FEELING SECURE WITH SOURCING IN CHINA?

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Even after several rounds of self-checks, long email/phone communications, and image analysis of each and every aspect of sourcing products in China, buyers still do not feel secured or get a sense of satisfaction. One of the big reasons for these insecurities is that their products are sourced from a different country (China), and the fact that they cannot control most of the outcomes of production, such as quality control. However, these insecurities are really exemplified when the buyers think of payment protection and legal protection. As a major China agent, we have been dealing with these insecurities for many years and have noted down some useful comments for prospective buyers in China.

PAYMENTS SECURITY

Payment Security is one of the biggest concerns for most buyers, but they should remember that the supplier in China is just as scared of payment failures. Suppliers are paying out for raw material, procuring and producing the goods. If they don’t get paid they are stuck with those goods (produced for you). Manufacturers deal with thousands of people around the world at a time and they have been let down many times.

The 3 key areas to look out for:

  • Paying deposits vs other secure methods like LC’s
  • Paying for samples
  • How and when to pay for the balance of the goods.

The two main payment methods:

  1. A bank transfer often referred to as a TT (telegraphic transfer). Most manufacturers will only accept a TT for the deposit and insist on the balance of payment before shipment.
  2. A letter of credit (LC), which is much safer. Always try and use an LC it’s safer but has a cost and administration burden on doing it. So, can be inaccessible to some newer or smaller buyers.  If a buyer is new, or it is a small order quantity, vetting the supplier and having a very clear upfront Purchase Order signed off is even more critical, as you may have no choice but to pay deposits by TT.

TIP: The maximum recommended deposit payable is 30%. Try to negotiate down to 20% or 10 %. The balance is normally paid on inspection; it means the buyer is happy with the goods and the supplier is comfortable to ship as they have received the balance of the payment. Typically, payment terms get better as the relationships with the supplier grow.

However, these would still count as recommendations for self-help and awareness and can’t guarantee that your sourcing of products in China will be hassle-free. We would still recommend that you work with a trusted partner who can take care of your sourcing in China. We are one of the most trusted China agents/partners and have been helping numerous clients to source products in China. We ensure that all the insecurities of our clients are taken care of and that the products are manufactured with utmost quality while the clients can relax and have peace of mind about their sourcing needs.