Business

Mistakes To Avoid When Getting Suppliers From China 

Despite the COVID-19 in 2020, China’s import and export sectors are still robust. China was the only country to report growth in exports, which increased by 3.6%. Retailers purchasing products from China at factory prices continue to find it to be a desirable location. An eCommerce store can typically save between 10% and 50% on the cost of the goods by sourcing their products from China. It does, however, have its share of disadvantages.

It takes expertise and experience to work with Chinese suppliers. It is very common knowledge that purchasing products from China at a low cost might result in fraud. However, despite the language barrier, these are intrinsic dangers that come with doing business with foreign manufacturers.

Mistakes to Avoid when Purchasing from a Chinese Manufacturer

We have gathered some common mistakes that can be avoided while purchasing products from China and building long-term relationship with the manufacturers –

Communication Barrier

Your biggest challenge will be communicated once you establish a Chinese manufacturer. If the supplier only speaks a limited amount of English, this may be a severe condition. Miscommunication might result in exorbitant delays, incorrect orders, erroneous specifications, or even an account breakdown.

To prevent this, only use plain English while communicating by email; stay away from jargon and technical phrases. Write only a few questions at a time so that your provider can deliver a more targeted response. Similar to this, avoid sending many emails on the same subject since this could be misleading.

Where possible, respond to your emails with a choice, such as on Skype. This will give you a chance to address any questions that come up, and Chinese culture encourages face-to-face communication in business. Another helpful method of communication that will help you contact your provider more quickly than email is through messaging software WeChat. WeChat is widely used and acceptable for commercial communication in China.

Not Ordering Product Sample 

It wouldn’t be an honest strategy to claim ownership of the produced goods only based on your specifications and drawings. Your specification paper may not be read properly by your provider. They’ll overlook some or many details, lowering the calibre of the result. It’s common practice for consumers to order samples from many suppliers. The sample serves as evidence that the provider can produce your product following your requirements.

Additionally, it serves as “practice” for the provider to understand what you genuinely want. You can provide comments on the sample and give the manufacturer another chance if the standard is good and only small adjustments are needed. You might need to switch providers if the sample is subpar.

As vendors compete for your business, you frequently receive a sample that looks and feels great. There’s always a chance that the provider acquired the “golden sample” from another manufacturer, according to the odds. Because it was produced at a different, less expensive factory, there is always a chance that the order you place in support of your satisfaction with the sample may not be up to an equivalent standard.

By overseeing how internal control is carried out at the plant and ensuring that your product receives multiple inspections at completely distinct phases of production, a sourcing agent reduces this risk. One of the agent’s representatives could be stationed at the factory to conduct inspections. Additionally, they’ll carry out a pre-shipment inspection and give your product the all-clear or return it to the manufacturer if there are any problems. You receive the full value for your money and steer clear of any disagreements brought on by poor quality.

Not Getting the Right Price Quotations

Pricing is one of your most important concerns if you want to run an online business or make revenue by reselling Chinese goods. The initial price you receive from your provider is negotiable, so don’t be shy about discussing discounts.

It is advised not to bargain with suppliers while purchasing products from China because this would compel them to compromise on product quality. Since companies must increase their earnings, they will employ subpar materials or less expensive components to meet your value. Lead times will also suffer as they move your order to the back of the line to make room for consumers who will pay more.

When it comes to valuation, the best strategy is to establish a baseline value for your goods, which may be done by requesting quotes from other factories. This might give you an idea of the prices you’re looking at while still ensuring product quality and numbers. Additionally, it is a good thought to start haggling right away after getting a quote instead of waiting for the the prototypes and product samples to arrive. Your supplier may not have any motivation to cut charges at this point because you have invested time and money into the procedure.

Not signing an agreement

Your agreement shouldn’t leave any room for question or ambiguity when it comes to the extent of the engagement and specifies the exact producing requirements for your goods.

The more complex your contract, the better your chances of a successful resolution in the event of a provider disagreement. This comprises the product specification, the acceptable and unacceptable ranges of the manufactured goods, and documentation proving your payment to the provider. You must ensure that your provider has real, substantiated assets that are situated in the region specified in the contract. Following this advice can provide you a helping hand if you ever find yourself in a Chinese court because Chinese courts don’t enforce decisions made in foreign courts.

You require a nondisclosure, non-use, and non-circumvention (NNN) agreement to preserve your tangible assets and give security against the possibility that your provider will produce your goods and sell them to your target market at a lower price.

Chinese law must apply, and the contract must be in Chinese. It should produce a different conflict settlement method. The party who drafted the contract may have a say in how it is interpreted. Though your lawyer has requested the agreement, Chinese law will apply even if your provider has prepared it under local legislation in your country. Be aware that a non-disclosure agreement is not binding in China.

Purchasing products from China can seem like a difficult task for a small business. You can get assistance from sourcing agents to complete the entire process. A competent sourcing agent acts as your right-hand person to make sure everything goes according to plan.

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