You certainly know your market’s constraints and requirements much better than the factory does. So you should give them a very precise description of your expectations regarding the product and its packaging.
You might also have to teach them a few things about production. Not only do they need it, but they might accept it if you give them substantial orders (on the opposite, larger manufacturers seldom respond to their small customers’ suggestions).
Difficulty for working directly
English-speaking staff and export licenses are a rarity, especially in workshops under 200 workers.
It means you might have to work through a trading company, or with a local agent. It might be fine, but make sure that (1) you qualify the factory, and that production does not take place anywhere else.
Easy product developments only
Small factories can only reproduce existing samples or follow very clear technical drawings. As I wrote above, the more details you give them the better.
Don’t try to describe the general concept you have in mind. Chinese suppliers don’t have the same references or the same vision of your market.
A system for early detection of problems
Unfortunately, most small Chinese factories are poorly organized. They regularly make mistakes in production.
It is very important to send an inspector during production. It is a way to monitor production quality, but it is also a tool to help the factory detect issues and correct course… before it is too late!