China sourcing advice

We know how important it is to find the right supplier for your business, especially when buying abroad

– Evaluating Suppliers
– self-inspection of suppliers
– How to pay Chinese suppliers by T/T payment (bank wire transfer)
– The China price and product liability insurance
– The best ways for importers to pay Chinese suppliers

I’d like to highlight one major red flag which is wiring money to a PERSONAL account. This means that the supplier’s salesperson asks you to transfer money to a personal account rather than there company’s account. In other words the company name on your invoice and the name on the bank account DO NOT MATCH.
Do not underestimate the time required for delivery and logistics

China factory scams

Recent business confidences surveys conducted in China show a downturn in the Business Confidence Index for small and medium -sized manufacturing companies of all types, falling to its lowest level since the 2008 financial crisis. The decline in business confidence is the result of features built into the Chinese economy.
Perpetrating a scam on a Chinese entity involves considerable risk. On the other hand, scams against foreign buyers have hardly any risk at all. When a foreign buyer is cheated, the Chinese police often do nothing at all and there is virtually nothing your Embassy or Consulate can do beyond put the names of the offenders on a list. The Chinese courts can do little to nothing as well and the informal methods of retribution are rarely available to foreign entities. For this reason, when it comes time to do that last big scam or series of scams before shutting down the factory, foreign buyers will always be the preferred target

Buy product samples

If you are importing products, whether from China or elsewhere, do not buy it until you have tried it.
Of course, buying product samples is not so easy,
Practice will show you how buying samples of products from China can take a long time.

How to find the best Asia factories

There is no “good factory in the absolute”. What is a good provider for one company may not be a good provider for another.
Choosing the right manufacturer is both important and complicated. It is not something that can or should be determined via a five minute conversation with an international lawyer; it should usually be done by working with manufacturing experts that know the country or countries that might make sense for your industry and your company.

Apple works with a famous contract manufacturer (everyone has heard of them). The products they make for Apple are truly first class — in the millions of pieces, with very fast ramp up and pretty close to zero defect.

Well, that same manufacturer also produces batches (for other customers) that would not be acceptable for sale , and sometimes even cheats on components.

How is that possible? Well, on the one hand Apple’s business is something they value. And, perhaps more important, Apple spends a lot of efforts validating their production & testing processes before launching mass production, not to mention all their monitoring all along production.

If, on the other hand, an unknown buyer comes in the picture, gives them a 50,000 USD order, and patiently waits for delivery, they might be disappointed. A second- (or third-) rate team will work on your order, and totally different business rules will apply.

A small buyer, in that situation, is actually better off finding and vetting an unknown manufacturer that accepts to sign a balanced contract. Since there is no particular confidence in that manufacturer, the buyer takes precautions. Trust but make sure to verify.

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