Sourcing From China can be a great way for you to make money, as long as you know how to play it safe and avoid the common risks associated with this practice. Before you dive right into looking for suppliers from China, you have to fully understand the process of product sourcing and why sourcing from China can be more lucrative than sourcing locally.

By partnering with one of these Chinese suppliers, you can significantly increase your bottom line by paying less for product sourcing. It may sound like an obvious decision to make to benefit your business, but there is a lot of planning and work that must be done before you can start enjoying a beneficial business relationship with a Chinese supplier.

This article will take a look at some of the most common risks related to the business of sourcing from China and how you can be proactive about avoiding them.

Risk #1 – Working with a shady supplier

Every industry has reputable companies and companies that should be avoided at all costs. There is no exception to this when it comes to Chinese suppliers. You will find a lot of honest and reputable companies, but if you aren’t careful, you might also find some suppliers who want to take advantage of you and benefit their own pocket instead.

What you can do about it – In order to make sure that you are entering into a contract with a trustworthy supplier, you must do plenty of research beforehand. Don’t worry; you don’t have to do it alone. Product sourcing from China has become such a popular business, there are professional companies that will research Chinese suppliers for you and help you expose any negative information that can signal a red flag for you.

Let’s face it, unless you decide to move to China to be closer to your manufacturer, you will lack a lot of oversight and will have to rely on the eyes and ears of your Chinese business associate to ensure that everything at the factory is running smoothly and efficiently. For this reason, you want to choose a supplier that is professional and has a lot of experience in exporting goods from China for the purpose of reselling somewhere else. Don’t be afraid to ask for hard evidence of experience either. Anybody can tell you what you want to hear in order to land the deal. You need to see with your own eyes that your potential supplier has a long resume boasting a lot of success in the exporting industry.

Risk #2 – Less protection under the law

When you decide to get involved in product sourcing from China, you have to be prepared for less protection under the law. It’s just part of the importing/exporting business, and while it might not seem fair, it is simply the nature of the beast. If something goes wrong with your supplier, you can try to seek justice through legal means, but you may not always be successful. The Chinese legal system does not necessarily recognize injustices in business partnerships in the same way the U.S. court system does.

Even if you try to sue a Chinese supplier in the U.S., chances are Chinese courts will not uphold any type of decision.

What you can do about it – In order to try to give yourself added legal protection, you need to make sure that the contract you enter into with your Chinese supplier is airtight. This document should, of course, lay out reasonable terms that are agreed upon between you and your supplier, but it should also consist of terms that can be upheld in either a U.S. court or a Chinese court. This contract is going to serve as the foundation for your entire product sourcing endeavor. It is in your best interest to hire a lawyer that specializes in exporting, especially product sourcing from China, who can assist you in drawing up terms that are reasonable yet provide you with protection in the event of a problem.

Risk #3 – Stolen intellectual property and illegal redistribution

One of the biggest reasons business owners avoid product sourcing from China is because of the major risk of having their product idea stolen without their knowledge. This all goes back to finding a reputable supplier. If you are product sourcing from a factory owner in China who seems like he has a hidden agenda, chances are he does have an alternative plan in mind for your product. Countless horror stories have been reported by business owners who explored the option of product sourcing from China to save money and ended up with nothing but problems after their product was being reproduced and sold in a different market without their knowledge or permission.

What you can do about it – One of the easiest ways you can try to minimize the illegal poaching of your product design is to place an identifying marker on your product mold. This way, if a product is returned to you for being defective and it does not have the mark, you know right away that it is not being produced and sold according to the terms of your contract. Unauthorized forms of your product circulating in the market can come back to haunt you. Another way you can keep tabs on the activity in your supplier’s factory is to make frequent visits. If you make your presence known often, your supplier will get the idea that you are diligent about watching over the production of your goods, and he might be less likely to go behind your back. If it is not feasible for you to make trips to oversee production, there are independent inspection companies for hire in China that will go to your factory and report back to you about everything they see.

By staying smart and aware, you can avoid these common risks and make product sourcing from China work well for your business.

