Author: 露露

How To Import From China

Elksourcing：What to Do if Production Problems Happen in China?

Apr 10, 2021 , by 露露

During your importing business, if you work with several Chinese suppliers, you will have to deal with production problems, especially for new suppliers. It might be a factory refusing to rework substandard goods, or an unacceptable delay, or simply a project that comes to a full stop without warning.

What to do for you as an importer in such a situation?

1. Show that you are ready to walk away

The favorite strategy of Chinese factories that don’t want to correct problems is… to wait. And wait. Until their customer (who needs to deliver his own customers) must let them ship. So, the first thing to do is to give them the feeling that you’d rather cancel the order (and lose your deposit, if you wired some cash before shipment) rather than receiving products that can’t be sold at all on your market.

The second step is to try to understand the real reason of the problems, and help the factory. Tell them what you can accept, ask them to confirm that they can do it, and then tell them that it is a limit that you won’t allow them to break.

2. Have somebody on site

How do you really know what is going on? By sending someone (either an inspector, or a local agent) in the factory.

And how do you unlock a bad situation? Having someone on site definitely helps. Phone calls and emails to a salesperson will leave you frustrated and apprehensive. In China, delicate business conversations should be face-to-face with a manager.

You need someone who protects your interests on site. And a few hours are not enough (I was told “sorry, our boss is out so we can’t decide anything now” too many times) – it might take several days.

My clients sometimes ask me to go in a factory and talk to a manager on their behalf. I often have to describe the whole situation to the boss, who is not aware of it. It is an important first step. Then I try to find a solution that everybody can agree on (and that means many phone calls to the buyer along the way: it takes time!).

3. Don’t get emotional. Be curious.

Don’t piss the factory people off. Sure, they are at fault. But you will need their help. Bad manners and threats won’t help.

If they stalled halfway through your production, or after substandard quality was detected, there is a reason. Here are the three most common types of issues:

They are giving priority to another customer who is bigger than you… or who is better at defending his interests. You will have to guess by yourself. Once again, having someone on site helps–you can see what is on the lines and understand the situation.

They have a technical problem that prevents them from producing your order, and they tell you it is impossible. If you have some technical experience, you might be able to help you.

In some cases, it is simply a matter of common sense. For example, this week I sent a technician to see why a factory could not press a plastic label properly on the product. She used different temperatures and timings, and she found a solution after 5 tests. It took less than an hour. Sometimes we wonder “why didn’t the factory do this?”

They think your conditions/penalties are not fair (for example you ask them to pay for air freight when they are “only” ten days late).

You will know right away if you are in this situation: they will tell you clearly. It requires a negotiation. The better prepared you are, the easier it will be.

4. Monitor progress closely

Finding a solution, shaking hands and going away are not enough. You should agree on precise steps, and then ensure that they are taken.

If the factory is not moving in the right direction for a few days, you know you are in trouble. You should immediately contact them, and send someone there again if are not given a good explanation.

5. Check quality before shipment

Even if your orders are quite small and you usually don’t control quality, this is the time to do so. A factory that is not happy about you, or that had to rush production, cannot be counted on to deliver perfect products.

If quality problems were noticed, you should impose a re-inspection. But before that, the factory should propose a way to improve the situation. Here are the issues to have in mind, and here is a simple chart of the process.

If the factory is really doing nothing, take the lead and send inspectors for a 100% check. In this case, only what is good can be shipped out. It can be expensive, but not as much as sorting the goods by yourself in your country.

6. Stop giving them orders until problems are solved

This might sound like common sense, but many importers have no alternative. When their own customers ask for more products, they send new POs to the factory they are arguing with. Why? Because they don’t know any other qualified manufacturers.

In general, importers tend to hope that the situation will get back to normal soon, even when red flags are multiplying. Then they get really upset when things are unmanageable. This is way too late. Walking away suddenly from a supplier can incur large losses for an importer.

7. How to prevent this type of situation in the future

Most efforts should take place earlier in the production cycle. Here are a few suggestions:

Avoid giving large orders to a first-time supplier, and increase business slowly (sometimes there is only a certain level of work that they can keep up with, and anything above that level will not be followed properly).

