If the companies in China would accept credit cards from the US, they would have a much greater amount of sales as the credit card companies would insure that the customer would receive the purchased product(s). It would take the question out of securing a legitimate exporter to work with. If I could secure or verify some of the information I get, I would have purchased a while ago.
I very much agree with you. I have asked a number of my friends who are Chinese suppliers about your points and here are some of the common responses translated into English.
Most common response:
“The credit card company charges a service fee of a few percentage points on the transaction. The margins are already tight and no room to add the extra fee into the sell price. While customers want the flexibility of paying via credit card, but they don’t want to absorb the price.”
2nd most common response:
“It is difficult getting a credit card and payment system set up in China as there is a lot of red tape and currency control issues. Even if the payment was made to the credit card, it would be another problem to access the funds.”
3rd most common response:
“When using a credit card payment system, if the buyer contests a payment the credit card company always sides with the buyer and it is very hard for a Chinese factory to fight a credit card company.”
As much as I wish the situation was not like this, it is true that credit cards are not widely used in China sourcing. Perhaps some of the trading companies can accept payment via credit card, but generally only for small orders and this is not a factory direct relationship. If you are concerned about your money disappearing using traditional bank transfers, I suggest the following:
- Do your due diligence upfront to confirm the factory is legit and not “one guy with a website” and no factory who will disappear with your funds.
- Tie your payments to performance. Give a deposit to get the order going (assuming the factory passed your due diligence) but don’t make the final payment until AFTER you or a 3rd party has done a product inspection to make sure what is about to ship is what you actually want.
A lot of buyers forget to ask for references. If a supplier can’t introduce you to a few happy clients, then you should run away!
Wishing you successful China sourcing!
Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.
Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)
www.SourcingServiceCenter.com conducts due diligence in China.
www.AsiaQualityFocus.com specialize in product inspection.
I would be happy to introduce you to either company if you need support.