Will This Chinese Supplier Rip Me Off ?

So I’ve been doing my research and I am finally ready to make an order for my very own private label product to sell on Amazon.com. Negotiations have proceeded and the MOQ + pricing are at a acceptable level. I have the funds ready but before I click the pay button. There is only one burning question that runs through my thoughts…

Will this new Chinese supplier from halfway around the world just take my money and run? Leaving me with no money or merchandise!

Yes, I know it’s a noob question, but a perfectly normal one. You are trying to start a new business and the impact of a merchandise scam can be devastating for a fresh venture. Using a payment method such as PayPal can help mitigate risk, but supplier can always buy a tracking number in China that just may cause you to lose your case with PayPal. Leaving you with nothing. O, and it’s not hard to buy a working tracking number in China….

The above scenario seems like a huge disaster — and that is why we are writing this article to let you know that the above rip off situation rarely happen. We speak from experience because we deal with Chinese staff and factories all day long. Here are top 12 tips we have compiled help you negotiate and deal with Chinese suppliers.

1.Chinese suppliers will definitely try to pull a fast one on you.

But they will not just blatantly take your money and run. They may try to fabricate and twist certain details to expedite the order, so to speak.

Here are some things that they may try to get away with

• providing a different than agreed color of product
• providing a different than agreed size of product
• misleading lead time and delivery time
• providing a different than agreed quality of customization (logo, labels, packaging, etc)
• not accepting responsibility for defects
• selling your custom product on local Chinese marketplaces or even Amazon.com
• providing a inferior version of product than sample
• Selling on Alibaba.com requires a bit of ID verification and total scams would not be tolerated by the Alibaba platform.

2. NEVER make full payments for anything in advance

We know the costs for sending bank wire payments can add up. But the optimal payment segment to Chinese supplier is

• 30% upfront + 60% upon completion + 10% within 10–30 days after deliveryHowever, you may not be able to get these terms with a new supplier, therefore the standard segment
• 30% upfront + 70% upon completionwould be ideal. If you have worked with the supplier for long time (1+ years) and you know that price negotiation is probably no longer possible. The next logical term to negotiate in your favor would be the payment terms. We would recommend this segment for long-term suppliers that provide running productions for your product.
• 0% upfront + 100% payment within 7–30 days of EX-W (leaving supplier’s premises)Never underestimate the importance of cash flow. With a flexible payment terms that is in your favor, you free up capital to further scale your operations instead of parking your money in inventory.If advanced full payment was made, you as a customer would lose all leverage that may cover your liability if anything is wrong with the order. Remember that product quality issues may surface even after you launch. So insure yourself against these types of situations and to not make any advanced full payments.

3. Always perform an inspection when production is completed

Inspection runs from about $300 USD and is worth its weight in gold. If your budget really prohibits you from getting a third party inspection, we would suggest you ask for photos of your product, LOTS OF PHOTOS.

4. Always ask about the defective or not as described policy

Buying from China factory’s is completely different than buying something in the United States or Amazon.com. There are no 30 return policies or any of those shenanigans. You pay for what you get and there are no refunds. So please perform your proper diligence and have the goods inspected prior to final payment.

5. Don’t be shy, state your requests clearly and concisely — MULTIPLE TIMES! IN INKED AND SIGNED WRITING IF POSSIBLE

Overstating your request can never be more important, there are multiple factors that may contribute to the supplier to forget about certain minor details of the order.

• Lost in translation — the supplier and perhaps even yourself are BOTH not native English speakers, but yet need to communicate in English to work out the details and finalize a deal. Awkward…..
• Lost in process — your order may go to a few different departments in the factory before the assembly line. Then after the assembly it gets to packaging and shipping. Make sure you are up to each process and follow-up.
• Culture clash of product quality standards — what you think is completely unacceptable may just be acceptable for a local Chinese. Product quality standards are lower in that part of the world.
• Simple laziness — this does not only apply to Chinese suppliers but to everyone. There are just really lazy people living among us. We don’t judge, but we don’t like working with lazy people and have the right to refuse their service. Please also don’t forget to overstate any further important details regarding your request — for example if you want a T-shirt in Red, don’t forget to let them know if you want burgundy, blood red, light red, dark red, maroon, rust etc. The quality of instructions is more important than quality of factory, your private label product will be offspring of your attention to details.