How To Import From China

Elksourcing：How to Locate a Good Chinese Manufacturer?

Apr 10, 2021 Chinese manufacturer, Elksourcing by 露露

Many importers find it’s difficult to locate a good Chinese manufacturer, for below four reasons:

1) Language and Cultural Barriers

It is an obvious reason, but it bears mentioning: There are huge language and cultural barriers that separate western businessmen from Chinese manufacturers. While English proficiency is rapidly growing in China, there are still many small and mid-sized factories that have no employees who can speak fluent English. Beyond this, you also have to deal with other, more difficult to define, cultural barriers.

2) Many Chinese Factories Do Not Market Themselves Well

In the grand scheme of things, China as a global manufacturer power is still a relatively new phenomenon. Many Chinese manufacturing companies are still in their early days. These mid-sized and small Chinese firms, which offer manufacturing services that are well-suited for many western companies, do not yet know how to efficiently market themselves to westerners. Indeed, there is no comprehensive ‘database’ that you can search on Google to find the right Chinese firms. When working with Chinese companies, you still need to have strong connections on the ground.

3) Your Products are Unusual, Specialized or Customized

It is not equally difficult to find the right Chinese manufacturer for all types of products. This is true for many different reasons. If you are importing products that are made frequently in China, such as t-shirts, you will have many more manufacturing options to choose from than if you are seeking to get a specialized product produced. Notably, many of China’s largest manufacturing firms focus solely on producing common consumer products, meaning that smaller manufacturing firms handle more specialized or unique products. Of course, these smaller firms are inherently difficult to find.

4) You Do Not Know Whom to Trust

Finally, for those who do not have connections in China, there is a huge trust issue to manage. it is hard to know which Chinese companies are truly reliable and can make quality products for your business. This inherent lack of trust and difficulty in researching firms creates friction in the trade process. This is an area where an experienced China sourcing agent can prove to be extraordinarily valuable.

Then, what do you need to look at when locate a good Chinese manufacturer? Below are my findings after many years of sourcing work.

Industry Experience:

When working with a Chinese manufacturer, it is best to work with a firm that has extensive experience within your industry. Regardless of your products, from clothing to tools, it is imperative that you seek a firm with relevant industry experience.

Experience with Similar Products:

Additionally, you should also work with a company that has experience making products that are highly similar to the specific product that you are seeking to manufacture.

Quality Control:

Unfortunately, there are many low-quality manufacturers in China. These companies will accept all orders, and they will simply pump out cheap products as fast as possible. You need to avoid working with firms that have insufficient quality control.

Overall Suitability:

Beyond relevant experience and quality control, you should also consider other general suitability issues. For example, if you have a particularly large order, you should be sure to work with a sufficiently large Chinese manufacturing firm so that major delays can be avoided.

Trustworthiness and Reliability:

Integrity is incredibly important. Not only must you look for a manufacturer that is reliable and can meet all important deadlines, but also you need to work with a trustworthy firm that will not steal your product designs and ideas.

Cost:

Finally, as with any business decision, overall cost cannot be overlooked. You need to find a firm that gives you a fair price point for the manufacturing services that you desire.

How To Import From China

Elksourcing：Six Tips on Importing from China

Apr 10, 2021 Elksourcing, importing by 露露

When importing there are a number of things you will have to consider. This may range from managing long-distance relationships to organizing international transport and customs clearance. If you are considering importing from China, read our top six tips to help you get started.

1) Plan your import objectives

Before you start importing, it’s a good idea to be clear about what you are trying to achieve. You might be looking at China to find a cheaper source of supplies, or to import products that aren’t yet available in your country to sell to your customers. At the same time importing should fit in with your overall business strategy.

2) Identify a good, legitimate and reliable supplier

Check the supplier is creditworthy and can meet your quality standards. You should assess product quality and check that the goods you buy are suitable. You need to know whether the supplier outsources any work to subcontractors.

You will also need to understand the culture of the Chinese market to establish a successful relationship with your suppliers. Mandarin is becoming an increasingly important language. It is spoken by over one billion people worldwide, outnumbering any other language. Making an effort to learn a few short phrases can help to establish mutual confidence.

