Why suppliers require high minimum order quantities

by Jeff Schuh

Asian and Chinese suppliers set high minimum order quantity requirements for the products they sell. The high MOQ’s are deliberate and have specific reasons that sometimes may cut across different suppliers. Here are some of the reasons why the Asian and Chinese suppliers place high MOQ and the MOQ meaning to their manufacturing and wholesaling businesses.

Why Asian and Chinese suppliers set a high MOQ

Low profits

Asian and Chinese suppliers operate on as low as three per cent profit margins. The low-profit margins do not allow them to have low MOQ on their products because they need to cover the production factors. As a result, the high MOQ compensates for their low-profit margins. As manufacturers, they do not own the product brand and only perform the assembly function.

A strong link between subcontractors and suppliers

The minimum order quantity set usually reflects the current minimum order quantity that the subcontractors have set. For example, phone manufacturers would have a high MOQ, depending on the subcontractors’ MOQ purchasing the materials and components for making the phones. Therefore, the higher the subcontractors’ MOQ, the higher the MOQ on the suppliers’ end.

Manufacturers and Suppliers make products to order

Manufacturers and suppliers avail goods for order meaning they have no shelves to keep the products. Meaning they would set high MOQ to make sure their products are sold as fast as possible. Furthermore, the manufacturers and supplies would make the least amount of a product to distribute rather than keeping it.

Several minimum order quantity requirements

The manufactures set different minimum order quantity requirements for their products. The higher the customization of your order, the higher the MOQ will be required for you. Regardless of your customization criteria, the amount of money spent on the range of products will range depending on the number of customizations you need.

Ways to get the best deal from Chinese suppliers

Take an organizational stance

If you were contacting your supplier via email, position yourself as staff within an organization and not an individual. It will be a mistake if you position yourself as the Chief Executive Officer. Your business proposal to the suppliers would look like a one-person show, and they would not give you the correct approach.

Instead, position yourself with a team-oriented post such as purchasing agent of your company. This stance will convey a more formal message to the suppliers and thus attract a better deal.

Specify the quantity price break before asking for a quote

The MOQ given by your supplier is based on a given number of products. It will be a great idea to specify your quantity price break before you as for a quotation. Similarly, the suppliers can quote the highest quantity they can supply and give you the chance to use the highest quantity to quote less.

Provide appropriate specifications before asking for a quote

Provide any product specifications, such as the need for a logo design, before asking for a quote. Be sure to conduct enough research before coming up with any product specifications. With every specification ready, you may prove them and ask for a quote from the supplier.

It would help if you were ready with enough information and specifications about your product before making an order from Chinese suppliers. This knowledge will help you keep watch on high MOQ, lower them, or ask for the best minimum order quantity.

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