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Average china markup

by Danceparty
15 replies
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Does anyone know what the Chinese markup their products at on average? Seems like we as retailers try to have a 100% markup, this seems to cover most fees and bills to be comfortable.... do you think the manufacturers have the same number in their mind too?
#average #china #markup
  • Profile picture of the author Silas Hart
    350% At wholesale is pretty average for most items being made in China. This might sound really high, but if an item costs a manufacturer 6 CNY, they won't sell it at wholesale for less than 21 CNY. Which is ($1 and selling it for $3.50) A distributor might work for something like a 100% to 200% mark up.
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    • Profile picture of the author Danceparty
      Originally Posted by Silas Hart View Post

      350% At wholesale is pretty average for most items being made in China. This might sound really high, but if an item costs a manufacturer 6 CNY, they won't sell it at wholesale for less than 21 CNY. Which is ($1 and selling it for $3.50) A distributor might work for something like a 100% to 200% mark up.
      thats pretty crazy, and here I was thinking their margins are like 30% since they are doing wholesale.
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  • Profile picture of the author Auctiondebteliminator
    Not if you're going down the 'food chain'.

    What you'll find is the further down, the higher the profit margin... BUT you're also having to buy in larger quantities.

    Those margins aren't unusual at all - BUT you're having to ship 40 foot containers to say, the Port of Los Angeles, then hire a trucker (FOB) for example to your warehouse (in my situation for example) and then unload the 18 thousand units at a time......

    Yes, the margins are GREAT! But so are the upfront costs. And yes, it's worth it.

    Then -- I'd sell wholesale at a wholesale cost where I'd have a 100% ish markup on that, but then retail 350% or more on top of that.

    But the quantities purchased the higher you go on the food chain are fewer and fewer, but the margins are less and less.

    ADE
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  • Profile picture of the author vne5
    It's a little tricky for folks that don't actually live in China. I live in Beijing and by far the best way is to find the actual manufacturer (can be extremely difficult sometimes). If you are doing business in the States or anywhere else abroad, you may want to look into logistics companies that for a fee, will locate the product manufacturer, provide dialogue between them and yourself (language barriers are huge), babysit your orders, arrange shipping..etc They are paid by you independently of the manufacturer. Is it worth it? Absolutely. As Silas Hart was stating, you can get some great deals here and make a killing as far as your profit goes. I have personally found that using logistics companies has worked amazing and cut back on a lot of headaches. Good luck!
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    • Profile picture of the author Importexport
      Originally Posted by vne5 View Post

      It's a little tricky for folks that don't actually live in China. I live in Beijing and by far the best way is to find the actual manufacturer (can be extremely difficult sometimes). If you are doing business in the States or anywhere else abroad, you may want to look into logistics companies that for a fee, will locate the product manufacturer, provide dialogue between them and yourself (language barriers are huge), babysit your orders, arrange shipping..etc They are paid by you independently of the manufacturer. Is it worth it? Absolutely. As Silas Hart was stating, you can get some great deals here and make a killing as far as your profit goes. I have personally found that using logistics companies has worked amazing and cut back on a lot of headaches. Good luck!
      During my 22 years running an importing business I had a standard markup at which I had no problem selling. I multiplied my landed cost by 250%. This worked so well that business boomed and I franchised it in 4 countries.

      The secret really was buying good quality at the best prices, and as vne5 says: "by far the best way is to find the actual manufacturer". As I outline in my book there are safe and easy ways to find reliable manufacturers, even if buying relatively small quantities.

      I never bought container loads. My franchisees ordered direct and orders varied in value from $100 to the occasional $50,000, but the same markup formula was almost always used.

      On one occasion I imported 1,000 items that cost me $3 each landed. I sold them at $21 each, because I knew the buyer absolutely had to have these things and everyone else he contacted refused to consider the small quantity for something that had to be made to order.

      I can show you how easy it all can be. I have lost track of the number of times I have visited China and I know how it works. For example, I have been in factories where there are effectively two production lines. One produces cheap and nasty stuff while the other produces good quality. The interesting point is that the cost difference is very small. Guess which big retailers buy the cheap and nasty?
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author Importexport
        Originally Posted by Importexport View Post

        During my 22 years running an importing business I had a standard markup at which I had no problem selling. I multiplied my landed cost by 250%. This worked so well that business boomed and I franchised it in 4 countries.

        The secret really was buying good quality at the best prices, and as vne5 says: "by far the best way is to find the actual manufacturer". As I outline in my book there are safe and easy ways to find reliable manufacturers, even if buying relatively small quantities.

        I never bought container loads. My franchisees ordered direct and orders varied in value from $100 to $50,000, but the same markup formula was almost always used.

        On one occasion I imported 1,000 items that cost me $3 landed. I sold them at $21, because I knew the buyer absolutely had to have these things and everyone else he contacted refused to consider the small quantity for something that had to be made to order.

        I can show you how easy it all can be. I have lost track of the number of times I have visited China and I know how it works. For example, I have been in factories where there are effectively two production lines. One produces cheap and nasty stuff while the other produces good quality. The interesting point is that the cost difference is very small. Guess which big retailers buy the cheap and nasty?
        Sorry, I did not make it clear that the 1,000 items landed at a cost of $3 were all for the one customer. The cost was $3 each. In other words, I landed 1,000 pcs at a total cost of $3,000 and sold them in the single order for $21,000. Profit was $18,000 in one sale.