Set up a clear quality standard, and keep referring to it when the supplier asks questions or when you notice some issues.

Follow production closely with quality inspections, if possible both during production and before shipment.

Hold at least some of the payment until the quality of final products and the production status are verified.

If you cannot afford to cancel orders (maybe you have already sold the products on your market), you should cultivate a back-up factory. It can be in China, or in your country (in which case production and delivery can be faster).

Keep 2 or 3 weeks of safety in your schedule. Production problems regularly happen in China. Getting a back-up manufacturer up to speed takes time. Plan for it!

Shopify Tutorial

Elksourcing：How to Enforce Quality Standard for China Sourcing?

Apr 10, 2021 by 露露

How can importers establish a quality standard, and then enforce it for China sourcing? It’s always not easy. Below are 4 proven ways I learn from my experience about how to handle your suppliers in China.

1. Insist on getting a “perfect” sample

Whenever possible, you should have a perfect sample (i.e. a prototype that is conform in all points to what you want to receive) in your hands before production is launched. The best practice is to get at least two samples, and send one back to the factory with your signature/stamp on it.

This is the most basic way to establish your quality standard. The difficulty will be in the enforcement.

In China, factories know that sending nice samples is important for them to get orders. These perfect samples (prepared by experimented technicians who take their time) are usually better that what can be made in mass production.

Suppliers simply assume that the buyers know it. And in many case, a buyer who has wired a 30% deposit and is in a hurry to ship usually has to accept this situation. Many factories count on it.

2. Define tolerances wherever applicable

Sometimes it is not realistic to expect a very precise result. For example, garments are generally made by hand, so there has to be a tolerance for measurements (for example: +/-1cm). In this case, the objective is the comfort of the garment.

Once you have approved some tolerances, put all your specifications on paper and get your supplier’s signature on them. You have already done half the work to establish and enforce a relevant quality standard.

3. Set a limit on the proportion of defects

A defect is an issue that you cannot accept on all products.

In the aeronautics industry, manufacturers have to guarantee near-defect-free products. But for consumer goods such as hard goods or apparel, such a high-quality standard is neither realistic nor necessary.

The quality control industry uses the same statistics (ANSI Z1.4), when it comes to checking consumer goods.

All inspectors, and virtually all factories and traders, are familiar with the contact of AQL (Acceptance Quality Limits). In clear, the AQL is the highest proportion of defects that you can accept. Most comment AQL is 2.5 (Major) / 4.0 (Minor).

4. A quality standard suffers no exception

Let’s say a supplier is late, you negotiate a delay with your customers, and before shipment you notice that quality is less than desirable. You still prefer delivering the products, rather than cancelling the order. So, you tell your supplier that he can ship out and that next time should be better.

The problem is, the “exceptional tolerance” will become the actual standard for the factory. Count on them to remember that you can accept less-than-perfect products.

Chinese manufacturers tend to have a “can’t do” attitude after an order production has started. Two of their favorite expressions are “almost good” (it’s off, but not by much, so you should accept it as is) and “no solutions” (there is nothing we can do about it now, no need to keep pressing this issue).

You should fight their natural inclination. Ask for re-work and re-inspections, even if it costs you 10 days. This type of efforts pay off handsomely in the long term, as long as the factory can reasonable achieve your quality standard — you will have clarified this if you follow the steps I listed above.

This should be a general rule, except when you are about to stop giving business to a supplier.

How To Import From China

Elksourcing：Advice about Managing China Manufacturers

Apr 10, 2021 , by 露露

After hard work for some while, you have verified a few manufacturers when sourcing from China. One of them will be your first choice, and hopefully you will have a couple of “backups”. What is the best way to handle them? And what about the unfortunate situation where your “first choice” disappoints you?

1. Cultivate your “second choice”

With a bit of luck, you have found and verified a supplier that seems quite promising. If you want to reduce your risks of long delays, I strongly encourage you to keep communication open with a few more suppliers.

I even believe you should spend the time and the money to verify at least one more supplier, and to start working on pre-production samples with that supplier, even though they are not your first choice.

2. Those “never again” suppliers

Some suppliers will prove to be untrustworthy. The worst scenario, which happens every day, is that they ship bad products to you and that you only notice this upon delivery in your warehouse – or, even worse, in your customer’s warehouse!

