White Label Products – Sourcing from China

China is a great place from where you can import generic goods to sell under your own brand. There can be risks, but these can be avoided. You can take the first step in making your business foolproof by reading this guide.

Do you want to start a business selling goods but are struggling to come up with the right product? It can be a dilemma, but not one that should stop you from starting up. You can just take the white label route. It simply means to buy a product that is manufactured by another company, put your brand or label on it, and sell it as your own. It is an easy option for retailers who want to start a business quickly but don’t have a unique product idea or much seed money (or the interest) to set up to manufacture the goods themselves. White label goods have also gained in popularity in the wake of the e-commerce boom driven by Covid-19. According to the BCMPA (a UK trade association for contract manufacturing, packing, fulfilment and logistics), inquiries from retailers for white label goods surged a massive 75% during the 2020 pandemic lockdown,        

In this piece, we will discuss what white label goods are all about, with a special focus on sourcing them from China. Read on to find out:

• How to find manufacturers in China
• What precautions to take when sourcing these products from China

What is a white label product?

A white label product is produced by one company (the manufacturer) but sold by another (the retailer) with its own logo and branding. Take into consideration the American retailer Costco’s signature Kirkland brand of batteries Would it surprise you to know that these are made by Duracell?

These products are often also called private label goods, though there is a significant distinction between the two. White label goods are generic products that are sold to multiple retailers, which in turn resell them under their own brands. For example, the generic anti-inflammatory drug ibuprofen is sold under numerous brand names, most commonly Advil, Motrin, and Nurofen. Private label goods, on the other hand, are sold by the manufacturer exclusively to a single retailer. Walmart’s Great Value brand of white bread, which is made by Sara Lee, is an example of a private label product. Another difference between the two is that while private label goods can be customized to some extent, white label goods cannot.

If you’re curious about the term ‘white label’, visualize a blank label on a manufactured product that can be filled with the retailer’s branding. That’s basically what it means. Interestingly, by some accounts, the term has roots in the music industry. In the age of vinyl records, recording companies were in the practice of creating promotional copies of new music and handing them out to radio stations and night clubs to test the response to the music before the actual mass-production began. These promotional copies came in sleeves with white labels on them.

While white label goods can be found in just about any industry, they are massively popular in the food and beverages, pharmaceuticals, electronics, cosmetics, personal care, and pet supply sectors. Retail giants like Walmart, Tesco, Whole Foods, and Target have found success selling branded goods made by third-party manufacturers. And while the term might be white label goods, the services sector also uses white labelling. An example of this being the department store chain Macy’s offers a store card that is provided by American Express.

Pros and cons               

For retailers selling white label goods, a key advantage is that they don’t need any manufacturing investment or experience. The manufacturer takes care of the entire production process, including product characteristics and components. They also produce the goods at a much cheaper rate than the retailer ever could. Other benefits include:

• Easy market entry: The retailer doesn’t need to spend time coming up with a product idea, designing it and producing it. Buying a trending product is all it takes to set up shop.
• Discounts: Since the goods can be produced economically – especially if made in China – retailers can sell them at a discount.
• Quality: Products can match other brands on the store shelf (some of which might be produced by well-known and reputable manufacturers) in terms of quality.
• Market tested: The products are almost always goods that sell well and have an established market. 
• Business expansion: White labelling is a great way to expand your product line and scale up your business.
• Big contracts: For manufacturers, being a while label provider means large and frequent contracts are as good as guaranteed.        

However, there are some drawbacks as well:

• Legal liability: As the manufacturer has full control of production, the retailer might not know there is a problem with the product until they receive a complaint from a customer. As the supplier, they are liable for any defects and malfunctions, especially if it causes injury to the buyer. Taking the legal route to pass liability to the manufacturer rarely works, especially if the manufacturer is based in another country (say, China) and does not have a presence in the retailer’s country.
• Competition: White label goods are generic, with just the brands that sell them separating them. The tight competition means retailers must ensure their branding and labelling stand out as much as possible.  
• Minimum order quantity: Small retailers might struggle to work with the minimum order quantity (MOQ) quoted by manufacturers, especially in China. Even if they accept the MOQ, there is a risk of being left with unused inventory due to limited sales.       
• Building brand loyalty: It takes time and effort to build a brand. Furthermore, customers tend to be more loyal to larger, well-known brands than lesser-known ones.
• Copycats: As a general rule, white label goods use the familiarity of established brands to their advantage. However, some retailers deliberately package their products to resemble those famous brands. This practice is called copycatting, and not only is it misleading to customers it is also illegal.

Where can you find manufacturers in China?

