China is and will continue to be one of the world’s leading exporters in manufactured products, and for good reason. Their expansive infrastructure and manufacturing base has allowed them to invest in projects all over the world, including Africa and Europe. They are an obvious choice for people looking to source their products. But of course, as is the nature of business, there are some risks involved with importing from China.
Here you will find what possible dangers there are (and how to avoid them):
If you google “China Wholesale Marketplaces” you will find a long list of websites with factories advertising products. Some of these websites contain factories with fraudulent pages.
We have heard stories from people who have ordered from these companies only to never receive their shipment. What also has happened is the website may have a picture of a brand name product displayed on a page for sale, but when a customer orders from them they receive a low quality knockoff of the item they ordered.
There are two ways to be 100% sure you are talking to a legitimate company. The first is to get in touch with the factory you are ordering from, then take a trip to China and visit them. The easier way is to get in contact with a sourcing agent with an established network to source your product for you. They will have people on the ground in China who can visit factories on your behalf.
Orders Getting Damaged During Shipping
If you have a fragile product, there is always the chance it can be damaged when it is transported. A heavy crate could fall on top of yours, a forklift driver may accidentally hit it, or a natural disaster could damage it.
The best way to negate this is to insure the shipment. You should understand the incoterms of the transportation. The more commonly used ones are FOB and CIF. FOB (Free on Board) means you are responsible for getting the shipment from the factory to your door. For our customers, we like to use CIF because it covers the cost, insurance and freight to the port of destination.
Your Intellectual Property Could be Stolen
We have had some instances where a client has come to us and told us that they went to a factory in China, ordered from them, and a few months later a near duplicate item appeared on the market. The ill reputable factory had taken their designs and concept and sold it.
The best way to avoid this is to use a sourcing agent who has long established relationships with their factories. We have our factories sign exclusive manufacturing agreements where they are bound to protect your product, and we have been working with them since 1991.
It is also recommended that you get a patent on your product if possible to avoid your competitors from taking your product and reverse engineering it.
Not understanding Chinese Business Culture
Chinese business culture is built on what they call “mianzi” and “guanxi”. Mianzi is the concept of “having face”. In our western culture, we use the expression “save face” which basically means to save our reputation. This is highly valued in the Chinese culture.
If you get angry at your supplier and send a heated email to them, you might offend them which can cause delays or they may choose not to work with you anymore.
Guanxi translates to relationship. Most western companies will pick a supplier that provides the best ROI. Whoever can provide the product quickly and with quality will often win the contract. Chinese companies tend to prioritize whoever the company they have the longstanding relationship with. It can take years to learn the culture and build the relationships with the factories, unless you go through a sourcing agent that already has those connections established.
Importing from China doesn’t have to be a risky venture. Contact us to see if we can help you on your next product.