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How to avoid risks when importing from China

Posted: May 15, 2017

By Kevin Lee


You can source everything in China nowadays: With a population nearing 2 billion individuals and one of the fastest booming economies, China offers a convenient one stop shop for all of your manufacturing purposes. It is for this very reason that, from among all the available options, finding a suitable supplier who can meet your qualifications is the true challenge importers face. However, a lot of the potential hassle can be avoided should you heed the following advice when importing from China.

Before business:

Most of the work involved in acquiring the services of a good supplier happens before a single business transaction has been made.

  1. Screen your potential suppliers:

When choosing a supplier, you should have a checklist of all the relevant criteria you are looking for. The criteria should include supplier’s references, the scope of their business, the system for quality management. Don’t be blinded by a lower price and ignore everything else: you usually get what you pay for.

Afterwards, compare each supplier to your checklist and see how they measure up; you could give them a score. When you’re done, pick the top three or four companies and reach out to them.

Once you've settled on a few of them, you should have them send you a few sample batches for testing. Buy these samples if you have to: You need to see whether their products comply with the quality standards and safety regulations.

  1. Sign a sales contract with your supplier:

The importance of a sales contract cannot be overstated:

  • A sales contract lets them know that you are fully willing to for any extra work, such as customising your product or following a stricter product standard than usual.
  • A sales contract specifies the quality and standards the products are supposed to follow. This helps clear any sense of ambiguity, acts as a point of reference for the future and resolves any possible disputes that could arise in the future. Moreover, the contract will also expand on what will happen should the products fall below your required standards, including whether punitive actions will be taken.
  • A sales contract defines the payment schedule between you and your supplier. This is important because you should never pay all the money upfront; only pay everything you owe once you’ve tested the products. A standard payment schedule is to pay a 30% deposit at the beginning, and followed by the remaining 70% upon receiving the products and verifying their quality.
  • A sales contract is the foundation upon which all third party contracts are built. It includes insurance contracts, which play an instrumental role in mitigating the risk you’d normally carry.

During Business:

Having signed the contract, your work is not over yet. You should monitor the manufacturing process so as to arrest any problems as early as possible.

  1. Have a quality inspector on the factory floor:

A quality inspector’s job is to test random batches from the manufacturing line. Granted there will always be quality issues, yet the presence of a quality inspector ensures these issues will not exceed a certain limit.

In case you are concerned that the quality inspector could miss something, you should visit your supplier’s factory during the production. And it’s very necessary to ask them for a test batch. There are numerous companies that specialise in testing products. As a matter of fact, customs may occasionally refuse to enter without the prerequisite documentation, which certifies that your product has been tested.

After business:

Concluding a successful business transaction is only a small cog in a much bigger machine. You must consider how to nurture a healthy business relationship for all future interactions.

  1. Always have your supplier’s attention:

You ought to realise that supplier has other clients besides you. Ergo, during crunch and busy times, they will be swamped with orders from several companies, including you. This could translate into less care given towards your order or a dip in quality. Therefore, your best bet is to work for your supplier’s attention; you should make sure that he prioritises your work over others.

This could be achieved by the following:

  • When sending in an RFQ, try using a fixed template. The consistency will make things flow smoother, and the probability of missing an important detail will be that much smaller.
  • Be punctual when it comes to payments. Follow the payment schedule to the letter.
  • Invest in your supplier. This investment can take several forms, be it monetary or educational; teaching their workers shows them that you are in this for the long haul. Furthermore, any cost savings your supplier experiences will trickle down to you eventually.

Although sourcing from China puts you at a risk of ending up with the wrong supplier, this risk is far outweighed by the benefits and cost savings achieved when you work with the right one. With this in mind, and with a little hard work, you should be able to forge a prosperous relationship that will last well into the future.


Kevin Lee is the Co-founder of Asianconn which is a China-based souricng agency. He writes about global sourcing trends and advise for purchasers and importers on asianconn.com. Kevin has been living full time in Shanghai, China, since 2003. For further questions, you can contact him at kevin.lee@asianconn.com.

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