At that point, there is basically nothing you can do. Chances are, you have already paid the supplier in full, and taking action against the supplier is usually a dead end.

3. Protect yourself from bad surprises

An ounce of prevention is worth a pound of cure, isn’t it?

Here are two simple pieces of advice.

First, make sure you check quality before shipment. Quality assurance agencies can help you with this.

Second, if you keep re-ordering the same products, you will need a safety stock, to avoid depending too much on your current supplier. How much exactly? It depends on the time it would take you to launch production in another factory.

China Sourcing Agent

Elksourcing：A Few Things to Notice for Sourcing in China

Apr 10, 2021 , by 露露

It has been over 15 years since millions of companies around the world have taken the opportunities of sourcing in China and outsourcing partial of their production to China.

In theory, the profits expected are huge but on the ground, it is not as easy. Many companies will have difficulties in dealing with Chinese suppliers.

Sourcing is an English term that refers to practices aimed at finding, evaluating and contracting with suppliers of goods and services.

The main tasks are:

A. To increase competition in the panel of existing suppliers for lower prices.

B. To identify new suppliers in the international market.

C. To discover innovation offered by new suppliers.

Here are a few things to notice for sourcing in China:

1. Use a local representative

Quality control will be a key factor of success for your sourcing activities in China. Then having a local person who anticipates problems in China is crucial. Import export in China is not an easy task!

Chinese have a different view toward quality. A product with a defect may be acceptable to your supplier, so you need a quality controller to protect your interest. Or as you may know it is always rather difficult to solve problems when you are far away.

Many companies think they can deal with Chinese factories by e-mails only. They will soon realize it is far from being obvious.

The main difficulties are: cultural differences, linguistic misunderstanding and different time zones.

Then a local representation will help you for several things such as traveling in China or negotiating prices.

2. Using a sourcing company

This is convenient and easy as they take care of everything. You can find a lot of sourcing companies in China, but few are serious.

Often that is the problem you expect least that will cause you the biggest damages and require time and effort.

Do not ever underestimate the power of networks and relationships in China, a local agent will be required to develop them.

You will have to pay attention to the dark side of Chinese suppliers. A common mistake is to believe that when you did find the right supplier the job is more or less done. This may be okay for a while but the supplier will not hesitate to do more if you engage a true relation with him. A supplier who has not seen his client for a while will soon not fully satisfy its customer orders in terms of quality or timing.

3. Supply chain management

Nowadays, the Internet makes it easier to find a supplier. Alibaba, Made in China or other websites can help you for that task.

Sourcing in China is to identify not only one supplier but many of them. In China, it is always important to have different sources of supply if you want to avoid the risk of seeing your supplier flying away or if you want to stop your relation.

In addition, you will have to visit the supply chain manager. If a supply chain manager feels your presence he will do better job.

4. The issue of management in China

Do not underestimate the time needed to deal with problems in China.

In all stages of the production we encounter problems, especially in the beginning.

An expert in sourcing will know what kind of glitches can quickly become huge problems if a quick and efficient decision is not made.

It is important to always have a look on your production.

In Europe, if no news means good news, but in China it means very big problems are occurring.

You may have to harass your partner and ask for a schedule if you want to follow the state of your production. In Chinese factories, the priority is often given to the largest customer, to new clients or to friends. If it is not your current situation you better ask and check everything to reach your goals that is to say a good produce timing with an acceptable quality.

5. Incidentals

In China, it is important to ask in advance who will pay for unpredicted costs.

Often, they will ask you to pay for shipments, samples, fumigation fees, brokerage and the list goes on and on.

Some of these fees are mandatory but often they are just trying to cheat you.

If your Chinese supplier knows that you do not have any representative in China, he will usually try to make you spend more money for over costs.

You also have the myth of the red envelope for customs in China … Sometimes that may be true, but many times some use this trick to get the envelope for themselves.

This may sound shocking but for many Chinese western people are likely to be seen as pigeons. Then you will have to show that you know your business and that are not going to accept to be cheated.

