Factors that Affect MOQ in China & How to Lower Order Quantity

MOQ in China is high and for good reason.  If you are looking to manufacture promotional products in China, then it’s important to familiarize yourself with MOQ or Minimum Order Quantity and how it works.

Ordering a large number of products is sometimes not workable for your budget or simply exceeds the needed quantity.  China has Taobao and many other sites where you can order one offs, but bespoke production of custom items means lots of admin. Obligatory QC on every order in China and shipping costs on small orders add up.   ODM can make 100 promotional pens for a client, but there is no way to match pricing of companies in the “catalog business” who ship in bulk and hold stock locally.

So, is there a way to get a lower MOQ at reasonable prices?  Yes – to some extent.   We give you 8 of our key tips to make it happen.

Factors that Affect MOQ in China & How to Lower Order Quantity

Factors that Affect MOQ in China & How to Lower Order Quantity

What is MOQ?

MOQ refers to the minimum quantity of a certain product, a factory can produce in an order. MOQ in China is usually high comparing to small enterprises in Europe and America, and here you need fully rely on economies of scale. Setting high-volume order somehow offsets high production cost.

There are many factors that affect the volume of orders. Below we discuss some of them and we will also share some tips to help you lower the MOQ.

Factors that Affect MOQ in China

  • Type of Product: MOQ is usually high for simple and cheap products such as promotional pens, pencils, matches, toothpicks, pins… you get the idea. Minimum order for these items are usually 10,000 pieces or higher. Products like glassware, noteboooks, plush toys- items that are a little more complex and expensive to produce- have MOQ of approximately 1,000 pieces. Expensive and elaborate items such as POS display units can potentially have a 50-200 pcs MOQ.
  • Mould Price: Custom products with very unique designs require opening new moulds, which are very costly. Hence, factories will have to increase MOQ to compensate for the expenses. MOQ is around 2,00-5,000 pieces depending on the type and specifications of the product.
  • Customization: Customizing your product could also affect the amount of minimum order. Items that require custom parts sometimes require higher production cost and longer production time. This could result to higher MOQ. For instance, you want a certain color for your plush toys, if you agreed to use the materials available in the market, then MOQ will be around 500-1000 pieces. But if you want to dye the fabric, the factory will have to shoulder the expenses for the materials needed to achieve the desired color. Alternatively, you can pay a quite expensive dyeing cost. MOQ for dyeing fabric is approximately 5,000 pieces.
Factors that Affect MOQ in China & How to Lower Order Quantity

Factors that Affect MOQ in China & How to Lower Order Quantity

  • Size of the Factory: Bigger and more “famous” factories with many people in staff and multiple audits, usually quote high MOQ on their products. Producing orders lower than their minimum limit is not worth the time for them, as they can make more money on big orders. They also have bigger production lines, and cannot allow resetting the large machinery for a tiny order. Smaller factories are happy to work at lower margins and often can offer a very competitive quality.

Other Possible Factors affecting Volume of Orders:

  • Raw Materials and Parts: Oftentimes, the MOQ of a supplier is affected by the MOQ of their subcontractor. Their local subcontractors sometimes require a specific number of orders on raw materials/parts, thus leaving suppliers with no choice but to increase their minimum order quantity.
  • Factories Don’t Keep Stock: Large factories rarely store pre-made products. They do not mass produce unless they get an order. For instance, catering to US and UK clients would mean complying with their product standard, which can be costly in terms of production and materials. And mass producing before an order could leave them with unsold expensive pieces.

8 Top Tips to Lower MOQ in China

  • Use Existing Materials: Identify what materials the supplier has on hand. From there, you can design the product around the materials available. Standard materials are usually easy and inexpensive to produce and they can also be purchased in smaller quantities.
  • Work With Small Factories: Small factories in China may be more willing to give you a lower MOQ than larger firms. However, you should be very careful when working with smaller suppliers. Make sure that they can meet deadlines as well as product standards to avoid having your products recalled.
  • Joint Orders: Sometimes suppliers offer clients to join the current production at a lower price and lower order quantity. For example, here in ODM were were offering to our clients to joint our CNY Pug socks production, and several partners in the USA and Europe took chance to join the order and make the small volume for themselves, without compromising the price.
  • Sample Order: Sometimes suppliers will make a special effort to get in the door with big brands.  If you have a sample order and pay for it, the supplier will be engaged and believe you are serious.  The simple act of paying courier charges to send a sample over is a milestone.  Your website or design files could also indicate your investment in this product range and following on – the potential for large orders later.  This will encourage factories will make an effort.
  • Buy Ex Works:   FOB shipping charges can really mount up and some factories loose money on these.   Going with Ex Works and sparing your factory the headache of taking care of shipment.
  • Order Off Season:  In Europe nobody wants to do rush order over Christmas.   Avoid “troubling factories” with special requests over Chinese New Year or Golden Week.   Plan orders, wherever possible for low season.
  • Choose your product:  With all factories flat out on orders for Footballs in the 6 months running up to a World Cup nobody wants small orders.  If you jump on a bandwagon, then jump early….
  • RELATIONSHIPS: Visit your factories.  It is critically important for a whole bunch of reasons.  If you can’t visit delegate a visit to a company on the ground.  (ODM for example).  At the very least call the factory and engage on a personal level.

Understanding Incoterms and how they impact on your costs is critical in our industry.  The costs and hassle involved with shipping mount as products continue along this chain.

Incoterms 2010

If you need help with manufacturing unique promotional products at a pocket-friendly price, contact ODM. We can help design, source, and manufacture personalized promotional & marketing Gift Items, in China.

To learn more about outsourcing in China, check out this articles:

This blog discusses what goes behind procurement negotiations with Chinese suppliers.

Procurement in China – Buyer Diary #14 Negotiations with Factories

This blog shares everything you need to know about auditing in China:

Auditing Factories in China – Practical Guide

Does your supplier have a SEDEX certificate? Do you know what a SEDEX mark mean? Everything you need to know about Sedex 4-Pillar Review is here:

Factory Audits in China – Sedex 4 Pillar Review and Explanation

As ODM expand operations into Vietnam, we are also experiencing higher MOQs there.   A lot of this comes from a more challenging shipping and administrative infrastructure.   Many of the production still relies on raw materials from China and further afield.   We expect MOQs to reduce there over time also.

Too often, factories require large MOQ in China, and this is not ideal for startups and medium size companies.  All this said, if you know what you want ask us.   MOQ in China is not set in stone.  Our team can make things happen or our creative design team can propose alternatives.

2018-03-02T15:54:46+00:00