Last week, one of our customers asked us to contact a supplier they found on a well known Chinese ecommerce site. They had found a product they liked and wanted us to get a quote from this Chinese supplier through our people in China to make sure they didn’t get ripped off. Our people in China called the supplier, and discovered that they didn’t even sell the product on their website.
In March 2011, Businessweek printed an article stating that 2,300 vendors from a large, well known Chinese ecommerce website were found to have scammed unsuspecting customers (Alibaba.com—Fraud Sparks a Shakeup, February 24, 2011). U.S. companies, looking for a manufacturing company in China to source or manufacture their products, would locate a Chinese vendor through this ecommerce website, wire money to China, and then find that their Chinese contact had disappeared. This doesn’t mean that every supplier on this ecommerce site is bad, but that first time importers from China need to be careful.
China’s business culture is vastly different than that of the U.S. It’s critical that new buyers know who they’re dealing with before sending any money to China.
There are several ways to conduct business with a manufacturing company in China:
1. Visit their facilities and meet with them in person.
This will take time, money, doing your homework, and a long term commitment. In China, the relationship is critical (they call it guanxi.) New importers should be prepared to visit their suppliers at least once a year, and be prepared for late night phone calls as needed. The average trip to China lasts one week, and costs a minimum of $3,000.00, not including the value of your time. You’ll also want to work to gain a working knowledge of the business culture and how to build relationships. Just hopping on a plane and hoping you can figure out how the business culture works will be like going to Chinese language school and assuming you’ll learn the language in the first two days.
2. Work with a sourcing agent.
Sourcing agents are professional international trading companies who have their own contacts in China. The best ones will have years of experience and have solid relationships. A sourcing agent can find new manufacturing companies faster than someone in the U.S., prequalify new factories, negotiate prices, and inspect the shipments. The best sourcing agents to work with are those who have people on the ground in China. Of course, Global Trade Specialists is a sourcing agent will all of these qualifications.
3. Send emails to an unknown entity and pray you don’t get ripped off.
As was mentioned above, unless you’re into gambling, this is not advised.
In the end, the only way to eliminate the risk of importing from China is to work through a sourcing agent, or fly to China on your own and hope you figure it out.