For folks new to importing, buying from China can seem overwhelming. There are many quality suppliers in the market, but how do you ensure that your prospective supplier is trustworthy and experienced? Here are the measures you can take at every step of the import process, from identifying the right supplier to when you receive your goods.

Identifying suppliers

There are many resources to help you find suppliers. Twenty years ago, you’d mainly rely on trade magazines or other published information about manufacturers and suppliers.

Today the process usually starts online. Supplier directories like Global Sources provide information about thousands of verified China suppliers and their thousands of products. When using online directories, check what steps the directory owner has taken to ensure suppliers are real. For instance, Global Sources verified suppliers have been visited at least three times, so you can be comfortable they are real companies, with real people and real offices.

Those who still prefer to flip pages and look at detailed supplier profiles can try China Sourcing Reports (www.chinasourcingreports.com),100% research-based reports on China suppliers, in very specific product lines. For insights that give an overall view, there is Global Sources Trade Magazines.

Global Sources Trade Magazines offer free sample copies. Prospective readers can get a sample copy, then a full subscription if they like what they see. For greater convenience, readers can now opt to receive their free samples in e-magazine format available instantly!

Trade shows provide another opportunity to meet suppliers face to face while looking at and touching their products; the U.S. and European trade shows have a small number of China manufacturers while shows in Hong Kong and China have a greater depth of China Suppliers.

The China Sourcing Fairs(www.chinasourcingfairs.com), held in Hong Kong every April and October, include an Electronics show with over 2,200 booths of suppliers, Gifts and Home show with 3,800 booths of suppliers, as well as Fashion Accessories and an Underwear & Swimwear show. The Trade Show Center (www.tradeshow.globalsources.com) here will update you on recent and future trade shows.

Selecting suppliers

If you’re only going to buy 10 pieces, you’re unlikely to get either domestic or overseas manufacturers’ attention. You’ll have to go through trading companies or distributors. If you have an established business that sells good volumes through your existing sales channels, and have the potential to become a good long-term business partner for the manufacturer, you’ll be able to get their attention.

When contacting the supplier, start by explaining your business and then request samples of the products you’re interested in. You’ll likely have to pay for shipping and the product, typically via wire transfer. In reviewing the samples, don’t forget to review the packaging and instructions in addition to the product itself. And remember, as the importer you are responsible for ensuring the product you are importing meets all relevant regulations. Learn what these are, in part by asking suppliers that manufacture these products whether they’ve previously exported to your region and what certifications are required for that market. You can also go to your local big box retailer and see what certifications are on similar products.

Finally, communicate frequently with the supplier about all details of the transaction – not just the product, but also lead times and manufacturing completion dates. If you’re new to importing, think of your first order as a small initial order that helps you learn how to import from China, rather than an order that will make a profit.

Paying suppliers

You’ll need to determine the terms of trade. Typical would be “FOB Hong Kong” which means the supplier pays to get the goods to the port of Hong Kong, and you pay to get them from Hong Kong to your warehouse. More detail on FOB and other incoterms is available on this incoterms chart (www.iccwbo.org/incoterms/wallchart/wallchart.pdf).

While everything is negotiable, common payment terms are 30% at time of order and 70% when goods are shipped. The 30% payment at time of placing the order gives the manufacturer the money he needs to purchase the raw materials necessary for your order. Some buyers have negotiated other terms, like 30% at time of placing the order, 55% at time the goods ship, and 15% when the goods are received. The payment before shipping mitigates risk that the buyer won’t pay, but then puts financial risk on you as the buyer. Understand and mitigate this risk through communications with the supplier (does he seem professional) and by starting with a small order. Typical payment method is via wire transfer. Shop around – international wire transfer fees vary quite a bit from bank to bank.

When you write your purchase order or contract, make sure you have clear options including outs and specific penalties if problems (such as delays) arise.

Quality control

Having selected a supplier, placed an order, and made an initial payment, you now have to decide what you’re going to do to manage quality control. Quality control generally begins before manufacturing starts, so after having seen the sample ask the supplier what steps he takes to ensure quality control. This can include both the raw materials he’s using in the product, and also any continuous improvement to the manufacturing process. Once your order is ready, you have three choices for managing the quality of products.

(a) rely on the supplier’s quality control,
(b) have someone in your company do it,
(c) hire a third party to do it.

If you’re placing a small order (a few thousand dollars), you may choose to rely on the supplier’s quality control; for large orders this probably isn’t your best choice. If you have in-country resources, you may use those resources to inspect products on your behalf, including not just the end products, but also intermediate products during the production process and even raw materials. If you’re placing a larger order and need the products inspected, you may use a third party inspection company (www.bureauveritas.com has a history of providing these services to large retailers, while up-and-coming companies like www.asiainspection.com are also providing these services; cost typically starts at several hundred US dollars) or find a third party project management company.

Regardless of who does the inspection, companies that are successfully working with China suppliers on large dollar volume orders seem to share one characteristic in common. They invest in quality assurance and quality control. This means talking to the factory in order to assess whether they have quality assurance practices in place that result in continuous improvement, and also developing extremely specific product inspection criteria. Inspection criteria may include not just the end product, but also raw materials and components.

Final words

If you’re new to importing, start slowly with the intent to learn the process. Think of your first order as an investment in learning about importing. With knowledge and experience of the importing process, you can work with China suppliers to put your own brand on the products you order to really super-charge your business. :niceone:

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Last edited by Global Sources; 04-05-2009 at 05:58 AM.

Excellent summary - thanks

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:niceone:

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Some excellent advice, also you can't beat actually going to a show or visiting a supplier. It is very easy to look like a professional operation with a good website when the company is just one person in an office acting as an intermediary with no real control over the supply chain. It is also very useful to have a Chinese agent who can look after things in China for you, this should cost about 5-8% and is money well spent!

Great stuff indeed!!!

Thank you

Very Good Advice!

I went this route and your wrong as i got totaly robbed

Originally Posted by LAPZER

I went this route and your wrong as i got totaly robbed

I'd like to hear this, care to share?

Spaceman

I found a seller with good feedbacks..emailed them and they made a quote white was fair...not too cheap as i would then be wrried how can this be possible..i followed there instructions on how to pay via money transfer..western union..i received confirmation they had received the payment..not big but ouccch it hurt..i was then givern a consignment waybill number with dhl ..guess what i went onto dhl website tracking..duff number not even the right type of numbers..17 mths later never turned up...i emailed them and never had a reply yet they returned my emails b4 payment by return...too late now but i have heard on the radio this is a big scam out there so dont touch them bye british even if its more at least you will get the items

so, Global Sources is the name of one of the big mainly (but not exclusively) China-based import-export platforms. Im not sure if we will see many more posts from them, I hope so- but I think its just them posting to promote their website..

Lapzer, there are some good posts on this forum (and in other places on the net) about how to avoid being scammed.
Here is an excellent post.
Basically, typical mistakes can include
- not checking that the company really exists- as a minimum eg search online, verify the company exists, sells your product, call them up and ask to speak to the contact that you have been dealing with
- believing that they really can provide your product: Chinese factories tend to say 'oh yes, we can make that' but you need to really check they have made this before
- sending money by W/U- for most payments, T/T is more likely for a decent company. Paypal or W/U sometimes happens, but not usually for more than say 100 GBP
Good luck next time.
If you dont speak Chinese, consider paying an agent to verify the manufacturers exist and to check QC.
My company can do this, but so can many other companies on this forum, and elsewhere.
Good luck next time!!

Matt Murdoch