Many businesses think of China as a place to buy cheap products. For them, sourcing cheap products means maximizing profits. While you may be able to find cheap products in China, finding products that meet the quality standards of your company may prove to be difficult, and in order to gain the loyalty of your customers, you have to provide them with quality products. Remember also that if the products you sell are recalled because of safety hazards, as the importer, you will be the one the authorities will go after, and not your supplier in China. For all these reasons, quality inspection in China should always be your priority.

To ensure you are buying quality products in China, the first thing you should do is to conduct a factory audit. That way, you will want to find out if:

You are dealing with a real supplier who has the required documentation and export licensing.
The supplier is experienced in producing similar products that your company is looking for.
The supplier has proper quality control systems in place and is capable of fixing problems that may arise.
The supplier has acceptable working conditions, meaning they are fair to their workers, have good working environment and they do not employ underage workers.

After checking your supplier, you should do the following:

1. Prepare and agree a Contract of Terms.
2. Approve a Sample.

Then, it comes the actual quality inspection in China. You will want to inspect the goods during production just to ascertain that they meet quality standards. What should you look for when doing quality inspection?

The quantity of products to see if they are able to deliver the amount you ordered, on time.
The packaging of the products.
Whether the products conform to your pre-set requirements and your country’s safety regulations.

For reliable quality inspection in China, you need to provide your supplier, and sourcing agent or third party quality inspection team with all your required product specifications. They may be experts in dealing with the kinds of products you need, but no one knows better what you want than you, the buyer. Your instructions should be clear and concise. Be specific in giving out details. Make sure the quality inspection team inspects the products thoroughly and not just look at the samples provided by the supplier. Ask them to check the boxes randomly, and finally, make sure they check the products down to the tiniest detail to ensure everything is as it should be.

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Elksourcing：Four Things to Consider in Supplier Verification China

Mar 31, 2021 Elksourcing, supplier by 露露

While the Chinese are generally regarded as trustworthy and hardworking, there are still some people in the country who are not to be trusted when it comes to business. These people work in various fields particularly in the manufacturing sector. Foreign firms that are bent on sourcing products in China must exercise caution and prudence in entering partnerships with suppliers in the said country. A thorough supplier verification China is necessary towards ensuring that enterprises get the services of a good and trustworthy supplier.

Business contact numbers

Companies can verify if a supplier in China is legit by checking the business address of the supplier. Legitimate businesses and production firms in China use a landline phone instead of mobile phones. If a supplier uses a mobile phone for business purposes, there is a good chance that it is a fraud. There is no restriction or limitation to the number of mobile phone numbers a person or business in China can own, and this is taken advantage of fraudulent suppliers as they can readily change mobile numbers anytime they want, or when they attempt to run away from a client who has given them payment.

Business licenses

Another important facet of supplier verification China is to check its business license. Legal Chinese firms have a unique company registration number as required by the law. If a potential supplier is unable to present a business registration number, then it can be concluded that it is a fake. In checking the veracity of a supplier’s registration number, a business may contact the local office of the Bureau of Industry and Commerce. There are also specialized services companies in China that businesses can contact to validate the authenticity of a supplier’s business registration number.

Extra low prices

Although China is an attractive sourcing venue because of the low costs of labor and products there, this is not to say that businesses should tap suppliers that promise outrageously low rates. Many scammers in China earn a lot by selling fake products at low prices to overseas buyers. Companies that don’t practice due diligence in evaluating prospective suppliers could fall prey to these scammers.

Payment terms

Supplier verification China can also focus on the mode of delivery and payment terms demanded by the supplier. Truthful suppliers deliver goods through formal channels. On the other hand, scammers refuse this mode of delivery as they can be subject to examinations from Chinese customs.Likewise, reputable suppliers accept letter of credit payments while bogus ones don’t.

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Elksourcing：Essential Tips to Achieve Quality Sourcing China

Mar 31, 2021 Elksourcing, sourcing agent by 露露

China has shed its image as a producer of cheap but poorly manufactured products. Through the efforts of its government, the Chinese has attracted countless of foreign companies for sourcing. Firms abroad obtain products from China because of factors like low-cost labor. Businesses that are into quality sourcing China must be conscious of certain things when finding the right sourcing specialist in the country.

Research

Entrepreneurs or firms must have a clear idea on the products they would like to order from China. Product drawings and specifications can help a sourcing agent better understand the requirements of the client.

The Internet is a good place to start in looking for a sourcing representative in China. Most foreign buyers visit websites specializing in Chinese products and suppliers to get a list of potential purchasers in China. Some buyers even go to the extent of visiting websites or social media accounts of purchasers in hopes of learning more about the prospective sourcing representative.

