China has been considered a region where you can buy almost anything. The large-scale production of various goods contributes to the fact that sellers buy goods here, who sell them in Europe, USA, Australia, and other regions. However, due to the specifics of the Chinese business, you may face problems when looking for a reliable supplier and negotiating the production of goods.
Mistakes could be typical, they are preventable with enough resources, involvement throughout the purchase process, and due diligence. In this post, we showcase the most common China sourcing mistakes.
Why Importing from China Is Preferable than Importing from Other Regions?
Sourcing products from China involves many steps to be successful. Many important aspects affect how successful your journey will be in this direction:
- Searching for reliable suppliers.
- Interaction with several suppliers to get the best price.
- Choice of payment and delivery method.
- Quality control, etc.
Despite the complexity of each of the stages and possible difficulties, sourcing products from China remains profitable for the seller for various reasons:
- A large number of suppliers;
- The possibility of cooperation with a manufacturer directly or through sourcing companies;
- Cheap prices for goods;
- Creation of a unique product, taking into account the specification you need;
- Production of almost any type of goods.
China is a mega-merchandise factory with tens of thousands of products, from toothpicks to machine tools and automated robots. Therefore, it will not be a problem for specialized factories to make the goods that you exactly need. However, you may run into some problems that can lead to wasted money and time when importing from China. Use a list of the most common mistakes that sellers make when negotiating with Chinese suppliers.
The Most Common China Sourcing Mistakes
You might already have heard about numerous shocking stories of some foreign buyers suffering from losses because of misunderstandings along with their Chinese suppliers, poor quality products, or production delays. Nonetheless, such mistakes when importing from China could be easily prevented with the right guidance. We've collected 20 of the most common mistakes when importing from China that can cost you a lot of business losses. Read and use it wisely.
1. Thinking the supplier understands English well. Of course, most of those with whom you’ll communicate in the negotiation process understand English quite well. But keep in mind that you are unlikely spoken to a native speaker who can explain everything to your Chinese partners exactly as you told. Therefore, ideally, you should have someone who speaks Chinese fluently and can translate technical terms, notation, or other important information. Otherwise, say everything as simple as possible and explain each requirement the supplier must fulfill in the process of manufacturing the goods in detail.
You can’t rely on shoddy translation in cross-border transactions. Language barriers often lead to failed business transactions.
2. Assuming the supplier understood the things, you said exactly the way you wanted it.
This is another of the most common sourcing mistakes. If you are not specific in your negotiations with the supplier, you may not get the product you are counting on. Even though the factory you have chosen may specialize in this type of goods, the supplier can’t always predict your desires. If you expect that he, as a professional, knows everything and can do everything perfectly, you are wrong. One factory produces hundreds of different goods, and a person who will communicate with you in negotiations is not always knowing the product’s specification well.
So, the more accurate your requirements and explanations are, the higher the likelihood of getting exactly the product that you want to receive in the end is.
3. Hoping that the supplier will fulfill his promises to produce the product, even if he assured you of this.
One of the features of cooperation with Chinese suppliers is the willingness to get a refusal to manufacture goods, even if you have received prior consent. The truth is it’s not customary to say "no" to a person interested in cooperation in China. A supplier can easily say “yes” to making you a frying pan, even if he has never produced it before. And only in the process of negotiations, you can find out that the manufacturer will not still be able to fulfill its promises. This is normal practice as at the first communication with you a factory representative is just afraid of offending or upsetting you with a refusal, although he is not completely sure that he will fulfill your order.
Of course, this does not mean that every supplier does the same thing. But such cases are quite common, especially if you ask him to make a product that he has never released before. In this case, the choice of the manufacturer who has previously dealt with goods similar to yours will be more reliable.
4. Considering that the supplier will not disclose or use information about the product, even if he signed the agreement.
Let’s say you launch a new product. Then you see it being marketed by your supplier and by other suppliers on Alibaba. Don’t think that suppliers will honor your contract. A vendor may release the same product like yours, or represent your product as a sample of the product they release, but without your consent. To avoid this, you need to register your trademark or obtain a patent (if you are creating a brand-new product) in order to secure your business.
An excellent way to prevent your item from getting hijacked is to have the supplier manufacture all the items separately. You can have those items shipped to you and assemble them on your own. Hence, your supplier won’t learn what the items look like.
Of course, this is a more complex method that requires more time and investment. However, it’s very effective, so you shouldn't discount it.
The second option is to supplement the main product with some additional accessories. Such a kit will be more difficult to duplicate or counterfeit if the supplier or your direct competitors decide to play unfairly.
5. Thinking it would be cheaper to cooperate with a Chinese factory.
Individuals importing from China like to purchase directly from a Chinese factory. For them, factories would provide more favorable costs than trading firms, allowing them to get better revenues.
We can’t tell they are incorrect. However, it’s not correct to limit yourself to factories while overlooking your business scale and model.
The fact is that trading companies are often more trusted by factories and therefore have more favorable conditions for purchasing goods. As a beginner, factories can’t immediately offer you the lowest price. Therefore, it is not always justified to limit yourself to the search for factories. Consider other options to find the best deal.
