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Importing goods from China can be a fun or miserable affair. It can be an eye opening experience as you do business in an environment filled with greed, fear and uncertainty. However, the result can be fulfilling as there is a great potential to resell wholesale goods at a cheaper rate to end users.
As international trade consultants, we have the opportunity to understand how difficult it can be to deal with Chinese suppliers, so we would like to share the 5 types of frustration we encountered dealing with Chinese suppliers:
1) Cultural Differences
Many Chinese people deal with problems after they become a problem, whereas many foreigners try to avoid problems. It is common for a Chinese supplier to discover a problem during production that could be easily fixed, but they choose not to tell the customer in the hope that the customer will just accept it. They won’t tell you early as they would then need to fix it. So they will either tell you once it is too late to fix, or you will discover the problem when you receive your goods. Perhaps this could be seen as a form of dishonesty, but then again, they are just being optimistic that everything will work out fine.
2) English Language Ability
It seems that 90% of sales staff speaks some English (or Chinese + English = Chinglish). The challenge is for you to understand what they are trying to say. Their language ability will depend a lot upon the type of supplier that you deal with and the price you pay. Smaller, cheaper factories outside of major cities tend to offer lower wages. Therefore, they tend to attract workers with weaker English skills. Once those sales staff has become competent in the industry, they tend to move to higher paying jobs in larger factories or larger cities, and their English will normally improve with their product knowledge. It is also important to note that most sales staff prefers to communicate via messenger or email rather than telephone as their reading and writing comprehension is much better than their speaking and listening.
Bear in mind that often factory bosses cannot speak English. They often rely on an English speaking Chinese staff member who has decent English test score. China has a national English test ranking, but even individuals with the highest ranking have weak English comprehension ability, as a lot of the English test is theoretical rather than practical.
If every seller in China spoke perfect English and was professional, then no middle men or import export agent is needed, and your customers can simply buy directly from China themselves. Suffice to say that it’s a paradox of life as the very frustrations that we encounter are the very things that protect the import export industry.
3) Sales Pressure
Broadly speaking, Chinese’s web sales people are “nobodies” in the overall factory hierarchy. They are often just as frustrated as Western buyers with behind-the-scene autocratic managers and poor quality products. As a result, they may not understand the concepts of creating a win-win relationship, and the importance of starting with lower quantity orders until trust, service level and quality are developed over time.
Most sales staff is constantly under considerable pressure to close deals. That pressure is driven by financial rewards or the fear of losing their job. When they see the potential for a sale, they will often jump the gun to get to the finish line and get the money into the bank account. You are probably not going to be able to change this, so the challenge for you is to explain everything clearly in point form or flowchart basis on how you can help them to get the sale.
Most Chinese factories experienced high sales staff turnover, which is why they do not really care about potential sales and the future of their business relationship with you. Their job is to get the best sales now. So, their intention can be in conflict with your best interest to grow your business with their business.
4) Payment System
The difficulty lies in the fact that most Chinese wholesalers will only accept Western Union and wire transfer payments. They only have such payment options because getting a credit card in China is an extremely difficult task, with a lot of government regulations and strict criteria obtaining a credit card. You must be aware that Western Union and wire transfer payments are not secure payment options , so you must trade with caution.
What about escrow.com? Escrow.com is a great payment system for retail or wholesale purchases, but not for purchases from a manufacturer. So, why don’t manufacturers in China accept escrow.com? Because it is not necessary for them as they have existing business clientele using proven international trade payment methods such as TT and LC. Most manufacturers in China produce orders after the order have been received. They do not hold stock. So with escrow.com, there are two huge disadvantages to the supplier, namely:
a. They need to wait longer to get paid. Very few buyers would have large orders by air or sea shipment, which takes one to two months. Therefore, a supplier will not wait for one to two months to receive your payment.
b. Escrow.com can lead to higher chances of returned goods regardless of quality, which is an issue that factories in China cannot accept. Common sense tells us that the buyer is not supposed to return the product, unless there is a legitimate problem like product defects. Suppliers want to avoid this form of public abuse, thus even if the buyer covers the return shipping costs, they will normally avoid this form of payment option.
5) Quality Assurance
It can be another major concern for buyers who often have difficulty telling whether a brand name product is genuine or not. In our experience, the vast majority of branded goods that come from China are either replicas or fakes. EBay is currently cracking down heavily on people selling these fakes, and it is not an area of business we suggest you get into!
Generally, we find that Chinese suppliers are best suited for cheap generic goods (they are manufactured there so you would not find it cheaper anywhere else!) that can be sold at higher rates in Western countries. For example, some of the latest trends are pocket bikes, scooters and generic electronic goods. These goods do not need a brand name in order to sell well, and they can be purchased wholesale at very good prices if you are serious about importing from China. For quality wise, it will be a challenge for you to ensure ‘what you see is what you get’ as it changes hand from the production stage, to product configuration, product shipment, product loading to product delivery stages.
Product licensing can also be a pain. For example, if you are exporting to USA, most products need a UL/FCC license. Until they are 100% sure about your large order, most of the China factory will not apply such license that can cost up to US$30000-US$50000. Without a quality control license, you have to bear higher risk as a buyer.
Top 5 Takeaway Tips To Stop Those Frustration
Not to sound too pessimistic, we want to offer 5 brief recommendations to international buyers:
- If you want to enjoy high level English communication abilities and sales professionalism, then stick with larger factories in larger cities and pay a premium price for that added value service. These factories will often have English speaking management, which will be more attuned to customer service and long term relationships – but bear in mind that many of these factories have long term relationships with large customers. If your orders are too small, they may reject you.
- If you are a small buyer who wants lower price goods and superior customer service from the seller, then it is best for you to stick with smaller factories. They will be a lot more work for you because of their poor English ability, but the returns can often be rewarding as you help them to understand how to make money in your market.
- If you are conservative or you are in need of fulfilling an urgent order, stick with hard facts like visiting the factory, paying for factory audits and pre-shipment inspections to ascertain the quality before you part with your money.
- If you want to minimize your risk, start with a fairly small shipment of goods so you don’t risk losing too much money if everything falls apart. Then, as trust is established, gradually build up your order over time.
- If you want to buy from China, you must be sure that you are buying from manufacturers in big quantities and low prices, and then wholesaling the goods to smaller buyers. You must strive for relationship loyalty (a.k.a ‘long distance business marriage’), than hunting for the lowest price manufacturer (a.k.a ‘long distance business dates’)
P/S: If everything sounds scary to you, why not work with an import export agent who can assist you with your import export business plan?
Do you think these recommendations are useful to your situation?
Rather than providing you with a more comprehensive solution, we would like to hear from you. Is this the best way to avoid these problems? What’s your import export business experience like? Have your say here!
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