Bigger businesses also send employees or representatives to exhibitions held in China. Exhibitions are a one-stop shop for entrepreneurs looking for potential supplier. Exhibitions in the big cities like Beijing, Shenzhen and Shanghai gather the most number of participants. The most reputable quality sourcing China agents also participate in this type of gathering. Firms and entrepreneurs should prioritize exhibitions with at least 200 exhibitors and attended by 20,000 visitors. Exhibitions also enable buyers to have a face-to-face meeting with potential purchasers.

Selection

Businessmen or purchasing officers should talk face-to-face with potential suppliers first before signing a contract. It is also encouraged that a visit to the local factory be made to give the client a better understanding of how the potential supplier works. A visit to the local factory will also give an idea on the type of machines used as well as the number of personnel working on the product.

Stringent selection also requires clients to ask for recognizable standards of quality like ISO. The track record of the purchaser should also be scrutinized particularly in terms of exporting overseas.

In selecting sourcing representatives, most businesses usually put a premium on the costs. However, not all sourcing agents in China that can promise the cheapest costs for their clients are to be trusted. Most of the time, cheap products also equate to poor quality. When selecting a quality sourcing China agent, quality should be the top priority all the time.

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Elksourcing：Why Chinese Suppliers Require MOQ and What Can You Do?

Mar 31, 2021 Elksourcing, MOQ by 露露

Minimum Order Quantity (MOQ) requirement specifies the lowest quantity of a certain product that a supplier is willing to sell. If the importer cannot reach the MOQ requirement, then the supplier is not willing to enter production. Suppliers in China tend to have fairly high MOQ requirements. Why Chinese Suppliers Require MOQ? What can you do about it?

Reason 1 – Low Profit Margins Require Large Volumes

Chinese suppliers tend to have very low profit margins, as low as 2-3% is common. Price competition is fierce and Chinese businesses in general tend to be focused on keeping a low price rather than improving product quality and service level. Low profit margins require the supplier to produce a large quantity of products in order to break even.

Reason 2 – Material Suppliers also Require MOQ

I’m sure most Chinese suppliers would be happy to do business with smaller buyers if they could. In fact, I know that many of them dislike the fact that a high MOQ requirement forces the suppliers to rely on a smaller number of large companies that could walk away with their business without notice. The problem is that the MOQ is not decided by the supplier alone, but also by its subcontractors. Every supplier need to purchase materials and components from local subcontractors, and every subcontractor requires the supplier to purchase a certain quantity. The supplier’s MOQ requirement is thus a reflection of the MOQ requirements imposed by its subcontractors.

Reason 3 – China Suppliers Rarely Keep Stock

A common misunderstanding is that Chinese suppliers have warehouses filled with export quality products ready to be shipped to the next buyer. It’s not true. In fact, most Chinese suppliers don’t even purchase materials and components until an order has been placed. Below I explain why:

Storage is not free and keeping a large stock would force the supplier to increase the prices. Empty shelves helps the suppliers to keep costs down and stay competitive.
European and American product standards (i.e. CE, RoHS and FCC) don’t apply in the other parts of the world. While many Chinese suppliers are manufacturing products that are in compliance with Western product standards, they are certainly not mass-producing them before they receive an order from an American or European buyer. Product standard compliance comes at a cost (more expensive material and components) and it would leave the supplier at a disadvantage if they mass-produced products that are compliant with Western standards.

How can you lower MOQ?

The MOQ requirement cannot simply be negotiated away or vanish. While some suppliers may accept a slightly lowered MOQ, requesting it to be removed completely is the same as asking your supplier to lose money for the sake of your business. Many importers try to play the “my orders will be larger in the future” card, but most suppliers hear this on an almost daily basis and only a fraction of their buyers can back up the claim in the end.

However, there are ways that can satisfy the supplier at the same time as you can order a smaller quantity:

Use components, materials and colors on several products. This way the supplier can limit the number of subcontractors involved.
Coordinate your orders with those of other buyers.
Import products that are not regulated in your country and/or market. This way you can purchase products that are originally produced for the Chinese market.

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Elksourcing：Price Negotiation with Chinese Suppliers

Mar 31, 2021 Elksourcing, price by 露露

The whole point with importing from China is the cost advantage. It’s cheaper than buying from West and certain products simply cannot be found outside of China. While China is slowly losing its position as a the world low cost factory, importers still have a price focus and negotiation is part of the process. The Chinese love to bargain, it’s part of their culture and even expected in many situations. However, there are plenty of misconceptions and mistakes made my importers – especially small ones.

