I have to imagine to the average person, the recent revelations of supplier/sales fraud and subsequent resignations of the CEO and COO of Alibaba’s board of directors, should serve as a wake up call to the China Sourcing community.

Alibaba, is a company that serves as an online platform for supplier identification.  This kind of service can serve as a great tool to helping foreign buyers find Chinese suppliers that can make their specific products.  It would seem though that some buyers have taken Alibaba’s “Gold Suppliers” (Alibaba’s highest rating for a supplier) too seriously and have thus been defrauded by suppliers who paid for their supplier ranking.

This is really bad news for Alibaba, and something that should serve as a wake up call not only for them but for buyers in China (especially NEW buyers).  I also feel bad for suppliers who use Alibaba that actually have earned their true supplier ranking by having sound business practices and by earning it.  They are now going to be punished by suppliers’ greed (I wish I could say a ‘few’ suppliers but 2,326 suppliers were removed from the Alibaba website in response to the allegations coming to light).

Buyers- Online platforms for finding suppliers are a great tool TO START your process of finding someone to make your product.  But more must be done, and most of it involves 3rd parties (preferably of your choosing) and it involves spending some money (fortunately as little as $260 can help verify that a supplier can do what they say they can do)

If you think you can get away with just finding a supplier and placing an order, you are taking a huge risk.  An avoidable risk.  China Sourcing is no picnic, and their is nothing that guarantees that your sourcing will go well and/or smoothly.  If you can’t commit to a personal factory visit (or hiring someone to do one for you),  Don’t source from China.  You may get truly lucky once or twice, but eventually things will turn sour.  The old adage “spend money to make money” is very true here.  The more you can do to verify that a supplier can do what they say they can do, the better you’ll feel, and the greater the likelihood of having a successful sourcing experience.

Remember, if you do come to China for a factory visit and you discover that the factory you’ve found doesn’t work for you (or is outright horrible); you’re saving money!!  Imagine if you didn’t visit the factory and you placed a PO, paid the tooling, paid the manufacturing costs, and paid the shipping costs only to get bad/defective products!  That trip to China to do personal verification doesn’t seem to bad now does it?

I hope that if you read this that you note one important thing- online suppliers like Alibaba or Global Sources are tools to help buyers find suppliers.  Many buyers I have met, have great success stories from finding suppliers through Global Sources.  These buyers though did more work though:  they also attended a tradeshow that their supplier was attending, visited the actual production facility themselves and/or paid a 3rd party inspection agent to also visit the factory just for extra caution.  Do the work and I promise your results should drastically fall in your favor.

For more information on the Alibaba scandal, I’d also recommend reading 2 articles written by CSIC founders Mike Bellamy (view here) and David Dayton (view here)

If you have been affected by the recent problems of Alibaba, please feel free to contact The China Sourcing Information Center with any questions you may have here-

David Bruns

Executive Director, CSIC

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