6. Thinking that a factory is better than a trading company or sourcing agent.
A factory is a place where the product is made, whether by machines or people.
A trading company is an intermediary. Typically, these companies buy the goods from factories and resell them to you at a higher price, leaving the difference.
A sourcing agent looks like a trading company, but they’re not all the same. The sourcing agent is most often an intermediary that helps you to connect with reliable factories that match your criteria. Often, they also help to organize the inspection of a factory or goods, provide advice on interaction with suppliers, and help to ship goods.
Direct cooperation with the factory will not always be easier and more profitable for you, especially at the beginning. You may not be aware of the peculiarities of interaction with Chinese suppliers, because you have no experience in choosing a reliable manufacturer, negotiating prices, do not know the specifics of the delivery of this product. Turning to intermediaries, you can get answers to many questions and avoid problems with a delay in production, quality of goods, and their delivery to your warehouse.
7. Considering that all reliable factories have a website or are represented in special catalogs of manufacturers.
Many factories don’t like to waste their effort and time with catalogs and websites. They sell goods to third parties such as trading firms and you see them online.
The truth is that factories may not even be represented on Alibaba, but still produce quality products. They're just focused on sales and don't want to waste time and money on someone to represent them on Alibaba and correspond with you on behalf of the factory. Therefore, such factories often represent intermediaries with whom you will interact.
8. Hoping that the supplier will make a batch of goods exactly on time.
Do you plan to make a bespoke product? Then expect it’s going to take a long time to create.
The supplier needs time to study and make a sample. Don’t expect to receive a sample in 1.5 months exactly, as the supplier promises.
Even if you are not producing something incredible or completely new, but want to improve one of the products that the supplier already produces, this also takes time. Don’t forget also that samples and the batch of goods must be delivered to you, and this also takes time.
Expect customized items to take at least six months from product research, all through shipping them to Amazon FBA.
9. Thinking that having a Gold Supplier status or Trade Assurance in Alibaba Supplier Description guarantees its reliability.
Many suppliers in Alibaba are gold suppliers. However, those gold suppliers are only the paid membership of the platform. Meaning, anyone could pay to acquire it. Hence, a gold supplier should not be the standard of identifying the supplier’s quality. Therefore, you should not be guided by this parameter alone. Of course, if the supplier has Gold status, this reduces the likelihood that he could be a fraud. But you should consider other parameters when looking for a reliable supplier.
Moreover, Trade Assurance isn’t identical to PayPal that safeguards the buyer’s interests. If you believe you could request the money back if you aren't satisfied with the imported items, you are wrong. In fact, you’ll have to work hard to get reimbursed under this program. However, the amount of compensation may not fully cover your expenses. Moreover, in order to prove the supplier is wrong, you’ll need evidence that you will have to provide. And if they are not enough, you’ll lose the argument.
10. Thinking that the supplier understands what you want from him and don’t elaborate on details and specifications.
One of the major reasons why a supplier could misinterpret importers is that they don’t present clear expectations for a product upfront. You may believe it’s enough to send the supplier a comprehensive drawing presenting the product description and expect the factory to understand the rest.
Remember that there are more details that a supplier must have apart from product requirements.
Even if a supplier has previously released products like yours, don’t rely on the fact that he fully understands all the specifics of the product. The more accurately you describe what exactly you want as a result (including size, materials, functions, labeling, and packaging features), the fewer problems you’ll have during production.
11. Thinking that the relationship with the supplier in China will be the same as with the West supplier.
One of the key cultural differences between China and the USA is that the Chinese are more likely to be non-confrontational. You’ll find a difference in the culture of communication, the manner of doing business, and the need to build deeper relationships (in the West, it is more formal than in China).
One of the key features of doing business with Chinese suppliers is building relationships. If you gain trust as an honest and interest buyer, then you’ll be treated with respect throughout your cooperation. Moreover, when you demonstrate the seriousness of your intentions, the potential for buying out medium and large volumes of goods, you can get a discount for your orders. At the beginning of cooperation, Chinese suppliers are reluctant to do this, but as the relationship develops, they are more willing to agree to this.
Also, your manufacturer can recommend you how to improve your product or what else you can save on without compromising quality if you can build a trusting relationship with him.
12. Relying only on the supplier’s promises and not carrying out quality inspections in the factory during production or before shipment.
It’s common sense to assess products before shipping. However, importers make the mistake of depending too much on the supplier to conduct quality check inspections. Remember that many Chinese factories have their internal QC team. The problem is that factory employees are assessing their work and sometimes based as a result. Hence, make sure you send your staff or a third party to check the factory items before shipping.
Even if the supplier has excellent recommendations and has released similar products earlier, you can never be sure that a new batch will be of the same quality as the previous one. Manufacturing defects can never be ruled out.
13. Hoping that, after the first contact, the supplier will take you seriously if you are not well-represented and don’t write messages about your intentions seriously.
