T/T stands for Telegraphic Transfer. In other words, an international wire of funds from the buyer's bank to the seller's bank. When a Chinese supplier asks for a T/T payment, what they really mean is they want a wire transfer. (Technically, a T/T is not exactly the same as a wire transfer through the SWIFT system, but the vast majority of people think of them as the same thing.) A wire transfer based on SWIFT is the most common payment method in international trade with Asian countries. … [Read more...]
What Simple Checklist for More Reliable Quality Inspections?
A simple checklist to follow day in, day out, is a highly undervalued tool. Here are a couple of examples where the value of checklists has been recognized: In aviation, checklists have been used for more than 70 years and have undoubtedly avoided many accidents. In healthcare, a study showed that following standard checklists saved 40% of lives. What is another activity where someone might forget something important? A quality inspection in a supplier's facility! People ask you … [Read more...]
Communication with Chinese Suppliers: Banging Your Head Against the Wall?
Over the years, Chinese manufacturers have gotten better at understanding their overseas customers. And, in many industries, their quality has tended to improve. However, communication with sales people is still an area of frustration for many buyers. In many factories, junior English-speaking employees are placed in a sales role. Their basic function is to translate what customers write/say to the rest of their organization, and vice versa. Over time, as they gain in experience, they are … [Read more...]
Upwork vs. a Sourcing Agency for Managing Your China Production
Some importers take a shortcut as they set up their supply chain, and pay for it many times over a few years later. I want to cover one of these shortcuts today. We have had a few clients come to us after being let down by an Upwork freelancer who was sooo great at the start... before things went downhill. (I get it -- it seems convenient, fast, and cheap to go to Upwork and get a freelance sourcing agent. After all, you may be selling goods online through the “Fulfilment By Amazon” … [Read more...]
How Does the VAT Rebate for Exports out of China work?
In most cases, importers don't need to worry about the way their supplier handles the VAT rebate. They are usually better off negotiating a price under the FOB incoterm and avoid worrying about the complex paperwork involved in getting a rebate on the VAT paid on components/materials. However, once they start looking deep in their supply chain, they can identify risks as well as opportunities for saving money. And they might notice that their supplier pockets a margin much higher than they … [Read more...]
What is the “AQL” (Acceptance Quality Limit) in simple terms?
What Does AQL Mean? 'AQL' stands for 'Acceptance Quality Limit', and is defined as the "quality level that is the worst tolerable" in ISO 2859-1. It represents the maximum number of defective units, beyond which a batch is rejected. Importers usually set different AQLs for critical, major, and minor defects. Most Asian exporters are familiar with this type of setting. For example: "AQL is 1.5%" means "I want no more than 1.5% defective items in the whole order quantity, on average over … [Read more...]
Bad China Suppliers Quality: Still Tolerable in 2018?
When people ask me if the quality of China-made products has improved over the past 10 years, they expect me to say "oh yes, certainly". However, the reality is not that simple. I think an interesting approach is to divide the market in 3 wide categories where the reality is quite different. In the end, the conclusion is simple. If buyers can't tolerate bad quality, then they will get better products. Whether in China or somewhere else. If they can tolerate a substandard batch from … [Read more...]
Buying Food Ingredients from China? Can You Trust that Info?
The 'China Aquatic Products Processing and Marketing Alliance' just decided that 6 types of fish can now be classified as "salmon" when sold within China. Amazing but true. According to the BBC, here is the background: New rules introduced in China mean rainbow trout can now be labelled and sold domestically as salmon. Why? Because a media report earlier this year caused a splash by revealing that rainbow trout had for years been labelled as the similar-looking fish. Authorities … [Read more...]
No Process Improvement Action Plan in Chinese Factories? Why?
In good factories, the leaders look at the future and wonder how to make their company stronger. They usually have an action plan that will support process improvement. That's how they will improve their quality, cut lead times, and contain costs. When I go to Chinese factories, managers very seldom tell me "here is our action plan". They seem to respond to every day's urgencies: A supplier is late in delivering some materials, and the customer will ask us to send the goods by air? Let's … [Read more...]
Evaluating a Battery Manufacturer in China for Consistent Quality
Over the past 3 months, we have heard of more problems with batteries than with any other electrical component. Our team over at Sofeast in Shenzhen has been busy evaluating battery manufacturers, recently. And the average level of those manufacturers is much lower than I expected. A bad battery means the entire product doesn’t function (and, worse, it might explode or catch fire). And yet, few buyers have focused their efforts on working with a good supplier. What to evaluate? A battery … [Read more...]
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