Shopify Tutorial

Elksourcing：Mistakes You Should Avoid When Sourcing Suppliers

Apr 10, 2021 , by 露露

China today is full of incredible business opportunities for American entrepreneurs and business owners, but like any country in the West, it is not a perfect paradise. You must accept the risks of sourcing goods in China while embracing the opportunities that come with it. The good news is that you can manage and reduce these risks with a methodical approach to sourcing in China.

1. Lack of a Well-Defined Strategy

When sourcing goods in China, you must have a well-defined sourcing strategy or “road map,” including locating the best supplier for your particular needs. Too few small companies do the proper due diligence when shopping for goods in China. As a result, they may not get the best deal in terms of price, quality, functionality, or timely delivery.

2. No Well-Defined Standards for Suppliers

Before searching for suppliers, it is important to have defined standards. Well-defined standards can determine whether sourcing efforts are successful. For example, a company might initially purchase a small order of electronic parts from a Chinese supplier and be happy with the product quality only to learn that delivery on larger follow-up orders would be delayed due to the supplier’s limited production capacity. If the company needs the parts delivered on time to capitalize on the holiday season sales rush, it runs the risk of losing profits, all because it did not eliminate potential suppliers with limited production capacity.

3. Inadequate Due Diligence Performed on Suppliers

Due diligence is perhaps the most important step when sourcing in China, yet many companies fail to perform adequate due diligence and end up being scammed. Some fail to perform due diligence at all.

4. Lack of Protection for Payment and Quality Issues

Sourcing in China is, after all, an international transaction. Before you make a payment, you need to think about how you are going to get your money back if there is any dispute over product quality or delivery. Otherwise, you are at the risk of losing your money.

5. No Written Contracts

To adequately protect your interest, you must have a detailed written contract. Any oral agreements or invoices may not adequately protect you, especially when different cultures and languages are involved. You should understand that the legal structure and enforcement options in China are different than in the U.S.

6. Written Contracts Not Reviewed by Attorneys

Some people download a copy of a form contract from the Internet or simply use a form they used in the past. Sure, most provisions are similar for a typical sales transaction, but the devil is in the details, so it is likely in your best interest to consult an attorney to help draft and perhaps negotiate the contract for you.

A good cross-border transaction attorney can draft a contract with more favorable provisions to buyers (namely, you) and better protect your interests. For example, your attorney may explain to you the pros and cons of contract provisions that dictate what law applies to contractual disputes between you and the supplier, or the method in which such disputes are to be resolved, like arbitration. Each of these decisions will have its own ramification if an actual dispute occurs, so there is real value in having the options explained to you clearly, not to mention the peace of mind that comes from having a well-written contract in place.

7. Ignorance of the U.S. Foreign Corrupt Practices Act (FCPA)

It is also useful to consult an attorney about what laws will impact your business in China. Both Chinese and American laws need to be considered and depending on your business dealings, many legal issues can be involved, including labor law, trademark law, IP law, anti-monopoly law, and commercial law.

8. No Mandarin Speaker on the Team

The importance of having a Mandarin Chinese speaker on your team is second only to due diligence on Chinese suppliers. In cross-border transactions, you cannot afford to settle for “maybe” or “probably” by saying that you and your supplier kind of understand each other’s expectations, which can lead to failure, to say the least. No guessing games, period!

If your supplier speaks fluent English and can understand your English well, you may get away without a Mandarin speaker’s help. Otherwise, you should consider engaging a Mandarin speaker, preferably a native speaker who also knows the business culture to help make sure your suppliers understand your expectations clearly and completely. At minimum, you need a fluent Mandarin speaker on your team, at least at the crucial stages of the transaction, like clearly setting product quality expectations. Finally, it is generally preferable to find your own Mandarin speaking team member, rather than relying on your supplier’s interpreters.

China Sourcing Agent

Elksourcing：6 Tips for Beginners about Sourcing from China

Apr 10, 2021 , by 露露

Sourcing From China is not a new thing, but in this post, we want to focus on providing China sourcing beginners some valuable tips on what is a very challenging but often very rewarding journey.

So, by definition a source is “a place, person, or thing from which something comes or can be obtained”. It makes sense to start there. Spending time and energy on getting the best sources is a worthwhile venture. In relation to having products manufactured and importing them from China it’s an incredibly important part. A good beginning really is half the work where choosing wisely is very important in lowering your risk.

