A CSIC reader in Australia recently contacted me with her questions about QC, MOQ, Payment Terms and Import Regulations. I want to share the highlights of my discussion with her for two reasons:
One: having read some of the content at CSIC, I am happy to see this reader is asking the right questions upfront as opposed to rushing into China and making common mistakes.
Two: many of our other CSIC readers are in the same situation as this buyer in terms of concerns and order size.
The buyer below is coming to China for the trade show season and is interested in gifts and household products.
Please see my list of products and order volume. The total will be about 3000 USD. A few of these, a few of those…just to get started. How to ask the exhibitors about the minimum quantity to order.
You have a range of products rather than a single target product. At that volume it will be hard to set up direct-to-factory sourcing. But when you are at the show, if the exhibitor says there is a MOQ problem, don’t try to trick them and say next year your orders will be huge, simply say you understand the MOQ and ask if they know of any brokers or authorized distributors/ wholesalers that would be a better fit. Also, while you are at the show, check out the sourcing conference that I host as it is designed to cover the questions you ask about in detail. But to help, in the meantime, here are a few comments on your current questions.
Will the manufacturer deliver the goods after we pay deposit around 30%?
How do I know if the supplier will deliver the goods in good conditions and on time?
It is import to verify the supplier is legit and get references before you place the order. Here is a blog post on that topic: Essential sourcing skills: Supplier Verification
If you can’t make the trip to China yourself, it is still essential to have a trusted 3rd party inspect the good at pre-shipment phase to confirm no red flags. Structure your inspections to verify conformance before final payment and before the goods ship out. These show videos will provide some more information:
What about the customs and regulations to import the goods into my market?
So important. Glad you asked. It’s up to the buyer to explain the standards to the supplier. Don’t assume the factory knows your nation’s regulations, even if they say they do. You or your agent can contact your government or more likely the government appointed lab to get the regulatory standards and set up a testing process to make sure your order achieves those standards. This is a lot of work and needs to be done regardless if you are buying 3000 or 3 million USD worth of product. As you can tell, the small buyers face a bigger challenge when going China direct.
Can I afford the support of a sourcing agent? I don’t want to risk not having a purchasing agent on the ground for me in China. Tell me how your agency works.
The agency I founded called PassageMaker (www.psschina.com) is based in Shenzhen. In your case, the potential problem is that they charge a fixed fee based on the level of project management involved rather strictly a % of PO value. This ensures all clients, big and small, receive 5 star service. But it also means that the service fees to process your initial small order of 3000 USD, would be about the same as the value of the order itself. Great deal if you are ordering 300,000 USD, but hard to finance if you are only buying 3000 USD of low margin goods.
If your business model allows you to retain professional support, then I suggest you visit with multiple sourcing agents to get a feel for how they work. The following white paper walks you thru the process: Selecting Service Providers to Support China Sourcing Projects
If your business model doesn’t allow for professional support, then I have the following options:
Check out my book at http://chinasourcinginfo.org/book/ which was written to help buyers large and small. It will give you the tools to DIY.
Read/watch the free buyer tutorials at CSIC.
Attend the China trade show and explore your options. I’d be happy to meet with you as we have a booth at the Global Sources trade. Plus I host the sourcing conference there. Here is the link: http://chinasourcinginfo.org/china-sourcing/tradeshows/
Although, I am beginning to import goods and thinking this is a good opportunity for me to develop, explore and make a relationship with business people who are also sourcing. Thanks for your help.