If you have never sourced products internationally, reaching out to a foreign supplier for the first time can be intimidating. Naturally, you may be concerned about getting scammed or ripped off, or you may have a general concern about the quality of products you can expect to receive.
We have found that these concerns are particularly elevated when businesses are considering sourcing products from China. Initially, our clients regularly express concerns about product quality. Eventually, they end up pleasantly surprised by the high level of quality products China can produce when the manufacturing process is managed correctly.
In this article, we will dispel some of the myths that surround sourcing products from China. Additionally, we will outline the necessary steps to follow in order to ensure that you do not fall for the scams or pitfalls that actually do exist.
It IS Safe to Buy From China!
Regardless of the reputation associated with some China-made products in the USA, it is safe to purchase from China. While scams or outright fraud are possible, it is unlikely you will encounter them when doing business with manufacturers in China. Instead of scams, we have found the following problems are the most likely for businesses to encounter:
• Working with a trading company pretending to be a manufacturer.
• A manufacturer offering a competitive price by using low-quality, cheap components without disclosing this to customers.
• General problems supervising quality control procedures during the manufacturing process.
Since most businesses do not have a physical presence in China, these three problems can be difficult to fully resolve. Having a supplier send videos and photos of the manufacturing process can help you monitor quality control to an extent, but it still pales in comparison to on-site supervision.
Trade companies are impossible to avoid unless you can physically visit, inspect, and communicate with a manufacturer. These kinds of businesses will appear on Alibaba and claim to be manufacturers. They will have clean, professional looking websites, they may communicate well, and they may even provide photos and videos of the manufacturing site.
In fact, many inexperienced businesses end up working with trade companies without ever knowing it. While the service may be adequate , the problem is the inflated costs and minimum order quantities (MOQs). Trade companies will offer an inflated price for their product offerings and will often require inflated MOQs when compared to what the actual manufacturer requires.
The result is businesses paying a higher product price and buying more product than they need. Since we have an established presence in China, the Kanary Team is able to easily avoid working with trade companies. Instead, we exclusively work with manufacturers to provide the best price, MOQ, and experience for our clients.
Problems with trade companies or product quality are the most prevalent when looking for a manufacturer in China, but there are less-common scams that you need to be aware of and avoid. In particular, being knowledgeable about and avoiding payment scams.
In order to avoid payment scams, you need to pay attention to how the potential supplier requests payment. This is very important. After product details have been discussed, reputable suppliers (either suppliers you find directly or suppliers you find through a portal like Alibaba) will request legitimate and standard payment methods such as the following:
• Credit card payments
• PayPal Invoices
• Payment through Alibaba’s Official Platform
• Wire Transfer (which should always be used with caution)
It should be noted that even these standard methods are not always fool-proof and can be used to scam.
Attempted PayPal Scam
If a supplier asks for payment in a way that seems odd or uncommon (like mailing a money order or sending money through PayPal as “Friends and Family,”), listen to your instinct and realize this could and most likely is a scam. Here's a real-life example that one of our partners faced before partnering with Kanary.
Before partnering with Kanary, one of our partners was assisting a client source smoking pipes through a reputable China-based manufacturer. During the process of the order, he realized that the size of the pipes being ordered were incorrect. Needing a quick fix, our partner looked to a domestic supplier, but none were available. As a last resort, he went to Alibaba to find a supplier who could help quickly resolve the issue.
He was able to find a supplier based out of India that specialized in smoking pipes, and the supplier looked legitimate. The supplier offered CIF (cost, insurance, and freight) pricing for the products. Since time was a limiting factor, our partner was willing to pay a premium for DDP (delivery duty paid) shipping. Even though it would cost more, this would have the supplier handle customs and taxes at the port of destination to speed up the overall process.
The supplier said they could accommodate DDP shipping, they offered a new price, and our partner was able to come to an agreement. Up until this point, there have been no red flags. The supplier has demonstrated expertise in a variety of shipping methods and has been quick and easy to respond to questions.