        Selling single items for $21 would never interest me or my franchisees when I was operating my importing business. $18 profit on a $21 sale may be a good margin, but too much work for that amount of money. We left that kind of effort to our wholesale customers.
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        Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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    • Profile picture of the author ralph010
      Originally Posted by vne5 View Post

      It's a little tricky for folks that don't actually live in China. I live in Beijing and by far the best way is to find the actual manufacturer (can be extremely difficult sometimes). If you are doing business in the States or anywhere else abroad, you may want to look into logistics companies that for a fee, will locate the product manufacturer, provide dialogue between them and yourself (language barriers are huge), babysit your orders, arrange shipping..etc They are paid by you independently of the manufacturer. Is it worth it? Absolutely. As Silas Hart was stating, you can get some great deals here and make a killing as far as your profit goes. I have personally found that using logistics companies has worked amazing and cut back on a lot of headaches. Good luck!
      Hi, I might need your help to find the production location for a specific product. Can I email you to ask for your help ?
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  • Profile picture of the author Ryan David
    I don’t think the “average” matters at all and the 350% is probably misleading (if you believe that to be the average). Sure, I have some products that I can buy for $1.00 and sell for $5 or $10. But these are small items, which take up very little space inside a container. It’ll cost you a small fortune to fill up an entire container with stuff like this.

    In my experience, you need to mix/match items in order to optimize the space inside the container. I have some bigger items (typically marked up 100% to end user), some medium sized items (marked 150%), and then some small items (500%-1000%). This optimizes the container in terms of weight and total out of pocket for me.

    But besides, I don’t really care about mark up. I care about the total gross profit that I can get from a given shipment and how fast I can turn the inventory. I can buy stuff with a 1000% markup all day long, but selling it is the hard part. You need the right mix of fast movers/high demand products for your niche and products with extremely high margins. If you don’t have the “big” things, you can’t sell the little things. And typically the big things have lower margins.
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  • Profile picture of the author Danceparty
    Thanks guys, great info. So basically, from what I understand its like with any service/product out there:

    small $ ticket = higher margin
    big $ ticket = small margin

    With small items, time to process affects the price, with big items, order size allows for good profit.

    Importexport, I purchased your book about a month ago and read it while I was vacationing, good stuff out there, however, I am struggling to find suppliers... maybe my niche is not so popular after all.
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    • Profile picture of the author Importexport
      Originally Posted by Danceparty View Post

      Thanks guys, great info. So basically, from what I understand its like with any service/product out there:

      small $ ticket = higher margin
      big $ ticket = small margin

      With small items, time to process affects the price, with big items, order size allows for good profit.

      Importexport, I purchased your book about a month ago and read it while I was vacationing, good stuff out there, however, I am struggling to find suppliers... maybe my niche is not so popular after all.
      Hi Danceparty,

      I don't recognize your Warrior name, so if you will email me I will help. Don't forget I promise ongoing support. I don't want you or any of my readers to be unable to succeed with my book.
      Signature
      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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  • Profile picture of the author chenyanroger
    the competition is very high for normal products, for most factories, the average gross markup for factories is about 30%.
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  • Profile picture of the author Kermit73
    I am reaching out as this seems like an appropriate thread to cover apparel manufacturing markups. I have two questions regarding apparel manufacturing.

    To date, the highest price break I have been quoted is $0.76 for 1M units landed at a US port. Based on your experience, what is a conservative range for the markup of the supplier is charging me (the distributor)?

    The second question I have is related to volume discounts. I am exploring an opportunity to distribution my goods in a large distribution network where the production levels may enter the tens of million. Based on the $0.76 for 1M units, what is a conservative estimate for a wholesale at 10 or 20M units?

    Let me know if either of my questions needs further clarification.

    Thanks
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    • Profile picture of the author Importexport
      Originally Posted by Kermit73 View Post

      I am reaching out as this seems like an appropriate thread to cover apparel manufacturing markups. I have two questions regarding apparel manufacturing.

      To date, the highest price break I have been quoted is $0.76 for 1M units landed at a US port. Based on your experience, what is a conservative range for the markup of the supplier is charging me (the distributor)?

      The second question I have is related to volume discounts. I am exploring an opportunity to distribution my goods in a large distribution network where the production levels may enter the tens of million. Based on the $0.76 for 1M units, what is a conservative estimate for a wholesale at 10 or 20M units?

      Let me know if either of my questions needs further clarification.

      Thanks
      If you have found the actual manufacturer, (not easy to do if you use Alibaba), you might well be as low as you can get for that quantity.

      You might find that increasing your order to the very high levels you mention might result in much smaller discounts than you expect

      The myth of big volume discounts. Those who think that volume means large discounts have never dealt with Asian manufacturers. Sure they give discounts for larger quantities, but those discounts are usually very small. .

      With experience in importing since 1987, I have found that discounts for volume were typically in the 1% to 2% range for doubling the size of an order. Multiply the order quantity by 10 and then you might get a discount as high as 10% if you are lucky. Therefore buyers should not expect substantial discounts for volume. In fact, as the volume increases, the % discount falls.

      Warning: Haggling can result in extremely low prices, but that will invariably lead to reduced quality. It also harms the business relationship and the supplier may choose to no longer supply.
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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      • Profile picture of the author Kermit73
        ImportExport,

        Thanks for your insight. It is very helpful!
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