The bi-annual fair season is here once again with the Canton Fair & Global
Sources Show starting in a couple of days.
(You can use the code A2M100 to get a $100 discount at the Global Sources Summit and code tsb9931 for a 20% discount at the Cross Border Summit)
I have written about trade shows in China a fair bit, for e.g. Here and Here. I have also written a couple of eBooks on the Subject, one focused on the Canton Fair in Guangzhou and the other focused on The Global Sources Show that takes place in Hong Kong.
However, I always get a lot of questions from buyers along the lines of, whether one is better than the other, which one is better for their business needs, which one has higher quality suppliers, etc. so this post looks to address some of those questions.
The world of international product sourcing can seem a bit complex, particularly for those new to the game. There are products to research, quality to control, payment risks & logistics to manage, laws to navigate, cultural barriers to overcome…the list goes on.
But while sourcing at large is difficult to manage, there have been many developments that have made cross-border sourcing, product development, and purchases vastly easier. Many years ago, the Canton Fair began and has developed into the largest sourcing event in the world, where buyers can visit and find new products to buy and or customize.
But it’s not the only game in town: Alibaba emerged as the power player in online sourcing and continues to dominate the internet. Meanwhile, other options exist. Global Sources, in particular, stands out as a platform that differentiates itself from Alibaba, by simplifying the sourcing process with its online platforms, while also providing a trade show and maintaining high verification and licensing standards for its suppliers.
All three of these are able to provide the buyer with options, though they differ in many regards in terms of their offerings, advantages, disadvantages, and their future outlook.
The Canton Fair:
The Canton Fair, found in Guangzhou, China is gigantic. I mean that in every way possible. In the last half-century, the Canton Fair has not only been one of the biggest annual economic events in the world, but it’s one of the biggest events in the world, period, with over 350,000 visitors in 2016. It covers massive real estate & is held over a period of a month twice a year.
Last year’s business turnover alone was 56 million USD. The Canton Fair is gigantic in the abstract also: its contribution to the Chinese manufacturing industry, its impact on Chinese/Western relations, and its impact on the explosion in Chinese manufacturing. Nearly every product from every category conceivable to the mind finds representation here. This is where most companies also launch their new products to potential clients.
The obvious and strongest benefit to the Canton Fair is its sheer size. However, this can be to its detriment. Any supplier with the right funds can buy a booth, meaning that suppliers are not comprehensively verified by any sort of organization.
As such, many representatives at the Canton Fair are not actually manufacturers but are instead traders – companies that are middlemen hoping to profit from the factory/buyer transaction.
As buyers know, this carries several disadvantages, as traders may be more expensive (they have to profit somehow) and less knowledgeable (if you had to represent multiple factories carrying multiple products, you might be also).
They also simply cannot vouch for the quality of the product in the meaningful way that a factory can. But they are generally known for having higher customer service standards and English abilities than the factories.
One thing to mention is that the outlook has recently been trending negative – fewer people have been coming to the show in recent years, having apparently peaked around 2012 with 416,000 visitors. (Still, about 370,000 made it in 2016. That’s a lot). With online platforms developing and more and more 3rd Party sourcing companies coming up the need to physically come to China to source products is on the decline.
Alibaba has become a household name in the last decade, though it has been around a little longer than that.
To put it simply, Alibaba is an online platform for B2B trade where suppliers are connected with buyers with the simple idea of other online marketplaces: buyers find products that they like, connect with the suppliers, and build the business relationship (Outside of the platform) either buying the products as they are or ordering customizations.
Overall, the site aims to completely digitize the sourcing process, much like eBay or Amazon does for B2C trade – a buyer is on one end and a supplier (a factory or trader) on the other. Suppliers and buyers are able to interact with each other with product catalogues, a robust messaging interface, an escrow service, and other features.
Alibaba has particularly benefitted from a recent trend in what is called Private labeling – identifying holes in online marketplaces like Amazon or eBay, finding the relevant products via Alibaba, and purchasing them in bulk while adding the company’s name to the product. (The days of this simple white labeling practice are on the decline or at least it’s getting a bit more complex but that’s a topic for another time.)
Alibaba is by far the biggest B2B platform and has been one of China’s greatest success stories. A company with seemingly never-ending surplus cash resources & led by its Charismatic leader Jack Ma, Alibaba has ventured into several other areas, such as Mobile Payments, Retail platforms (Amazon’s counterpart in China), and countless other ventures.
Alibaba benefits massively from being online, firstly in that commerce is increasingly trending in that direction, and secondly in that product sourcing can be done year-round, while physical fairs such as the Canton Fair are held only twice a year.
