“If I discover that some goods I purchased from China are defective, and I am in the USA or in the UK (as examples), what can I do?”
Many people tend to think “let me tell the supplier, and I can return it to them for rework or replacements”. However, that’s seldom realistic or practical. Let’s examine why.
It works well with near-sourcing, but far-sourcing makes it hard
If you are in Spain and you got a few pallets of faulty products made in Portugal, you can put them back on a truck and send them back. And, in many cases, you’ll get those pallets back quickly.
However, when you get those pallets, or whole containers, from China, think of what it would take to send them back for repair:
- Ship them out again, pay for transportation
- Re-import them into China, and pay import duties if applicable
- Get them to the factory (which may be far away from the port/airport)
- Unpack the goods, sort them, fix or reproduce the bad ones
- Get it inspected (since you really don’t want to do all this for nothing, and you want to receive products that are REALLY good this time)
- Ship it out, pay for transportation
- Re-import it in your country, and pay import duties if applicable
The whole import/export system makes it difficult
Importing the goods into China may be impossible, too, if the goods are classified as defectives.
UPDATE 15 Apr. 2022: it seems this is about to change:
The business environment for foreign trade will be improved. Customs clearance for returning export goods will be made more efficient. Policies will be devised to support the development of overseas warehouses and facilitate cross-border e-commerce returns and exchanges.
Source: People’s Daily
And, as I mentioned above, if you can get it back into China, you may have to pay import duties for that. (Except if the goods are brought to the Shenzhen Free Trade Zone and are reworked there — in some cases that makes sense. More on that below.)
Are you seen as a large customer, and do you have a lot of leverage?
Before I go into the reasons why Chinese factories don’t accept returns, I need to mention something. If you have a lot of leverage over them, nothing is really impossible.
As I wrote in 9 Things Only a Large Company Can Obtain in China/Vietnam, large customers play another game. They can force a manufacturer to rework a batch that contains too many defective products.
Now, let’s look at the realities for small buyers, especially as they work with factories owned by a Chinese boss(es).
Chinese suppliers very seldom reimburse their customers or accept returns
That’s just a fact. I don’t think I can remember any instance where a factory sent a sizeable amount of money to a buyer in the absence of a good and enforceable contract.
I believe there is a psychological effect at work here. Let me simplify things a bit.
In China, people don’t trust other people who aren’t from the same family or village. So why would they trust a foreign company on something that is very hard to check like defective pieces (e.g. ‘are there really 50% of bad products, or are they just showing me photos of the few bad pieces they found?’)?
And nobody wants to offer something that they know (virtually) nobody else is offering. (Especially as the financial consequences might be serious.) They don’t want to be seen as ‘the stupid one’ who is ‘too honest’. They want to think of themselves as the smart one who plays with the rules, not by the rules.
Is this changing? Yes, slowly, with the new generations of factory owners. But it’s rolling out very slowly.
Aren’t there any specialized repair services?
In the USA and Europe, yes, there are a few (many of them specialized in garments & footwear, it seems).
In China, not really, for the reasons I evoked above.
We looked high and low for a repair service a few years ago, but it was quite difficult to find. And that’s logically something we offer since we opened a facility in the Shenzhen Free Trade Zone. The products are technically not imported into China, so it makes the whole process easier and cheaper.
If all that needs to be done is a disassembly, some operations to fix an element of the product, and a re-assembly, it can be done there. If some extra components need to be sent there and used as replacements during repairs, it is also feasible.
The manufacturer at fault can send some of their people for doing the rework. As the buyer, you can certainly negotiate for them to provide that labor force for free. And you might well be able to get them to pay for the transportation back to China.
*****
What do you think? Have you got any experiences to share on this topic? Please, let me know by commenting!
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