3) Negotiate the right deal

Understanding your own strengths and weaknesses, and what your supplier’s priorities are, helps you negotiate the best deal. For example, if you have a healthy cash position, you could offer to pay more promptly in return for a good price.

The Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow. The objective of developing close relationships is to build what the Chinese call “guanxi”, which are essentially social or business connections based on mutual interest and benefit.

4) Reduce risk by having a clear contract

It is important to have a clear contract setting out exactly what payment and delivery terms you have agreed. Using internationally agreed Incoterms (International Commercial Terms) helps reduce the risk of delivery problems or misunderstandings. The contract should also cover what payment is required, when and in what currency, and what payment method will be used.

5) Choose which method of transportation you are going to use

When making your choice as to how you are going to import, you will need to decide whether to handle logistics by yourself, or outsource the work to a freight forwarder.

When importing from China your main options are air and sea. If your business needs to transport large quantities but there is no pressure to deliver quickly, shipping by sea may be suitable. However, if you require your items quickly and with higher levels of security, shipping by air might be more appropriate.

6) Taxes and duties on imports

When trading with China, you will need to find the correct commodity code for your goods so you can fill out customs paperwork accurately. The code is a ten-digit number for imports from outside the EU. Once you know the commodity code, you can look up other important information such as duty rates and any import or export restrictions.

It is important that as a trader you know whether you have to pay import VAT and duty on your goods before they can be cleared for entry into the UK. Imports may be liable to import duty, depending on the classification of the goods and where they come from. VAT is charged on goods imported from outside the European Union at the same rate as if you bought the goods in the UK (currently 20%).

How To Import From China

Elksourcing：5 Common Mistakes for New Importers

Apr 10, 2021 Elksourcing by 露露

I regularly work with a lot of new importers, especially new e-commerce sellers selling through Amazon or eBay platforms. Most importers, when first starting out are very excited and charged up about the new venture, and want to get things moving as quickly as possible.

When first importing from China, there is a steep learning curve and it normally takes 2-3 shipments for an importer to understand the process flow and all the terminology involved in International trade.

With limited understanding of the import processes and that of the working style of Chinese factories, comes increased risk, especially quality risk as well as the increased likelihood of incurring losses on the first import from China due to getting the numbers wrong.

Here I look at 5 common mistakes, I often see with new importers first starting out of China.

1. The “Urgent Order Syndrome”

This is by far the number one issue, I notice with enquiries from new importers and I like to call it the “Urgent Order Syndrome”. Normally the first email we receive from a potential new importer would go somewhere along these lines:

I am looking to import 2,000 units of kitchen scale from China. These are required urgently as we have huge demand for these. Can you help us out and get us the best possible prices on these?”

While the exuberance is totally understandable as all new entrepreneurs are excited about their venture and want things to move fast, this can often be a recipe for disaster.

This urgency often results in requirements for product & packaging not being “specific” enough, quality control procedures being lax, factories skipping procedures to cut down on “production time” and last but not the least, losing out on good suppliers, who may have a quality product but are not flexible on their delivery times, or have longer delivery times simply because they have more business.

All these issues can lead to quality problems and the loss from these quality issues can be far greater than the time savings achieved by trying to speed up the process.

Another thing I see commonly in such cases is people negotiating aggressively on “Delivery Period” and choosing a supplier because they promise a slightly shorter delivery time relative to the “Industry Standard”.

In many of these cases, suppliers tend to quote a shorter delivery time to close the sale and may still take the same time, in other cases, they may skip processes to speed up production which can lead to quality problems.

2. Not comparing “Like for Like”

For most new importers first importing from China, the sourcing process starts on a B2B website like Alibaba. It involves contacting multiple suppliers, getting quotes, comparing them and shortlisting the best suppliers, in many cases based on price.

However, from my experience, often people do not compare like for like specifications albeit unintentionally. For a majority of the products, there are so many subtle differences in a product that influence the pricing. These can be materials, components, type of paint, dimensions (thickness is a common culprit) or other specifications.