1. Finding supplier

Start by signing up as a free member to alibaba.com, globalsources.com and made in china. Familiarize yourself with these platforms which are user friendly but do contain a few more bells and whistles than before. The number 1 important thing to learn about sourcing online is gaining a 6th sense for genuine good companies. The more information you review the more you will get this. For example, the more company profiles you read, the more websites you visit, the more images you review, the clearer the picture you get. Focus on what you can see that’s real. Don’t assume because a company has 500 pictures of products there that they must be great at making that product. There is much more to finding suppliers than that – focus on what you can see that’s real evidence.

2. Getting the Information you need.

When you master finding legitimate suppliers then you need to worry about getting the information you need. Don’t over focus on prices unless you have a very detailed specification for a supplier to quote from. When requesting information, make numbered lists and only ask for 1 thing per line. Do not write request for information as long winded unpunctuated stories. It genuinely comes across un-professional and you will be put to the bottom of the pile. Utilize the phone (by that I mean Skype or another such technology) to give the supplier a call and get a sales contact. A quick polite professional call where you can agree to email details you would like quoted on is a great way to start. I recommend you do that before you start swapping emails with anyone.

3. Weighing up the information.

After gathering a lot of details from ideally 3~5 solid supply options you’ll need to start weighing up the information. Here takes time to compare everything received, be organized and file the information separately. It is pretty easy to start getting confused between Chinese company names and contacts if you haven’t much experience with them. What’s important to you? Company size, how long they are established, are they servicing markets with comparable quality, are they within reasonable distance of a major port, do they communicate clearly or are there some questions that are just still unclear? Ask yourself plenty of questions. For most products, you will be able to request a sample (assuming non-customized) and that will be either free or with a small charge. To save time do this as soon as you shortlist the company. Armed with lots of information and product samples you will be well placed to rank your suppliers.

4. Visiting Factories.

You won’t always want or need to make the journey to China but sometimes you should. Having ranked your suppliers if you want to place an order first you should get a 3rd party foreign sourcing company in China to make factory visits in China. This is a very popular way for remote buyers to make final decisions on which supplier to begin with. By engaging experienced and specialized companies you will learn more. Costs for this are comparatively reasonable. If you are making the leap yourself then there is plenty you can do to be prepared. Be thorough and go through and bring copies of quotes, specs. Or any important points discussed and confirmed. Get the map out to understand exactly where you are going…not just I’m going to Shanghai and then a 2-hour train from there.

5. Sourcing at Exhibitions.

In the early stages of sourcing if you are more of a get up and go type you might be intrigued by the proposition of sourcing at exhibitions in China. If you are in an idea generation phase then this can be a lot more beneficial than trawling the B2B sites. There are 2,500 tradeshows currently held annually in China, make sure to learn the specific one in your industry or matching your needs.

6. Making & Keeping Business Relationships.

If you have been through half of what’s outlined above then you will be well away on your China business venture. This means you need to know how to make business relationships in China and keep them. It is a subtle skill to attain but if you master it will always serve you well. Business relationships in China work differently than in Western business. In China, you need to accept each other on a personal level and to consider the other party as a friend. That all seems outlandish, right? Well, it is until you experience it and it does require you to use your powers of judgement. This is also true for your Chinese counterpart.

How To Import From China

Elksourcing：Top 3 Ways to Find Chinese Suppliers

Apr 10, 2021 , by 露露

The rewards from doing business can be great but if things go wrong you end up at the opposite end of that great scale. This is why I always promote that buyers, especially those new to sourcing from China take time to make an informed decision before making a financial commitment.

What sources can I use to find reliable Chinese suppliers?

1. B2B

Websites such as the Alibaba, Global Sources & Made in China tend to dominate this side of things and the accessibility for the services here make it really appealing. Sitting anywhere in the world communicating in real time with someone at a factory in China is pretty cool. So that bit is relatively easy BUT It’s not a sure-fire way to reliability as there are lots of con artists on there too. Don’t follow generic information, only follow real information even if it’s a bit rough around the edges. The crooks never post anything of much substance or anything that’s traceable.

