Since the official declarations about the fraud committed by some of Alibaba’s salespeople, everybody in the sourcing industry stresses the need for proper qualification and quality assurance. And they are right.
In my mind, the fraud uncovered by Alibaba’s board or directors is indicative of a lack of internal control — nothing unusual for a Chinese company. But it is negligible, compared to the intellectual fraud committed by Alibaba in its marketing promises.
Inexperienced buyers get on Alibaba, find a “gold” supplier, and feel they can trust him. That’s the heart of the problem.
Why is it called a “gold” status? Because this marketing is actually directed at a Chinese audience. Alibaba gets its revenue from the suppliers it lists.
Hense a conflict of interest. The tradeoff is: how to increase the number of paying suppliers, while guaranteeing a certain quality level?
Alibaba decided to welcome any supplier, as long as they were not outright scammers. Remember, they were the first mover in this supplier directory space, and they wanted to be the clear leader. It was probably a good financial decision, but it was not in the interest of importers.
Another online directory, Global Sources, decided to be more expensive. It tends to attracts larger suppliers, with a higher proportion of manufacturers. I am not sure whether it is the right place for small buyers to hang out, but at least it is safer than Alibaba.
Let’s get into the details of this fraud:
1. Approval of suppliers to display:
Here is their marketing promise:
To qualify for a Gold Supplier membership, a supplier must complete an authentication and verification process by a reputable third-party security service provider appointed by Alibaba.com.
It means two things:
- The suppliers without that “gold” status have not even been checked at all.
- I guess any company can get be a “gold supplier” as long as it pays. There is no checklist to pass. A third party collects information, which is posted on the supplier profile.
A terrible factory that increases prices at the last minute and delivers substandard quality can be listed on Alibaba. A couple of people setting up a trading company and renting an office can be listed on Alibaba.
2. Supplier presentation:
I just had a look at the Alibaba profiles of a few suppliers. They are all listed as “[ Manufacturer ]” in the search results, even when their registered capital is 100,000 RMB (example here). I don’t know how they can set up a factory with such a low investment.
And a Hong Kong company can also be listed as “manufacturer” without producing any evidence of ownership in any factory (example here). At least, none of this evidence is visible in the profile pages.
A small proportion of the gold suppliers have been audited by Intertek. That’s probably a way to ensure that they own a factory. But the audit only scratches the surface of the factory’s system. For example, there is no verification of the capacity of a production line. And there is no real assessment of the quality system!
3. Approval of products to show:
Once a supplier joins Alibaba, he has the right to publish a certain number of product pages. Of course, he wants to come up in the results for a maximum number of queries, so he is tempted to display products that he cannot even make.
Couldn’t a third-party visit a factory and write “they can only make such and such type of product, with such and such processes”? Well, that would require a specialized engineer. And it would eat in Alibaba’s margin…
For further reading: an article from Global Sources about what buyers should check before placing orders in China.
blah blah blacksheep says
Good article. I would think China would crack down on this. China got into the inernational market, and is proving to be a powerhouse. Unfortunately, if too many importers get burned with bad deals from Alibaba, it’s going to be a short-term gain. Folks are already irate over poor Chinese craftmanship. But, with companies like Apple using Chinese manufacturing, China has proven they can make quality products. The issue is that the range of quality is so huge that you never know if you’re getting complete junk or something on-par with what Japan would produce. By allowing sites like Alibaba to mix qualities, China is essentially telling folks to roll the dice when they deal with an export company. That’s a quick way to burn your exporting bridges.
Want to see Chine crack down on their scamming business, before I believe it.
The whole system feeds on scam, corruption and dishonesty.
Renaud Anjoran says
China’s government has other pressing issues to solve. This is not their priority!
Well Renaud, if I was a Chinese trade minister, I would clean up this mess in a hurry.
Those trading sites is Chinas biggest with millions of costumers in the west and I think that both you and me know how important a good reputation is for a country, and how difficult a bad reputation is to get rid of.