This problem is less severe, when someone knows the product well, however even in those cases differences among suppliers start to get highlighted, when you are deeper in the sourcing process.

In many other cases, especially when people are sourcing new products that they haven’t worked with before, very obvious differences are sometimes missed, leading to good suppliers being shot down because their first quote looked expensive.

One of the ways to deal with this is to spend some up-front researching and understanding the specifics and finer details of the product as well as expected quality problems with that product. Asking a lot of good questions about the make-up of the product, to the first few suppliers you speak to also helps.

3. Overestimating the Profit Margin on a Product

This is a very common problem when first starting out importing and normally happens due to the nature of international trade. Even in a simple international trade transaction there are several parties involved which can make it difficult to calculate the landed cost of a product and hence the expected profit.

On top of that, what I often see in the consulting work I do with a lot of e-commerce clients is that when you factor in other costs for e-commerce platforms, say Amazon seller fees, domestic courier costs, marketing costs, professional product photography costs, etc. the profit margins don’t always look viable & there might be better opportunities in a different product.

New importers often base their costing on the obvious costs such as product cost, logistics, and inspection. However, there are often other not so obvious costs that influence profit margins for a product.

These can be for unexpected contingencies such as cost of random customs inspections at port of loading or port of destination or unplanned contingencies such as cost of returns.

4. Not Realizing how “Economies of Scale” work

This is a difficult one for new importers which takes a while to get used to when importing from China. This is also critical when it comes to working out the landed cost of your product.

When requesting quotes from Chinese factories, the first question you can expect is about your quantities. The answer to this question influences:

Whether the supplier will respond to your email

The quote you get from the supplier (High-Low)

The “service level” you will get

Your customization options (White Labelling, Customized Packaging, etc.)

Your logistics cost per unit.

All these things will have a significant influence on your “Landed cost” & quality of the product. While this should be a whole post in itself, I would like to mention out of the factors above, “logistics cost per unit” is the most important one, especially for sea shipping, I often see people losing margins because of getting this wrong when it comes to LCL shipments.

5. Expecting Perfection on Small Orders

I am a huge proponent of being very clear & specific on your requirements when importing from China, as it’s one of the best levers against quality problems. This is one of the reasons we ask a lot of upfront questions to our client when starting a new sourcing project.

However, this is a bit different from expecting a “Perfect Product”. While the objective of every quality control process should be to aim for perfection, in reality this may not always be achievable for “smaller orders”, especially on your first order with a given factory.

There are several reasons for this, relating to how factories in China work, economies of scale, the thought-process of the factory workers, and the perception of the factories towards what is considered perfect or acceptable.

I have often seen importers lose valuable time, in trying of get minor things perfected such as the taping of the box in a certain way. The law of diminishing returns comes into play here, i.e. the time spent and the QC cost of getting this level of perfection, often outweighs the cost of doing so “for smaller orders”.

But more importantly, for e-commerce sellers this cost can often be bigger, when you take into account the “opportunity cost” of potential lost sales during the time spent on reworking the goods.

Some of these requirements are essential, for e.g. when working with Amazon FBA, they tend to have very specific requirements on how the packaging needs to be and hence it is for the importer to identify what are the non-negotiables when it comes to the product & packaging.

It is easy to misunderstand this point, so I would like to emphasize that, perfection in itself is not always hard to achieve, but what I am referring to here is more about the link between the degree of perfection you aim for and the value of your order.

Smaller & medium end factories that are willing to accept smaller orders often have less resources to achieve perfection relative to larger, higher-end factories.

Also, normally, it takes a couple of shipments with a given supplier in China, for them to really understand your requirements in-depth and have the process perfected & customized for your unique requirement.

How To Import From China

Elksourcing：8 Tips for Your First Approach to Chinese Companies

Apr 10, 2021 Chinese companies, Elksourcing by 露露

There is a belief in the West that Chinese companies are competing very hard for your business and you’ve just got to send a mass email out to get a dozen competing responses, fighting to make your product.