6. Fire the deadbeat employee that are non-responsive, disrespectful or has a condescending tone

Many factory sales reps on Alibaba.com are underpaid or under qualified. The boss of most factories does not know a single word of English and rely on the younger generation to discover and fulfill export orders. However, many are not skilled in the art of sales or just out there to get a salary. If such a situation happens to you, be fully proactive and try contact the factory to speak to the owner directly. Even if it means getting a Chinese translator for a day or a few hours. Let the manager or owner know that you are a serious customer and some serious support.

7. Break up your processes to avoid having all your eggs in one basket

if you rely in one supplier for all your work, and most new entrepreneurs do. You are opening yourself to copycats and non-ethical suppliers that will try to profit off your ideas or designs. We would advise the following

• Packaging design should be outsourced to a third-party firm, do not let your “garlic press” factory handle your design work. They make garlic presses and are good at that. If they were good at package designing, they would not be good at making garlic presses. 
• The actual packaging printing and execution should also be outsourced to a third party firm. Do not let the factory do it

By splitting up the processes, you will get a professional company that will handle each professional part of your product’s manufacturing process. It will also be much harder for un-ethical suppliers to start selling your product on the side. Make it hard for those damn hijackers.

8. Always pay for your samples, and always ask for samples

This one is self-explanatory. If you pay for the sample, supplier will most likely pay for your shipping within China. A great start to a win-win relationship, you will noticeably see better customer service and pricing if you keep it real. But all that won’t matter unless a high quality sample arrives. The quality of a sample and fulfillment an tell you numerous things about the supplier, good or bad things.

9. Ask for pictures of everything

A good supplier will always try to convey the message to you that’s they are capable of making premium quality products. What better way to show off your quality than to take a massive number of photos. Think of the photos as selfies of your product. Things that would be helpful with a photo for confirmation. Here are some recommended things to check.

• Close-up of Tech/product Data on label 
• Close-up of packaging inserts 
• Photos of the products being packed into cartons 
• Photos of all color and size variant be proactive and don’t forget to tell them “pics or it didn’t happen”

10. Build a relationship with your supplier

China is fueled by relationships. The more connected you are, the more chance of being successful you will have. This applies to both business and on a personal level. The Chinese have immense pride and always need to have “Face”. If you build a great relationship with them and become a valued partner, you will see that your supplier will go into great length to help you in any aspect of life. Even if it is not related to your dealings.Add them on QQ, WeChat and let them know you are connected. Even follow them or their company on Weibo and grow a real friendship. If you are on the next level, fly to them and visit them in China. Enjoy a once-in-a-lifetime experience of crazy dinners, strong Chinese liquor and seedy karaoke.

11. Ditch the supplier if things are not going well

Like all unhealthy relationships, things must end when nothing is working out. One of the hardest things in entrepreneurship is learning to let go and moving on. Many suppliers just want to sell their products and could care less if their customer has issues after payment has been made. If a supplier is non-performing, treat it like an inferior quality product and cut your losses. Finding a new and better supplier will help you scale harder and stronger in upcoming days

12. Attributes in quality suppliers that we recommend

if you find signs of any of these things, you may have quality supplier on your hands.

• Catching your mistakes — we all make mistakes, if your supplier was able to catch a mistake in a order that you made. That attention to detail is telling you that your order is important to this supplier and they took the time out to learn and understand your needs. 
• Making detailed recommendations to help you improve your product — to make recommendations, that really means you are an expert at something. If your supplier can help you improve your existing product, keep this supplier and work with them.
• Responsible for any action that was caused by supplier’s end — Yes, we are bringing up mistakes in order again, sometimes supplier makes mistakes and that is totally fine, it is how they handle in rectifying the mistake that really matters. Quality suppliers are proactive and will fix any mistakes that was caused by them, even if it means losing money to manufacture a replacement batch with the problem fixed.
• Niche factory — factories perform it’s best when it is only concentrated into manufacturing a single niche of products. Try to avoid factories that can manufacture a very wide variety of physical products, as that usually means they are outsourcing it to other factories.
• Automated ordering process — suppliers that fully understand your order will be able to work in automated workflow. When you resupply — a good supplier would not need repeated instructions on the details and options of your order. All the supplier needs is your SKU and payment and they will know what to do.
• Provides logical answers and solutions — while it is common sense to be logical, there are just others in this world that have no logic. Suppliers that have a logical sense of business will be the one you want to work with. Imagine working with a supplier that does not solve problems, but creates them. This is not someone you want on your team.

We hope these 12 tips could help you navigate the Chinese sourcing / procuring supplier segment of your entrepreneurship. Please comment below with any questions or contact us directly for any insight.