The supplier must also make a worthwhile profit

Rather few importers are aware of the (very) low profit margins that most Chinese suppliers struggle with. It’s simply not possible for them to offer a 10 – 20% price reduction, unless the price was way off to begin with. Asking them to lower the price with anything more than 0.5% – 2.0% is the same thing as asking them to lose money on your order.

Some importers simply cannot accept this and keep pushing for major price reductions, sometimes only for the sake of it. If you’re lucky, the supplier will simply tell you to get lost in a nice way. If you are less lucky, the supplier will give in and offer a price reduction, and adjust the quality accordingly. The likely outcome is a batch of products with horrible quality and a large number of defective units.

However, I’m not saying that should not attempt to negotiate the price. I encourage it, if only for the sake of showing that the supplier that you have clear limits. That can discourage them to make any bold moves on the price in the future. All I’m saying is that you shouldn’t expect price to be cut more than a few percentage.

Price Negotiation is all about good timing

You must give incentives to people if you want them to give you something in return. The same applies when negotiating prices in China. Keep in mind that a supplier will not reduce the price because they want to be nice; it’s a cold calculation that’s aimed at getting your order. If a supplier already knows that you’ll place your order regardless of price, they no longer have an incentive to cut back on anything. This is very common, and may occur in any of the following situations:

When a supplier knows that you don’t have any additional suppliers to fall back on
When you’ve invested a lot of time and money into product samples and development
When you are just about to place a new order
When you need products fast. This means the supplier can simply hold out until you become even more desperate.

When any of the above occurs the supplier is fully aware that you’ll place your order with or without a price reduction. For natural reasons, the supplier is very unlikely to offer even the slightest reduction when this is the case. On the contrary, some suppliers even consider such a situation an excellent opportunity for a price increase!

Be ready to leave the table and walk away

Many Chinese suppliers take a “you want this order more than we do” approach to negotiations. I’ve found that this strategy works very well when reversed. The key to success is to always make the supplier feel that you are well prepared and ready to leave the table and take your order elsewhere if they refuse to meet your demands. Although, you’ll have to leave many tables if your demands are unrealistic to begin with. This can be achieved by doing the following:

Always have plenty of supplier options available until the moment you place your order. This means that you need to negotiate with many suppliers at a time.
Never make any promise or confirm future orders. This makes the supplier feel in control.
When you’ve withdrawn from a negotiation, then that’s it. If you keep coming back you’ll like you’re out of options. This certainly doesn’t give the supplier any incentive to reduce the price.

Avoid importing products with razor thin profit margins

Since you’re reading this I assume you are not a purchasing manager working for Wal-Mart or Tesco. Thus I suggest that you forget about competing with large multinationals in terms of pricing. Instead I advise you to find a product niche where you can enjoy a fairly high profit margin. This is becoming especially important now since the “China price” is under a lot of upward pressure, mainly due to rising wages and inflation.

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Elksourcing：Interesting Q&A about China Culture

Mar 31, 2021 China Culture, Elksourcing by 露露

Business is about culture. It is extremely important to learn and understand the culture, logic and thinking of your business partners especially when you are talking about international business.

THE QUESTIONAIRS

Social life in China

1. Q: What are taboos in Chinese society: subjects that I should not talk about?

A: We talk about everything except sex, we talk age, income, politics, religion, etc.

2. Q: Are there any expressions that I must avoid while speaking to a Chinese person?

A: I can’t think of any specific expression you need to avoid, generally, be polite, be nice, don’t be rude.

3. Q: Is it acceptable to talk freely about your private life?

A: Yes, it is acceptable to talk about private life, especially with families, friends and people we know. But we don’t talk private life with strangers. We feel more comfortable to talk about the privacy with someone you know and close to you.

By asking some general private questions people try to know each other and get closer, for example ” how old are you”, “where are you from”, “what do you do by occupation”, so on and so forth. We normally will answer those questions if the people who ask are not so annoying. So in the other points, don’t feel be offended if your Chinese friend asks about your privacy. It is just like he/she is trying to find a topic and interested in knowing you more in person.

4. Q: If you want to make friends, do you consider any difference between men and women?

A: Not really.

5. Q: What is the distance that you must respect while talking to a Chinese person? And in this case, are there any differences between men and women?

A: Depends on the relationship between the speakers, more intimate relation, closer. You sit side by side with friend, but don’t want a stranger to sit side by side with you. Also you will leave some space if you are talking with your boss.