The reality is very different. Chinese companies are often overwhelmed with emails from importers who (most of the time) are not serious buyers and will never place an order. Why spend hours dealing with impersonal emails that in most cases are just for price comparison? 99% of emails to Chinese companies are just that, and they know it.

The best way to make first contact is with a detailed and targeted email to the company. Then make a follow up call within a few days to confirm that they have received it and are dealing with it.

Here are eight tips to make sure that they pay attention to you when you make the first approach:

#1. Know your product

If you are approaching a manufacturer directly, they will pay more attention if you have a very detailed product specification. If you have clearly spent a lot of time doing your research before making the initial approach, they are more likely to give you the respect that your approach deserves. A general email covering just a few points is going to get little attention.

If you know the product well, they are also more likely to give you a better quote too. The more competitive you seem, the more likely that they will wish to compete for your business.

#2. Tell them your order volume

In your email, set out the numbers of units in your order as a whole. If you don’t they will quote for an MOQ (minimum order quantity) that could be significantly different to what you seek.

You may want much smaller quantities than they are willing to make, for example, and that will be off-putting for them. By being upfront from the start, so you should be able to find the right match more quickly.

#3. Specify compliance requirements

You should cover the legal and regulatory requirements for the goods in the country (or countries) you will be selling to. Some factories aren’t set up to meet these, while other factories will do it all the time and be better able to deal with your requirements.

#4. Stand out from the crowd

There are three essential requirements for a factory to consider you immediately:

You are ready to buy right now

You have the capital to buy at least the MOQ immediately

You have great “repeat potential”

Many factories operate on wafer thin margins, so the prospect of repeat customer is very important. You can make this look possible with your detailed product knowledge as well as having a professional company website with a business address. They are far more likely to do business with a company than an individual.

If you have done business with China before, say so in your opening gambit as this will signal that you know how things work there.

#5. Follow up

Give them a call within a few days of sending the initial email. In the West, this may seem impatient or rude, but in China personal contact is more important than “cold, impersonal” emails. The call will help them remember you and, in their eyes, start forming a personal relationship as you work on the product together.

#6. Communicate their way

Consider getting an account with QQ Chat, which is one of the best means of working day to day with Chinese businesses. An English version can be found here. As you build your relationship and get into the detail of the deal, you can get a lot of things done on QQ Chat. Many companies will also have Skype among other services.

#7 Visit China!

If you can’t afford to travel and spend time in China speaking face to face, then what are the prospects of you investing in the product and having it delivered to your home country? Businesses in China still hold great stock in face to face meetings.

#8. Work in their time zone

Consider working on Chinese time one or two days a week. If they can get an instant response from you during their 9-5 routine, then they will feel a lot more comfortable working with you. You will have invested a lot of time and money into this project, so it can be worth your while working around them too, as they are playing a significant role in your new business venture.

In Closing

Getting products manufactured in China is not simple.

There are factories, trading companies and sourcing companies, and either one might be right for you depending on your circumstances.

When you do work with Chinese companies, you are building a business relationship, not buying products off-the-shelf. In a good relationship, you need them and they need you. It’s not about dictating terms or demanding compliance, it’s about working together.

But you can make it work. Find the right company, give them a compelling business proposition, and treat them with as much respect as you expect from. That’s the way to do business in China.

How To Import From China

Elksourcing：Outsourcing from China in Right Way

Apr 10, 2021 Elksourcing by 露露

No business is completely self-sufficient. All companies require solutions and products from other vendors to better service their own customers. Outsourcing enables businesses to focus on developing its core competencies, while still benefiting from greater efficiencies and conveniences provided by their outsourced partners. For example, a premium brand online selling business should spend more of its time developing new designs, working on promotions, or training customer service staff, while outsourcing production from China.

There are many suppliers that provide specialised solutions, and this can cause a huge headache for procurement departments. Furthermore, the range of options is getting more complex, with the availability of traditional services firms, freelancers found via word of mouth or from online platforms, purchased software with an upfront cost, cloud-based solutions on subscription basis and many more!

Unfortunately, for most companies, procurement policies are still stuck on a lowest cost bias. One might wonder why this is a problem, as lower costs are better, right? Not necessarily.