With its manufacturing expertise, skilled workforce, advanced trade infrastructure and competitive prices, you can source nearly any kind of product from China. This includes white label goods. For years, the country has also been the top supplier of private label goods. If you’re looking to import products from China, here’s where you can find manufacturers:

• Alibaba: Most retailers looking to source goods from China start with Alibaba. Other B2B platforms such as Global Sources and Made-in-China also list products by “verified manufacturers”, though their offerings might not be as extensive as that of Alibaba. Global Sources is better suited for commercial products and Made-in-China for industrial goods.    
• Trade shows: If you’re more comfortable searching offline, you can meet providers in person and check their products first hand at major trade shows such as the Canton Fair in Guangzhou city and the Private Label Fair Asia in Shanghai. There are also smaller trade shows that cater to a specific industry or sector, such as the China International Beauty Expo (CIBE) and the China International Furniture Fair (CIFF), both in Guangzhou.   
• Yiwu Wholesale Market: Unlike trade shows that are annual or biannual events, the Yiwu Wholesale Market – said to be the largest in the world – is open round the year, barring national holidays. Located in Zhejiang province, Yiwu comprises multiple wholesale markets, the most prominent being Yiwu International Trade City. These markets are great for smaller businesses as they offer rock-bottom prices and modest MOQs. However, buyers must beware that not all wholesalers here are manufacturers (most are trading companies), and that an extremely low price is often associated with quality concerns. While the Yiwu markets sell just about anything, they are better suited for watches, bags, shoes, accessories, and textiles rather than more specialized goods such as electronics and cosmetics. Incidentally, the region also has its own trade show, the Yiwu Fair.              
• Sourcing agents: Retailers who lack experience importing from China can outsource the job to a sourcing agent. There is a distinct advantage to working with an experienced sourcing agent with a physical presence in China (such as Sourcing Allies) – it gives the retailer a greater degree of control over product quality. Sourcing agents not only buy the goods but inspect factories and organize quality inspections of the products. They also ship the goods, so there is a lower chance of a delivery delay.

When sourcing white label goods from China…

Remember to take these precautions:

1. Don’t forget quality inspections: Generic products are as prone to quality issues as customized goods. Retailers might not have much control over production, but they can and should ensure all goods are examined before they leave Chinese shores. Given the distance the goods will travel from the factory in China to your warehouse in another country, your chances of getting a refund or replacement for inferior goods are slim. Even if the manufacturer is willing to replace the goods, the delay means you’ll still end up on the losing side. You can hire a third-party quality inspection agency in China, directly or through your sourcing agent, and give them the product information (dimensions, logo, color, material, etc.) so that they can inspect and clear the goods before they are shipped. This is a step you must not skip. There are other ways to ensure your products are of the desired quality – always ask for a sample before placing a bulk order, and clearly state your product specifications and requirements in your contract.

2. Spell out your labelling requirements: White label goods are all about the label, and retailers must be attentive about this aspect of the procurement process. Giving the manufacturer a vague idea about the labelling you require and expecting them to figure out the rest can certainly lead to trouble. Chinese manufacturers are not known to ask their clients for details they don’t provide on their own. If given too little information it’s highly probable the manufacturer will improvise and the end result could be disastrous for the retailer. To avoid unfortunate labelling errors, make sure to specify each aspect of your label, including:

• The type of label you require – embossed, engraved, carved, embroidered, laser-printed, and so on – depending on the product type
• The color/colors of the label
• The print font and font size
• The exact placement of the label
• Any artwork that is part of the label 

Labelling doesn’t just cover the label but also the packaging for the product. Most manufacturers in China offer standard packaging designs that can be branded with the retailer’s logo. But what if your manufacturer does not offer packaging services, or cannot fulfil your demand for customized packaging? If this is the case, you can ask if the manufacturer has a packaging subcontractor they can outsource the job to, or you can hire one yourself or through your sourcing agent.        

3. Play safe: You can’t always choose the products you sell, especially if you’re already running an established business. But if you are just starting out, you should have the power to pick your products. To this second category of retailers, a sound piece of advice is to avoid high-risk products. A good example would be toys and other children’s products. The retailer has little oversight of the production process and therefore cannot say for sure if the product is safe. Specific warnings might need to be affixed to the products, which the first-time retailer might not be aware of. Furthermore, the region where the products are ultimately sold might have strict safety standards that if not met, will leave the retailer vulnerable to legal difficulties. Dietary supplements are another risky prospect for white labelling. The wrong ingredients can cause side effects. The labelling requirements are strict. And the products come with expiration dates, which makes it tricky to control the amount of inventory you hold. When a retailer sells a product with their logo on it, they must be able to vouch for the goods. Buying liability insurance, which covers the cost of compensation that might need to be paid, is certainly a good idea but sometimes, it just makes sense to stick to safe products.

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Sourcing Allies is a team of expert China sourcing agents that has helped western customers manufacture and source products from low-cost regions since 2006.

For more on China sourcing visit our website or write to us at info@sourcingallies.com.