Generally the distance between men and women depends on the relationship between them. The differences is China is a conservative country, so you need to leave a bit more space if you are talking to a person in opposite gender. Don’t kiss. Wait the female to reach hand first when shake hands. People here don’t touch each other much.

6. Q: Do you keep eye contact while talking with someone older than you?

A: Yes.

7. Q: Do you consider interrupting someone while speaking impolite or it doesn’t really matter?

A: Very impolite.

8. Q: How can I express politely my agreement or refusal?

A: The thing is to let people know you agree or refuse without making them unhappy or misguide them. In daily life, better be clear; in business, better be clear and also diplomatic.

9. Q: Does the Chinese society respect a certain hierarchy or degree of formality?

A: Yes.

10. Q: Do I have the right to express my feelings or should I hide them instead?

A: Do express yourself. The key is expressing your feeling without make others unhappy or misguide them.

11. Q: When I am eating something, do I have to invite my friends to share it with me?

A: If we eat something alone with a people we know around, we think it is very impolite not inviting. The idea here is we treat others as well as what we treat ourselves.

12. Q: What kind of gifts can you offer a Chinese person to make them happy?

A: Depends what they like and what the occasion is. Normally we buy cosmetics/novelties/something else they like to women, electronics/wine/something they like to men.

Professional life in China

1. Q: At work, how do you say hello?

A: Nothing special. Good morning/good afternoon/how are you? Etc. Chinese will ask, “Have you eaten lunch/supper yet” etc. as a greeting, just like you guys talk weather to start a conversation.

2. Q: Are there any differences between men and women?

A: not really.

3. Q: Do you have any dress-code?

A: Dress professionally.

4. Q: Describe manners at the table?

A: Vary. China is big. The people in the north drink a lot, the people in south not. The host normally will invite the guests to eat first when every dish is served.

5. Q: What kind of gifts can you offer when a Chinese person invites you to dinner?

A: Check what they like beforehand. For example, if they drink, it would be great if you bring a French wine.

6. Q: At work, do you consider your partner as a friend?

A: Depends. Some yes, some no.

7. Q: Do you express feelings freely?

A: In business, better politely and diplomatic.

8. Q: What is the distance that you must respect while speaking with your co-worker?

A: Closer with co-worker, a bit more space with people you respect.

9. Q: At what hour do you start work?

A: At 8, 8:30 or 9 depends on region.

10. Q: How long does the lunch break last?

A: 1 to 2 hours depends on companies.

11. Q: Do you drink alcohol during the lunch?

A: No, except you are accompanying a client.

12. Q: Is there any behavior that I should not have when I visit China?

A: Nothing special. Don’t “streaking”, don’t break the laws, be nice.

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Elksourcing：Product Certifications You Should Know

Mar 30, 2021 Elksourcing, Product Certifications by 露露

New importers sometimes may be puzzled by so many certifications, such as UL, CE, FCC etc. You may wonder: what are these product certification standards? Which countries and product categories they apply to? In this article, we will give you a complete guide of the major products certifications.

The CE marking (also known as CE mark) is a mandatory conformity mark on many products placed on the single market in the European Economic Area (EEA). The CE marking certifies that a product has met EU consumer safety, health or environmental requirements.

Countries that adopt UL certification: EU countries.
Which product categories UL apply to: Examples of European Directives requiring CE marking include toy safety, machinery, low-voltage equipment, terminal equipment and electromagnetic compatibility. There are about 25 directives requiring CE marking, the link of the 25 directives is http://www.newapproach.org/Directives/DirectiveList.asp
Official CE website: www.ce-marking.org

Underwriters Laboratories Inc. (UL) is a U.S. privately owned and operated, independent, third party product safety testing and certification organization. Based in Northbrook, Illinois, UL develops standards and test procedures for products, materials, components, assemblies, tools and equipment, chiefly dealing with product safety. UL also evaluates and certifies the efficiency of a company’s business processes through its management system registration programs. Additionally, UL analyzes drinking and other clean water samples through its drinking water laboratory in South Bend, Indiana. The UL Mark does not carry any legal weight beyond that of any other trademark. In this sense, it is different from the CE Marking or the FCC Part 15 requirements for electronic devices, which are required by law. In practice, however, it may be extremely difficult to sell certain types of products without a UL Mark. Large distributors may be unwilling to carry a product without UL certification, and the use of noncertified equipment may invalidate insurance coverage. It is common practice in many fields to specify UL Listed equipment or UL Recognized materials. Local jurisdictional authorities, such as building, electrical and fire inspectors, may be reluctant to accept a product for installation in a building unless it carries a recognized third-party compliance mark such as the UL Mark