Just take a look at the recent Auditor’s General report, which revealed problems in the tendering and management of contracts. In some cases, the solutions procured were unused, possibly because when the lowest tender is chosen, it can lead to unsuitable vendors being awarded the contract and providing an incompatible solution.

It is far more important to take a holistic view and use a value-based procurement approach. Besides eliminating solutions that may simply be a waste of resources, looking at the total value add derived from each submitted quote creates an alignment with organisational goals and strategy and ensures integration with internal user needs. This enables organisations to reap more long-term benefits from their outsourced solutions that may require higher initial costs but result in much higher value add across its lifecycle.

Here are some tips on how organisations can implement a value-first thinking when it comes to outsourcing, especially from a remote area like China.

Confirm the need

Assessment of projects should be done before it even reaches the procurement stage. Preliminary questions should be asked such as: Why do I need this new solution? What is the underlying problem? What will happen if I do not procure this new solution? Do I have the capabilities to do this in-house? What are our alternatives? Based on these questions, the team will have some idea of the expected results (not solutions). This sets the initial scope and budget for the project.

For example, a company found that its sales team was unable to cope and had trouble following up with clients. This may seem like an obvious lack of manpower, fixed by hiring more salespeople. However, a deeper investigation could reveal different underlying problems, such as salespeople spending too much time filling up the paperwork. This could be solved by an enterprise solution that speeds up administrative work, which is more cost effective than additional hires.

Talk to users and experts

In some cases, you may not know what is the underlying problem. The best way to discover this is to talk to stakeholders and users.

Businesses can enhance this conversation by using in-house experts or independent consultants, who are knowledgeable about the issues. Their expertise and knowledge of technology trends can result in new solutions to reach the expected results. They can also provide feedback on feasibility of the project or budget expectations.

When it comes to the procurement and assessment, remember to include these users in the decision-making process. This ensures that the project remains focused on the needs of stakeholders and ultimately benefits the organisation.

Be clear on the purpose of your requirements

Once you know what type of solution you want, generate the requirements for the project. Where possible, tag each requirement to a specific business purpose/need, so your vendor can understand how their features will be used to meet your goals. In some instances, they may be able to suggest superior alternatives that still meet the requirements. For example, an inventor wanted to create a complete new silicone wine glass. Once their Chinese vendor understood this was to build a stronger user friendly and cool looking, they did minor tweaks to the existing design, make the bottom and corner smaller & rounder to save material cost and easy to produce. This achieved the same objective in a significantly faster, cheaper and more effective manner.

Outsourced projects often fail, not because vendors were unable to meet the requirements, but because they could not meet the actual goal of the company. This is especially true when businesses select the lowest cost vendor, who may reduce their cost by matching their offering against the stated requirements, while disregarding what the client actually needs.

When initiating a new project, it is advisable to determine if the project is to be a standalone and solely developed by the vendor or requires integration into existing systems. This makes a huge difference especially to IT projects and can make or break large automation projects.

Have an open discussion

With these requirements in hand, invite interested vendors for an open discussion. This should be done before calling for tenders or quotes, so you can tap on their knowledge and refine the scope of your project. This also prevents blindsiding them with new requirements or getting unpleasant surprises when they inform you that the project cannot be integrated into your existing system.

Multiple quotes are a must

It is essential to ask for multiple quotes, and typically at least three bids are recommended. While it may take effort to get three vendors, it could save you significant time and money later. This is where online procuring platforms or sourcing agents can help in the sourcing and matching process. These act as one-stop centres for vendors to find procurement opportunities and make their bids in a transparent and fair manner. They also provide access to a broader range of previously-unknown vendors and suppliers.

Ultimately, these steps should culminate in a value-based approach when your business purchases outsourced solutions. Done effectively, your business can better assess who is the ideal vendor to solve your problems and meet your goals.

How To Import From China

Elksourcing：Quality Control for Importing from China

Apr 10, 2021 Elksourcing, QC by 露露

When your business entails importing products from China, it’s vital to incorporate a quality control process at the factory you work with. Even the best managed factory might not always produce a perfect batch, so a robust quality control plan should be used to ensure your specifications and quality expectations are met within every order.

