importer, and who, in turn, buys even larger quantities from the manufacturer. Don’t expect to get cheaper prices for small quantities by going direct to the manufacturer.
And, oh, by the way, at your end, you have more static charges, like Clearance Fees, Port Charges etc, which are almost the same whether you bring in 5,000 pieces or 1 million pieces. Add these costs to your purchase price too.
In the long run, you will pay MORE for small quantities you buy overseas, than you would from your local wholesaler.
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