Countries that adopt UL certification: U.S and Canada
Which product categories UL apply to: Electrical Enclosures, Industrial Control Panels, Industrial Control Equipment, High-Voltage Industrial Control Equipment, Power Conversion Equipment
Official UL website: www.ul.com/

A-Tick

The A-Tick is a compliance mark produced by ACMA for telecommunications equipment. It gives consumers confidence that a telecommunications product meets the safety and technical standards set by the Australian Communications and Media Authority (ACMA). Telecommunications products must have an A-Tick or display the labels of previous labeling schemes such as the Telecom Authorization or AUSTEL permit. Products without an A-Tick or the previously accepted labels may be unsafe and cause damage when connected to the network and cannot be connected to a carrier’s network.
Countries that adopt UL certification: Australia
Which product categories UL apply to: telecommunications equipment
Official UL website: http://www.acma.gov.au

CCC

The CCC (China Compulsory Certification) Mark is a mandatory safety and quality mark for products sold in the Chinese market. It is required for products in 19 groups, divided into 132 product categories in total. UL-CCIC, UL’s joint venture in China with CCIC (China National Import and Export Commodities Inspection Corporation), has been approved by the Certification and Accreditation Administration of the People’s Republic of China (CNCA) as a registered CCC agent to assist domestic and overseas clients with CCC certification applications.

Countries that adopt UL certification: China
Which product categories UL apply to: 132 product categories.
Official UL website: http://www.ccc-mark.com

GS Mark is a voluntary mark. It can be used on products such as household appliances, laboratory equipment, luminaries and IT/AV equipment. Products are evaluated according to the German Equipment and Product Safety Act (GPSG). The evaluation is based on harmonized European standards for the safety testing, some product may require additional testing according to other standards e.g. ergonomic testing. The validity of the certificate is maximum 5 years.
Countries that adopt GS certification: German
Which product categories GS apply to: household appliances, laboratory equipment, luminaries and IT/AV equipment.

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Elksourcing：How to define relationship with Chinese suppliers?

Mar 30, 2021 Chinese suppliers, Elksourcing by 露露

Managing the relationship with Chinese suppliers is not easy, the cultural difference, the language issue, the communication problem, China has another social system, different business culture and practice.

Managing the relationship with Chinese suppliers is not that difficult at all, if you can answer one question: How do you define the relationship with Chinese supplier? Do you think your relationship with the supplier is equal? Do you think your order is a blessing or giving to the supplier? Do you often threat the supplier that if they don’t do this or don’t do that, you will change the supplier, as you said there were handful of qualified suppliers lining up for your order?

The relationship should be equal

We recently read a story on the leading international trade forum fobshanghai.com, a Chinese supplier complained how their big buyer (Target) behave arrogantly and how Target was indifferent to the benefit of their suppliers, Target often cancel orders without prior notification, which has caused huge money loss to the supplier as they have already started production. Target doesn’t give any reason and refuse to compensate the supplier for the monetary loss.

The relationship between Target and the supplier is not equal. Target might think that their big order is a blessing to the supplier, so the supplier should do whatever they are asked to do to please Target, fair or not. However, in the end, the supplier refuses to supply to Target any more. Target maybe think they have plenty of backup suppliers to replace that supplier, however, if things go on like this, Target might develop a bad reputation among Chinese suppliers.

Even many small and medium sized buyers are as arrogant as Target. Gradually they will find the relationship with the suppliers become intense and tough. Like human being, organizations like company seldom do self-exam; they always think it is other side’s fault.

Vice versa, it is very common that big suppliers belittle small buyers, we are helping a big Brazilian electric bike importer find Chinese suppliers, out of the vast suppliers we contacted, a few of them are very arrogant, they even don’t have interests to answer the telephone, reply the email and try to learn our inquiry. We also help small and medium sized buyers verify Chinese suppliers, oftentimes we heard the suppliers says they are too busy, too many orders, and they don’t care if they buyers buy from them or not. Our advice to the buyers is “dump those arrogant suppliers”.

We compete as supplier chain, we are partners.

Companies need to cooperate with upstream and downstream companies, suppliers, service providers, distributors, logistics companies, etc. You need the cooperation and support from other partner companies in your supplier chain to improve your competitiveness; otherwise your company will achieve nothing.

As partners, we should try to share market intelligence with suppliers, we help them grow, we give them feedback and suggestion to improve their products, we let them feel we not only buy from them, we see them as partner, we help them grow. If the R&D ability of the factory grow, if they can lower their price and improve the competitiveness of their products, in return, that will help the buyer’s company grow.

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