Getting China Manufacturers to Pay Certification Costs

If you want to reduce your legal risks, you might need to pay many thousands of dollars in laboratory tests and product certifications for each type of product you buy from China… For each order and re-order.

If you purchase many products in relatively small quantities, this is probably unaffordable. That’s a real challenge for most small importers.

What do they do? they ask for certificates from their suppliers, they send an inspector to run tests using the factory’s equipment (unfortunately a minority of factories are properly equipped), they might do just 1 or 2 tests in a laboratory to avoid the major risks, and they hope for the best…

Now, what do large importing companies do? And the publically-listed, high-profile brands/retailers? Certainly, they pay for all the laboratory tests, right?

Wrong (in most instances).

The big boys’ strategy is generally to push testing costs up the supply chain. In other words, to have the manufacturers and their sub-suppliers to pay for testing and certification, but in a way that can be traced and verified.

Having suppliers paying for testing components and products will certainly be reflected in the FOB price, one might object. Well, not entirely, for two reasons.

First, it is a better use of money, since the same component batch can be tested once and then be sold to different customers who accept that test report.

Second, Chinese suppliers will look for a “good deal” from testing laboratories. They will push for using Chinese labs rather than Bureau Veritas, Intertek, or other multinationals.

Are all the tests done properly? Not really. But the buyers are aware of this and accept more or less risk based on the product category… They will be more lenient for a plastic garden chair than they would for a barbecue grill or a toy.

By the way, many buyers also try to devise a reasonable and optimized testing plan. I touched on this before.