What is Quality Control?

Quality control can focus on both product specifications and manufacturing process specifications for any type of goods and is especially important for importing from China. The goal is to identify any problems, defects, and non-conformities in the product that doesn’t follow required specifications from the buyer, or from general international standards. When caught early enough, these issues can easily be solved to fix the initial batch and avoid any future problems.

Challenges for Importing from China

Import business owners face several specific challenges that can affect their return on investment as well as the delivery of goods. The first major issue to be aware of is that importers typically need to purchase goods in advance. Since payment is generally released to the manufacturer prior to the goods being shipped out, you run the risk of receiving low quality goods with few (and costly) options for sending them back or reworking the goods locally. Whether the factory’s mistakes are deliberate or not, the bottom line is that they impact your business. The expense for shipping and customs duties would be enormous, not to mention the amount of time it would take to send back products and receive a new batch. Since many smaller businesses don’t understand the intricacies of China’s legal system, it’s very unlikely a lawsuit would have any success. So, in this situation, the importer would take a financial loss if the goods’ quality was not at an acceptable level because there’s little to no recourse for the factory even if they don’t fix the problem. Even if the business decided to sell the product anyway, their brand image could be substantially damaged if customers viewed them as lower quality.

Quality control not only ensures the quality of the product, it can also monitor their timely delivery. Without a quality control plan in place, production schedules can fall behind and you might miss your sale season, resulting in low product turnover.

All and all, it is essential for an importer sourcing in China to check their goods before, during and after production. You should check your goods at pivotal points in the manufacturing process and communicate with the supplier to get any potential problems fixed before it’s too late. To do so, you can manage it all by yourself together with the factory or work with third parties.

Who Performs Quality Control in China?

There are a few different options for quality control when importing from China. The first is the supplier’s in-house review of the manufacturing process. However, it’s obvious that solely relying on the manufacturer presents a conflict of interest. At the end of the day, they are likely to be more concerned with their own financial interests than the quality of your products. To get a better idea of how the supplier operates, consider performing a factory audit prior to the confirmation of your order. This will give you a clear idea of exactly how they control the quality within the factory. You might also check the factory’s licenses and certifications, along with their production capacity, human resources policies, and more.

Another way to perform quality control is through your trading or sourcing partner in China. You could consider requesting that they add a product inspection to their other duties; however, this also carries a high conflict of interest. Intermediates negotiating with suppliers need to keep good business relationships with them, sometimes it is difficult for them to provide a neutral opinion.

You could also decide to have your own quality team. This strategy requires intensive training on your products, plus local human resources management. Travel time and costs could quickly add up if your suppliers are located throughout the country. There are additional risks as well. Because quality teams have a limited number of human resources, the same quality inspector will regularly be in charge of verifying goods at the same suppliers’ site. There is a high chance that QC and suppliers develop a friendship that will end up with risk of corruption or at the very least influence his point of view on the goods’ quality.

As an alternative, there is a wide range of reputable third party inspection companies who advocate on your behalf in China. The company’s sole purpose is to protect you and your financial interests by verifying the goods based on your requirements. They have a neutral relationship with the supplier or trader; in fact, their business relationship is on one side only: the importer. They can provide several QCs to visit a unique supplier to keep the opinion the most neutral. They are able to provide services all over China. Plus, many importers are surprised at how affordable professional third party inspections are, especially compared to the potential for loss if a low-quality shipment makes it to your door.

What Does Quality Control Include?

When you work with a third-party inspection company, the process is very detailed and specific to your products. You develop a detailed inspection protocol based on a checklist and your own product specifications and quality requirements. The inspection protocol sets up all the different verifications the QC may have to perform while controlling the goods on-site: it includes cosmetic verification, functional verifications as well as verifications to your requirements. It’s best to be as specific as possible to ensure every detail is controlled and evaluated as you want it. Provide clear details, otherwise the inspector and the manufacturer will use their common sense which may be different from yours. Also realize that your checklists should be constantly evolving as your own specifications change. You can even provide a reference sample to be used in conjunction with the specification sheet to get the best results.