Major Pro: Good companies will be happy to display a lot of information for you to weigh up. The convenience and speed of communication is a massive pro. Get images, videos, business licenses, test reports and product certificates quickly. Legitimate operations don’t have an issue sharing these things. In fact, they will be glad to.

2. Exhibitions

The bi-annual Canton Fair usually tops the bill and is an absolute must visit. The Canton Fair is very good for new product ranges, idea generation and add on existing products. If you are operating in a competitive market it is questionable how you can differentiate your business when accessing the same suppliers that your competition can BUT it must be said the benefit of this being the most economical way to meet multiple suppliers trumps the other arguments. The possibilities to find reliable suppliers at tradeshows like the Canton Fair are higher than online and you will gain the reliability we crave faster. Reasoning for that comes from the fact you have been able to meet people face to face. Just beware that you speak to a manager at least sales level and not just staff hired for the show. There are a lot of other tradeshows out there, try to find out the one suitable for you.

Major Pro: The face time is hugely important as it allows you to leave an impression on suppliers as someone they want to work with and gain as a repeat client. You can also touch the products, get a feel for the company and talk through various details which increases your ability to weigh up important details when finding reliable Chinese suppliers.

3. Sourcing Companies in China

There are now plenty of great options in this area. These companies bring western management and local knowledge to the table. If you are struggling to satisfy a requirement or prefer to spend more time servicing customers then utilizing the valuable resources of a sourcing company in China ticks the box. When finding reliable Chinese suppliers, it can be a great option to leverage experience gained by your fellow countrymen. The reliability factor should be already built in here but that’s not to suggest these sourcing companies are above the law. They should be able to satisfy the same questions who have raised to a random supplier on Alibaba.

Major Pro: These companies do this for a living. The mass experience built up within a sourcing company operating in China for 5-10 years can be of huge benefit. They rely on connections and trusted relationships instead of B2B platforms.

These are the 3 most popular routes to take, social media sites like LinkedIn are also becoming viable options. For the more traditional types among us always be on the lookout for an introduction from a trusted source, that could be someone you know already doing business in China, the local chamber of commerce, etc.

China Sourcing Agent

Elksourcing：Purchase by Yourself or Use a Sourcing Agent?

Apr 10, 2021 , by 露露

If you are starting to buy from China, your first decision will be: should I manage this by myself?

If your team can’t dedicate 1-3 hours a day (per supplier) to follow what happens in China, you might need help from a sourcing company that can handle these tasks:

Identifying new suppliers that can make your products at the right price and quality levels;

Helping develop new products/styles with these suppliers;

On-going management of the supplier relationships (communication, quality control, shipments follow-up, quality problems, and so on).

You may have 3 options:

1. Purchase direct

This is what 80% of importers try to do. They want to control the whole process, and avoid paying commissions to any middleman or agent.

If you are organized enough to manage suppliers, and if you can satisfy the minimum order quantities (MOQs) of suppliers, this is probably the best option for you.

2. Purchase from a trading company

This is a good option if you cannot satisfy the MOQs. A trading company can place production in a smaller workshop that accepts small orders. Aside from this particular situation, I don’t advise to work with a middleman.

3. Use a sourcing agent

This is the best option if you just start to source from China, and you forecast large orders down the road. Some agents provide a service and charge a fee. Everything is transparent (supplier names, process followed…).

Such agents used to be very rare but I am sure it will become more and more common. The best ones tend to work like a procurement office and to be well organized.

Qualifying an agent

Here are a few questions to ask sourcing agents before you engage one:

1). How will they get paid, and by whom?

2). Will you be able to visit the factories before/during production?

3). Can they provide referrals or testimonials from satisfied customers who are using his services?

4). Who buy the same type of product as you? Make sure to contact two of them and get confirmations.

5). Do they do quality inspections by themselves? Or do they resort to a specialized third-party? Will you get a report every time?

6). Will you get an update every week on the production status?

7). Can they share their management system with you? You need to make sure they have processes in place. The vast majority of agents don’t follow any established procedures.

8). What guarantee do they offer in case supplier scams you? If shipments are behind schedule? And if you receive junk products in your warehouse?

9). Are they located in the area where your products will be sourced?

10). If you keep re-ordering the same products from the same sources, will you pay less after the first order?