For my part; dealing with Chinese company’s is over, it’s to risky even the possibility for earning can be good.
Renaud Anjoran says
blah blah blacksheep,
Thanks for the feedback. China is probably happy to have a company of the caliber of Alibaba, and won’t hurt it. If they wanted to crack down on low-quality production, they would also close the Canton Fair, as well as hundreds of thousands of factories.
If some foreign buyers are ignorant/stupid enough to use this service, too bad for them (that’s a valid line of reasoning, isn’t it?).
Ali express and supplier join hand to cheat the buyers
Hi ALL OF YOU !
I find none like big cheaters like Aliexpress joining hand with suppliers. My case history is this.
My order No: 1006190283
Placed on 8th January 2012
Product : Wifi booster 2W
Supplier : 1buycart Co.,Ltd ( No.504670 Store).
Contact Name : tu aiming / Lu Lu (firstname.lastname@example.org)
1. After Placing the order by making full payment, the supplier did not bother to respond me for a week time.
2. I suspected the fidelity of the supplier and demanded for fully repayment from Ali express on 16th of January 2012
3. Finally she gave me a tracking No. 3435994741.
4. Even after 6 days the tracking No. was not traceable.
5. Finally on 19th of January (10 days later) the consignment was picked and sent.
6. The consignment arrived on 20th January 2012 at Bangalore / India
7. The consignment could not cleared from the customs for following reasons.
a. The items description mentioned as “Controller” instead of “Wifi booster”
b. The quantity of the items mentioned was “ONE” instead of “Four”
8. The custom department charged USD 132/- for declaring wrong description and wrong quantity.
9. Finally the consignment reached on 28th January 2012 at Coimbatore / India DHL office.
10.To my surprise, when I opened the consignment at DHL office, the items were not the one we ordered. Instead of 2W, the
supplier supplied 1W – 3 Nos and 2W-1No.
11.I refused to take delivery of the product because of wrong supply.
12.I complained to Ali express.
13.To my surprise, Ali express, demands me to clear the consignment by paying the duty and pay another USD 132/- to the
supplier to proceed with the case.
14.How stupid is this. For a wrong supply I have to pay the duty and then pay another USD 132 /- to supplier again to proceed
15.No action has been taken by Ali express for Late supply, wrong supply and false Invoice. Instead Aliexpress is penalising the
buyer. How cheating is this. I am already on the job of publishing this in International Journals and media.
I request all the readers to be very alert before proceeding with Alibaba. They are cheats. So far I have lost USD 344.80. I have not got the refund yet. They are playing fishy.
GOOD LUCK ALL OF YOU FOR DEALING WITH ALIBABA
NOW I AM BEING BANNED IN WRITING ANY FORUMS IN ALIBABA
Renaud Anjoran says
Thanks for relating your experience. Seems like Aliexpress is not really suitable for products that are subject to custom duties…
Just came upon this from your recent post on Chinese Supplier Directories. Back in July we also had an article that talked about this where we essentially agree that the problem really isn’t one about Quality Control procedures. We argue, which seems to be along the lines of your evaluation here, that there is a fundamental conflict of interest at the foundation of Alibaba’s business model, which is basically you pay for the Gold status.
At the same time there was also a scandal with Jack Ma and his board at Alibaba Group regarding the handling of Alipay causing some tension with major stakeholders Yahoo and SoftPay.
To read more on our take you can see the full article here: http://www.chinaperformancegroup.com/2011/07/sourcing-in-china-and-alibaba/
Renaud Anjoran says
The article you linked to is very good. The author is right — Alibaba’s revenues are not aligned with the interests of their customers.
Alibaba is a fake business portal, as a supplier I also lost thousands of dollars……alibaba creates fake buyers too…and ruined out suppliers money….
beware from alibaba…its not safe point for suppliers and buyers…
I had a very bad experience with alibaba. I strongly believed all companies in Alibaba are good suppliers, yet now I lost 24000$ with one supplier that Alibaba introduced to me. I feel so bad. That supplier sent me the bad quality product, and they didnt have any responsibility. They just pushed all the problems to me the buyer. Everyone please be careful to contact any suppliers in Alibaba.