Talking is more important throughout the early stages of the relationship. An email could go so far as to inform them what it is you need to make, especially if you’re asking the supplier to make a unique product they’ve never performed before.
However, the problem is that the supplier evaluates everyone who contacts to him in terms of how beneficial cooperation with him will be. If you don’t clearly indicate your intentions, don’t indicate the approximate volume of batches that you plan to purchase, and the frequency of purchases, and also don’t present yourself and your company in a favorable light, don’t expect quick answers and interest from the manufacturer.
It is simply unprofitable for a supplier to spend his time answering your questions, telling about his business, and discussing all the details if you are going to order no more than 10-20 pieces per month for reselling products on Amazon.
14. Negotiating with suppliers for lower prices too early.
Lower prices make importers palpitate with too much excitement. You will find the lowest prices within the market if you build your strategy of interaction with the supplier correctly. The mistake most newbies make is talking to a supplier too early about reducing the price of a product. Of course, this conversation has to happen, otherwise, the supplier will misunderstand you. He also expects this moment, but not in your first email or phone call.
You should not start talking about price reductions if you have not previously conducted research and found out the real market value of the product. You may want to buy an item at a definite price, but the reality is that most manufacturers are simply not ready to release the goods at the price you offer. After all, they also own the business and profit from it though. Therefore, before negotiating a price cut with a supplier, make sure you are realistic about the cost.
In addition, if you are really determined to order goods from this particular supplier, only then it makes sense to talk about a price reduction. If at the end of the negotiations you just go to another supplier, then the next time (where is the guarantee that this will not happen?) when you contact him you will not receive favorable terms of production and delivery.
15. Choosing the supplier with the lowest price.
You understand that free cheese is only in a mousetrap, don't you? Therefore, if you expect to receive a high-quality product, do not expect it to be too cheap.
Be especially wary of a situation where 4 manufacturers are pricing at $ 20-25 per unit and one manufacturer is pricing at $ 14. Such a difference in price can be an indicator of the poor quality of the product due to the fact that the supplier saves on materials, does not comply with production standards, or is simply a fraud. Therefore, don’t go to the lowest price, because it will not always be the best choice for you.
16. Thinking the supplier will take care of the insurance of the product and the correct packaging.
Many importers think that suppliers will handle the packaging and insurance, as they have experience in exporting. But you will have to confirm packaging details with Chinese manufacturers because of private label necessity and to avoid transportation problems. Make sure you check with your supplier how they’re going to pack your items, whether these are fragile or not.
Further, accidents happen, such as ship crashes, stolen items, or damages. Cargo insurance can offer protection over risks of damage or physical loss to freight from any external cause through shipping.
17. Hoping for a verbal agreement or agreement using Skype, WeChat, or other online communication channels and don’t secure everything with an agreement on paper.
Most communication takes place through instant chat tools and email. Keep in mind that online communication is considered cold. You do not know how your prospect suppliers respond, their facial expressions, and how they talk in real life.
Would you want to collaborate with a supplier? Then more contacts are essential such as face-to-face meetings on-site, video meetings, or phone talk. It’s advantageous to perform supplier verification and selection.
Remember also the following: no verbal agreement will guarantee the supplier's performance. No matter how reliable and interested he may seem, be sure to draw up a detailed contract, where you write down all the details. If any misunderstanding arises, you will have the opportunity to win the dispute by providing this document.
18. Making too high demands on suppliers look for the perfect manufacturer.
If you overestimate your supplier requirements and look for the perfect one, you risk to be left with nothing. Don't try to find someone who fits your criteria perfectly. Look for those who are most suitable, and determine for yourself the criteria that you can sacrifice or at least lower the bar to find the right option. So do not limit yourself to the too narrow framework and get a better chance of successfully finding a manufacturer.
And one more thing: even if it seems to you that you have found the ideal supplier, be prepared for possible force majeure. Bad things could occur. When something like that happens, adjust your expectations and take the necessary actions to prevent more troubles.
19. Make a full prepayment for the goods.
The drawback of paying full too early is clear. Your manufacturer has nothing to be frightened of because they have money already. He can drag out the deadlines in every possible way, look for a reason not to allow verification of the goods. He is simply no longer interested in completing the order on time because he has already money. Therefore, 100% prepayment is a very risky path, even if you know the supplier very well and have been cooperating with him for a long time.
20. Relying on a supplier’s experience in shipment and delivery of goods, without discussing incoterms options before.
Many buyers would think that suppliers are professionals and experts in the shipment and delivery of goods. Hence, there is a feeling to count on them in these cases. In fact, most Chinese suppliers are used to use only a few shipping options. At the same time, many of them don’t know anything or almost nothing about other species that may be beneficial for you. You should do your own research in order to understand incoterms and find the one that suits you. Don't expect the supplier to agree with this right away, but it's definitely worth of trying.
These are some of the mistakes you must avoid sourcing from China, especially when reselling Amazon products. It’s crucial to understand how to work efficiently and successfully with suppliers. Make sure you've learnt from these so you can prevent any problems in the future.