The process came to an abrupt halt when the supplier asked for an unusual form of payment. They requested payment be sent through PayPal, but instead of a business invoice, they wanted it to be sent as "Friends and Family." The explanation they provided was that they wanted to avoid PayPal's business transaction fee, which was why they were able to offer a competitive price.
This is a huge red flag. First of all, this is an excellent way to get your PayPal account suspended, since it is a violation of PayPal’s terms and conditions. The bigger concern though, was that money sent as "Friends and Family" has no buyer-protection on it at all. That means once the supplier received payment, they would be under no obligation to provide any refund or product whatsoever. Basically, our partner would have had no recourse to recoup payment.
Our partner did not end up falling for the scam (he was able to identify a reputable supplier and resolved the sourcing issue).
Scams Are Unlikely, so Focus on Quality!
As previously stated, blatant payment scams or fraud are uncommon among Chinese manufacturers. China's manufacturing industry is so developed and robust, the likelihood of you ever coming across a payment scam from a China-based supplier is extremely low.
It is far more likely that you will face quality control problems rather than experiencing payment fraud. While it is important to keep possible scams in mind, your focus should be more on implementing quality control procedures to make sure your product follows your exact specifications.
The only way to guarantee quality control is to have a physical presence in China or to partner with a sourcing specialist with offices in China (like Kanary). Of course, you will want to be sure to partner with a high-quality supplier too!
Positive Signs of a Great Supplier
We briefly mentioned quality and payments scams, both of which are characteristics that indicate a poor supplier. Now it's worth highlighting characteristics that demonstrate an excellent supplier. We'll use another real-world example, this time from a current Kanary Partner.
A Great Supplier Asks Questions
A client was interested in sourcing a pouch bag packaging machine. This is a machine commonly used in the production lines to mass-produced food. It weighs and fills bags with food, quickly and efficiently, allowing businesses to quickly scale based on growing demand.
We went through the process of finding a high-quality supplier for this machine. Upon our client’s request, we approached them about sourcing the pouch bag packaging machine. We were immediately asked multiple, detailed questions, which is a great sign. We were asked about what kind of power supply it needed, as well as what stations it needed (for example, a bag open station, a bag close station, a hole-punch station, etc.)
The supplier also asked us if the client wanted a metal detector installed under the multi-head weigher, and if so, what brand did they prefer (different brands perform certain functions better). All of these details needed to be confirmed in order to allow the supplier to make a packing machine that would fit the specific needs of our client.
What did these questions tell us about the supplier? These questions indicated that the supplier had a depth of expertise in the industry and for the specific machine. It showed that they were aware of some common problems that arise when these specific questions are not asked ahead of time. If your potential supplier is asking you detailed, multiple questions that will allow you to better customize the product to your client, this is a very positive sign that the supplier is competent and produces high-quality products.
Be Cautious of Suppliers Who Ask or Answer Too Few Questions
Not all products are going to require the specific questions necessary when ordering a complex piece of machinery like the bag packing machine. Even so, a high-quality supplier should at least ask some detailed questions, especially if you are an inexperienced buyer. They should also be answering any questions you have about the product or manufacturing process.
If you find yourself with a supplier that is very slow to answer questions, or simply does not answer them at all, that is a red flag. It could be indicative of a language barrier, lack of expertise, or a sign that they are not a manufacturer at all.
We have talked before about how to find a manufacturer , and we encourage you to read the article if you want to learn more of the specifics about how to find a high-quality supplier.
Kanary: The Safest Way to Buy From China
If you are concerned about getting scammed when buying from China, or if you do not feel confident about your ability to monitor quality control, then partner with sourcing specialist, like Kanary! We completely remove the risk of getting scammed, and our physical presence in China allows us to guarantee the quality of any product you want to source.
We offer unique advantages to businesses looking to start manufacturing in China, including:
● A physical presence in China to supervise the entire manufacturing process
● Long-term relationships with high-quality suppliers in a variety of different industries
● A customer satisfaction guarantee
Reach out to us for a free consultation, and we will show you how we can take away the stress of payment scams and quality problems in the products you need!