I’ve been recently contacted by a Hong Kong company that distributes pet product to the HK market, they have seen some design I have made few years ago and would like to distribute them. They are only distributors, not manufacturers and they are not familiar with manufacturing.
So they would like to distribute the designs, and I would also like to bring these products to market. How to cooperate from here?
I’m now based in China, so should I just find a factory to manufacture the product and the distributor get their products directly from the factory, and I ask royalties on sales?
Or should the company distribute the products under their own name, adding “design by …” , take care of the manufacturing part… and I ask fix rate for each design they want to distribute + royalties on sales. Or do you think of other plans?
As always in dealing with factories, it’s about relationship and the size of your order.
You’ll have to show that you have a big commitment from a buyer before the manufacturer start to listen to you. Developing a new product and distributing it to Hong Kong sounds like a small order to me. I seriously doubt that manufacturers would have much interest for such project.
You may want to sell your design to a manufacturer that specializes in pet products and can sell it for you internationally. They take care of the mold/development fees and you charge them with royalty. But since there’s low financial commitment on your part, you’ll likely get less royalty from the factory.
If you have enough money to take care of the mold/development fee, pay that up front and negotiate higher royalty rate.
If you don’t, you may want to ask if your customer (the distributor) is willing to pay part of the development/mold fee. Give them more incentive by lowering your royalty rate.
You may ask them to pay a fix rate for each design, but if you’re confident in your design, I’d rather skip the fix rate and negotiate for a higher royalty rate.
I presume you speak Mandarin right?
Hope this helps.
BTW, what material and processes does your design involve? I’ve designed pet products before and may have the right connections for you.
Thanks for your feedback, this is helping a lot to clear up my mind.
I think sell the design to a manufacturer who specializes in pet products is a good solution. They take care of the development fees and I charge royalties, sounds ok for me. Surely a commitment from a HK distributor is a small order, but I think its a start and gives more credibility to the design, also I can highlight that there can be bigger buyers internationnaly and more volume if the factory add it to his product catalogue. So now I would need to find the right factory…
I surely cannot afford to take care of the development fees, and it seems strange to ask the distributor to participate in development fees, as he’s only interested in distributing the final product, no?
Anyway I don’t know how much can be the development fees, as the designs only involve wood, foam, fabric, etc… there would be no mold. Anyway I guess the development includes the making of a prototype to validate before production so this would have costs.
Yes I speak some mandarin, so I think it could help when checking prototype on site, etc… but my level is not enough to negociate a business contract, etc…
I haven’t done a product with foam before, but I believe you’ll need a mold if you want something organic. You may want to consider filling your product with Styrofoam beads instead, but it won’t be as cushy for sure.
Some distributors in China have extensive factory connections and can act as an agent between you (the designer) and the manufacturer. But to most distributors, it’s risky to develop a product themselves and then hope that someone would buy it. It’s much easier and less risky to wait for the manufacturers to solicit new products to them to sell. Plus, which factory wants to entertain with developing a product that have no guarantee of an order?
Some distributors and trading company have direct connections to retailers. If you can get a retailer to buy into your idea first, it’ll be easier for the distributor/trading company to develop the product for you because at least there is an incentive (or carrot) that’s driving everyone.