As a lawyer in China who helps foreign buyers source safely, in my opinion one of the ways to protect yourself is to structure your payment terms so that payment and quality of the goods are linked. Make sure to keep the deposit as small as possible and don’t make the remaining payments until you or a 3rd party (inspection agent) has checked the goods.
That’s why I always recommend to my clients, if they can’t get something like 30/70 then there’s no deal.
Of course, the better option is 30/30/40 or something like that. Meaning, the initial deposit (30%), after the Pre-shipment inspection (30%) and after the inspection after delivery in the destination country (40%).
However, some suppliers don’t agree to 30/30/40 or 30/40/30 for the first order. But if you place orders regularly you can tell the supplier “OK, first order is 30/70, but second order is 30/40/30 and third order is 30/30/40….It may takes a few order to get where you want to be, but the key is to lay out a road map in advance and negotiate when you have the power in the relationship. If you order steady and pay on time, most suppliers will be flexible on payment options in the long run.
Written for CSIC by Sophie Mao
China based lawyer at www.AsiaBridgeLaw.com