Sourcing in China can be challenging, no matter how long you’ve been doing it. Quality controls are keys to protect your business. They are important for the first shipment concerned but also for the recurring orders. They can then help your factory prevents similar mistakes in the future while getting the current shipment out the door within an appropriate amount of time, and the guarantee that your goods are sellable. Thus, make sure to rely to the right quality control experts when performing product inspections. Having a third-party inspector is probably the most flexible and reliable option for small and medium companies, as they guarantee product expertise while sitting on your side to defend your interests. Not only that, they can quickly operate all over China, with a third-party inspection company, you keep control on your goods quality and benefit from their expertise regardless of location.

How To Import From China

Elksourcing：Why Chinese Suppliers Raise Prices of an Order?

Apr 10, 2021 Elksourcing, Prices by 露露

If you have done regular business with Chinese suppliers, you have certainly noticed how eager they are to push prices up. And you probably felt like you got cheated sometimes.

In this article, I am going to focus on cases where the supplier increases the price of an order they already accepted — a very upsetting situation for the buyer.

1. How they raise prices

I think it works out this way most of the time:

The boss looks at the prices negotiated for current productions.

He says to the salesperson “we will not make money on this order. We need to increase the price.”

It is always better to invoke an external fact, upon which their company has — supposedly — no control. So, the boss chooses an excuse of this type.

In the email from the salesperson to the customer, it often sounds unconvincing.

The customer generally cannot check the reality behind the excuse, and it ends up as a “you will do as I say or the order needs to be cancelled” contest.

I heard many types of excuses over the years. Here are a few:

The main material used for production got more expensive since we worked on the quotation (but no, we cannot give you a breakdown of our costs);

The VAT rebate we get from the government was reduced;

Someone in our company quoted too low for this order and we are going to lose money.

2. Why they raise prices

As I wrote above, many times the reason involved is a joke. And, to be sure, the supplier never comes back to the buyer with a price decrease when components get cheaper. It only goes one way — up!

It means there is a lot of insincerity, and importers feel that. BUT there are reasons why prices often need to be raised:

Chinese manufacturers often run on very slim margins. If you leave little profit to the supplier, you know the temptation to bump the price up is very high (especially after you have spent lots of time developing a new product, and after you have pre-sold the shipment to your customers).

They have a poor quotation process, and make mistakes regularly. When it comes time to buy the components and the accessories, these mistakes appear clearly.

Price competition is brutal. Often, those suppliers that sell at a low price and then ask for a raise after the deposit was wired are those that get more customers and grow up. Others notice it and emulate that bad behavior. I am not trying to excuse them, but it is a fact.

3. How buyers can avoid this situation

If you do not want to suffer a price increase for a current order, I see a few solutions:

Working with a sourcing company that will absorb the price increase and will not dare to renegotiate the price they gave you. I know several importers who work with faithful intermediaries to avoid managing all the little problems and tricks from manufacturers.

Getting a lawyer to write a contract (preferably in Chinese) that can be enforced in China. That is a good source of leverage if you crossed all the T’s and dotted all the I’s with a good lawyer.

Finding a backup supplier, so you will have alternate options when the original supplier raises price to you.

If this problem happened to you and you did not take any of the above-mentioned measures, the best is to gather some information first. You can pretend that you need to inspect the components before taking a decision. If you see that they have already received some components that will be hard to use for another customer of theirs, you are in a stronger negotiating position.

If you want to mitigate price increases in the mid-to-long term, though, the best is to cultivate a few backup factories that will put pricing pressure on your main suppliers.

4. A word of caution

Should buyers try to contain price increases?

I would avoid dealing with these issues in a “this is what you signed and there is no way you can change these terms” fashion. Refusing a price increase is dangerous.

Your Chinese manufacturer will either go back to you and ask to be able to raise its prices considering its greatly increased costs for Stainless Steel, or it will secretly start replacing some of the stainless steel in your widget. Which would you prefer?

Category: How To Import From China