Also, buyers can easily search for it with just a click. That’s clearly an advantage over having to travel to China, and then walk several miles through a trade show the size of a city to find products.
Alibaba also benefits from having a massive database of suppliers and products available to choose from. Clearly, in many circumstances, more is better – especially for small buyers, who may be unable to physically find suppliers willing to mass produce small quantities of a certain item (not to mention, lack the funds to travel to China).
However, just like how it is with the Canton Fair, Alibaba’s supplier verification processes have been questioned time and time again and are not the most robust. Also, by some estimates 70% of suppliers on Alibaba are traders. The Internet is also full of stories of scams, even when dealing with “Gold Suppliers” on Alibaba.
Additionally, for obvious reasons, buyers cannot physically touch the products (until virtual reality develops further, anyway), and owing to the overwhelming supply of suppliers, there is very huge variation in product quality among suppliers.
There’s a final downside to Alibaba: suppliers, for reasons good and bad, sometimes consider online shoppers (especially the smaller orders) as unserious and more likely to fail, and may treat them as such by offering quotes that maximize the profit for suppliers until the customer demonstrates otherwise.
Global Sources Show:
Having two established giants of the sourcing world, with the Canton Fair dominating the physical trade show sourcing world, and Alibaba dominating the virtual sourcing world, is there any room for alternatives?
It turns out that there is significant demand for other solutions – owing to the fact that not every buyer wants an infinite supply of options, but would prefer instead a selection of high-quality, verified suppliers.
Global Sources (based in Hong Kong) is one such contender, and they’ve been around long enough to make a name for themselves and be established firmly within the sourcing world as a high-quality supplier/buyer connection platform.
In fact, very few people know that Global Sources pre-dates Alibaba and there are some nice snippets about their rivalry in their early days in the book Alibaba: The House That Jack Ma Built by one of the best-known Western China experts Duncan Clark.
Their unique value proposition is that they organize both a bi-annual trade show in Hong Kong (at the same time as Canton Fair) and have a very good B2B platform as well. There is a lot of integration between the platform and the trade show which often allows importers to get the best of both worlds.
They also organize a lot of conferences targeted towards different buyer groups, such as the Global Sources Summit for Amazon Sellers and the Start-Up Launchpad for hardware start-ups.
(If you visit the Summit, you can use the code A2M100 to get a $100 discount on the ticket price)
Similar to the Canton Fair, they provide a trade show (hosted in Hong Kong) where buyers can physically go to meet supplier representatives (again: verified as licensed and legitimate) and physically touch new products.
These shows also feature favorite selections by the Global Sources team, products that are particularly novel and/or of high quality.
There’s one other thing that Global Sourcing does: they have recently begun hosting a summit geared towards Amazon sellers alongside their trade show, allowing new prospective buyers to network with other sellers, attend presentations by the biggest names in the sourcing world, and get up to date with the best and most profitable sourcing practices.
All of this takes place alongside their trade show, allowing summit attendees to immediately put their newfound knowledge into practice at the show.
The biggest benefit to Global Sources may be its trade show accessibility: first, it’s in Hong Kong, meaning that most Western buyers won’t even need a visa (unlike the Canton Fair, which will require some kind of embassy engagement).
Secondly, it’s strategically held during the intervening periods around the Canton Fair in Guangzhou, meaning that buyers are able to visit the Canton Fair (during its commercial electronics phase) and then take the train to Hong Kong for a visit to the Global Sources Show (Hong Kong and Guangzhou are within two hours train ride of each other).
Beyond the not-insignificant point of ease of access, they are a more targeted option. Being a contender that does not compete for size (which would be difficult against the vastness of the Canton Fair or Alibaba), Global Sources instead takes an approach to sourcing that considers only verified suppliers.
They also focus most strongly on consumer electronics, although their other offerings are considerable as well. (If a buyer is in the game for consumer electronics, they are likely going to be that buyer’s preferred venue.) Additionally, they’ve recently taken to specializing with Amazon sellers.
Concluding Remarks and Advice:
These are the three most noteworthy platforms for product sourcing in China. Different buyers will have different preferences, and hopefully, these distinctions can provide guidance in making that decision.
A final note before closing: buyers who are interested in niche products, particularly industrial products, may consider finding niche trade shows. There’s even a large, annual fair in China devoted to sourcing tires. Buyers should consider what their priorities are, and make their sourcing decisions accordingly.
But there’s no reason to not use all three – do product research online (know the features you want) via Alibaba and keep their offerings in mind, while then attending the Canton Fair, and then hopping the Hong Kong border to take advantage of Global Sources Show offerings.
How’s your experience been with these platforms? What sort of challenges have you had and what advice would you give other importers attending these shows? Do share in the comments.
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