Renaud Anjoran says
Hundreds (thousands?) of importers have had the same experience…
Alibaba and other B2B directories should be considered like the yellow pages with fancy design. Nothing more! Remember, you don’t pay for their service.
i have been spending days trying to order. I in fact nearly transferred a huge sum to one supplier on ALibaba. Next i thought aliexpress was safe. But im shocked to know that their buyer protection is but a scandal! pls email me with any advice and also alternatives where I can order from (small quanitities of dance props) Thanks so mcuh email@example.com
Renaud Anjoran says
Unfortunately, if you purchase small quantities (too small to buy made-to-order and factory-direct) in China, there is no safe solution. Maybe Aliexpress is your best option after all. Make sure you start small with any given supplier…
Alibaba-AliExpress is a front for Chinese scammers…
Do not trade with Chinese company’s, no honesty, no moral and the Chinese state support it.
Stay away from China!
I’m about to pay $8k worth of goods to China Manufacturer with just merely from a GOOD FAITH. Alibaba Escrow is expensive asking $400 as the escrow service that should be paid by the manufacturer. The manufacturer won’t agree on ESCROW in the 1st place and if I insist on it, I have to pay the $400 escrow service, with no assurance at all. Escrow is just receiving the paper works without the goods at all. Manufacturer will have me pay 50% as down payment and 50% after the production is done with the B/L. Tried to order a hundred sets instead of a thousand to minimize loses (is a scam is around) but no deal. Now after I read the comments here, and that article shared my Buck…I became more scared. Thanks everyone for sharing. How I wish China is just so near to deal with it personally.
Pleniceanu Cristian says
Excuse me for interrupting the war with alliexpress but didn’t you all that have been cheated buyed those product half a price in order to sell to your customers with full or almost full price? Maybe your intentions are serious but don’t forget that you are buying from China in order to kill your local competition. Of course shits happen, this is China. On the other hand I’m on 17th order and all is fine by know. Of course, I had some problems with some seller because I stupid enough to buy things from seller that dindn’t had the best reviews, which is not an option, if they don’t have at least 1000 – 2000 if not 10000, and more than 90-95 % positives you don’t buy! And if have not made at least a few small orders wich turned out to be positives, you don’t make an order of thousands of dollars. Not even in SUA you don’t do that, firstly you check the supplier! Anyway, even if I had problems, all the money was returned to me or I received very good discounts. And after you make a few orders you should be able to know where the bad supplyers are, you read revies, you check what are they selling, how many orders are made, how many are received, what the customers say about them, and evens if they are hundreds of good reviews you can make an ideea from 10-20 bad reviews which most probably are true. If they are very bad, then you can avoid the seller. And even with all that, you may still have bad luck specially in China. This is the price for a small price. It won’t be small either way
as you have shopped 17 times with aliexpress and alibaba.com………well this is my first time……i have ordered some rhinestone chain, applique to design my outfit worth $170……and i haven’t made any payment yet……i ve chosen a supplier and he seems to be positive…….if you have ordered this kind of product by chance………can you please help me or guide me which supplier to trust…..Jesus Christ help me……….i m in desperate need of such product…
read all the comments………..its so scary and upsetting…..don’t want my hard earnings to go in wrong hands
I lost 500 hundred dollars at alibaba
BEWARE , do not buy anything form that site they are all scammers
they asked me to transfer money via western union, after that they needed another transfer for the customs, then they requested 3rd payment for
dhl , so i called the police and informed them them of all details. After two
weeks they found the seller and got arrested. but this was done because i had
a close relative helping me from china.
i am using ali express instead it is great , safe and reliable
i buy from alibaba some all Gold Supplier buy with paypal most scamers only tt and wu hope the will help you alibaba express instead it is great , safe and reliable and more money