The 10 biggest misconceptions of importers about China

I get some weird questions or comments from readers who are not professional importers. It keeps reminding me of what most people in the West think (imagine?) about China.

I listed a few of the myths, fantasies, and misconceptions about importing products from China.

The first ones are held by people who have never sourced anything from the Middle Kingdom, while the last ones are still engrained in many seasoned importers’ heads.

10. The government will send an inspector and will block the goods if they are below a certain quality standard.

Oooh no, they won’t. They close some factories (a very small minority) from time to time, but they will not check if the products you buy from a supplier are acceptable in your country.

If you want someone to help you with quality control, take the initiative and contact some QC agencies.

9. All the companies listed on alibaba.com, or exhibiting on trade shows, are manufacturers.

Wrong! I bet that most of the suppliers listed on alibaba.com don’t own manufacturing facilities. They are intermediaries, and many of them will claim to be manufacturers.

Research who your potential suppliers are. There is no substitute for factory audits and background checks.

8. The supplier we contacted told us they are ISO9001 certified by SGS, and they work for Disney. So we are safe if we buy from them.

ISO 9001 certifications don’t mean much in China — ignore them. If this is important to you, audit the quality system of the factory yourself.

And customer references are cheap — they should be considered false until you have verified them yourself.

7. In China, everything works with personal connections. I need to ask around, until someone introduces me to a good manufacturer they know.

Bad advice. Start by defining what the ideal profile of the supplier you need looks like: what size, what engineering capabilities, what peak production seasonality, what main export market…

Then it is only a matter of contacting many potential suppliers (on trade shows or online directories like globalsources.com), of screening them, and of visiting the few that look the most promising.

6. All we need is a good factory to act as our partner. They will see that their interest is to give us high quality at low prices.

It just doesn’t work. All importers ask their suppliers to make short-term concessions for mutual gain in the long term… And most of them disappoint their suppliers within the first two years of the relationship.

So factories just say “yes sure, let’s work on this like two partners”, but they don’t believe a word of it. More on this topic here.

5. All we need is a good agent who will find good suppliers and then follow up on our orders.

Some sourcing agents do a great job. But over 90% of them should be avoided. They will actually increase your prices by getting commissions from factories, in addition to what you pay them. I wrote about this before.

4. Most companies that export from China are middlemen. Once we find one company that offers much lower prices, it means we have found the manufacturer.

Chances are, the price that is the lowest at the beginning won’t be low any more by the time you have wired a deposit (“raw materials are up, so we need to raise the price by 20%”).

Or, even worse, you won’t hear from them again and they won’t ship anything to you.

3. We need to buy directly from factories, to save money.

If you place relatively small orders, you might be better served by a trading company. Small manufacturers generally are very disorganized and don’t have English-speaking staff.

And, in China, the reality is seldom black or white. Factories routinely sub-contract some of their orders. Some trading companies own shares of factories. Most factories only do one final operation, but most of the potential problems originate from the components they have purchased from a sub-supplier. I could go on and on.

2. We can buy anything directly in China. It’s like a supermarket.

Wrong! You can buy about anything, as long as (1) the order quantity is high enough, (2) some manufacturers have the capability to produce what you want to buy, and (3) these manufacturers are willing to sell it to you.

Do your research, but don’t assume anything. And following up on a first order from China can take you 15 hours a week for the whole length of the project, if you purchase goods that were customized for your order.

1. Chinese factories already work for European and American customers. They know the market expectations. They will know the safety standards, the packaging requirements, etc. better than us.

Shockingly few of them know the safety standards inside out.

And, if you leave some specifications up to them, they will follow their cheapest solution… which is probably not in your interest.

What do you think?

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Comments

  1. Dave Fisher says

    I recently met a woman at a trade show and explained to her the importance of QC. She then said, quite seriously, “You mean there can be quality problems?” I was floored!

    I’m looking forward to reading “The 10 biggest misconceptions” volumes 2-100000 in the coming years! =)

  2. says

    I love it. This is a great referral post for any importer. I loved point #2, the “supermarket” idea. “Well everything is made there, I should be able to source it”.

    But they don’t understand many things they see on the markets in their home countries are proprietary of the foreign/Western brand and you can’t just find it from any common Chinese factory.

    Hope you had a good summer, Renaud and Autumn is jumping for you.

    • says

      Thanks Jacob! That’s true, many companies try sourcing products that are “obviously” made in China, but they never find it.
      I always tell them “well, why don’t you approach Foxconn and ask a price for 1,000 iPads?”

  3. phil fraraccio says

    excellent comments.but i think the best bet is what i did
    if you’re looking for big quantities. i just got back from china 26/11/2012.
    i met my sourcing company,at their office.
    we visited many manufacturers that i found on the internet.
    out of 15 manufacturers only 2 of them i think will be capable of helping me even though they ALL said they were capable.but only 2 had the set up to help me.these 2 manufacturers actually gave me a tour of operations and factory.the others basically had an office and told me the manufacture was in another city (SOUNDS A LITTLE FISHY).
    i need at least 4 to 5 containers to start,so i think i will start with 1,and after i receive it i will order 2nd,after i receive i will order 3rd… and so on,this way if there is a problem i will loose out on 1 and not all 5 containers.
    you really have to do your homework,and if possible you need to go down and have a face to face.
    hope this can help

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