Wednesday, February 13, 2008

LinkedIn Answers China question

My social networking experiment continues to suggest that, while Facebook is fun and a real time sink, LinkedIn is actually the more useful for business contacts. I am noticing increasing activity on the "Answers" page where members respond to each others' questions.

One exchange has caught my eye around a question posted by Massimiliano Bevilacqua a Senior Consultant at IBM Global Business Services. He asks:

Importing goods from China ... online with Alibaba.com or similar: is it safe to import goods from China using such website for establishing contacts with suppliers? Somebody had/has experience, can give good advices/best practices? How to deal with frauds, defect products, or worse with products not shipped at all? Which risks should I consider??
There are some particularly sensible responses from the China Law Blog's Dan Harris who says:

To be safe, you should conduct your own due diligence on any supplier.

Meanwhile, my friend Trapp Lewis, formerly of both Global Sources and Alibaba.com, now running the Palmetto consultancy, has some very sound advice which is worth re-posting in full:

Sourcing websites - Don't forget that these are designed to provide marketing channels for suppliers/exporters and aggregate product/supplier content for buyers/importers online. Read the User Agreements closely as they clearly state that you are essentially using the site at your own risk so be careful!
Never rely solely on any ratings systems provided by these sites. Always conduct your own due diligence.

Trade shows - The absolute best place to meet suppliers and learn more about the industry, manufacturing process, products, export issues, etc. The exhibitors can teach you many things and are willing to do so if they believe you are a serious buyer and potential customer. Like finding the right supplier, it is not easy selecting the right trade show to attend. Do your homework, ask other importers you know which shows they attend and also look for UFI approved events (www.UFI.org).

Quality Assurance - There are companies that specialize in factory audits and product testing - use their expertise. Bureau Veritas is a good place to start.
Shipment - Selection depends on the product and quantity. If by air, then speak to FEDEX, DHL, etc. to understand not only shipping costs but also import taxes. If by sea, look for a shipping company that can also help you manage the taxes. Its also a good idea to speak to your local customs office.

Payment - Never send cash! Talk to your bank about Letters of Credit and Escrow. There are systems to protect your money so use them!

Patience - Take your time, look at alternatives and start small. If something looks too good to be true, it is.


There are many other facets to this industry but this is a good place to start
Quite right!

2 comments:

Marshall said...

This post is important because there are so many small and medium sized enterprises (SME's) getting absolutely burned when purchasing initial orders from Chinese factories.

The reality is that China is a place where you need to work face to face and build trust with parties over time. This is why Trade Shows, as Trapp Lewis pointed out, is a great way to meet potential suppliers.

At SourceJuice, we've written a similar article 7 Ways to Avoid Getting Scammed by Suppliers in China. It's particularly important that if you can't be here on the ground, that common sense is used when arranging payment methods. A solid LC or Escrow agreement can weed out the majority of true online crooks that unfortunately troll the likes of Alibaba.

Jessey said...

China is the top seller of products in cheap prices. And this country currency rates are too low. This is very beneficial for buyers.