In this email, you’ll learn about inspecting your goods prior to their shipment to you.

Once your goods have been manufactured in China, should you outlay more money to have your product inspected prior to loading on the container?

If you’re not using an independent sourcing company then yes, you probably should have a third party inspect the goods.

If you’re using a trusted sourcing company, the answer depends on a few variables, such as:

•    Order value
•    How safety critical your item is
•    Your confidence/history/relationship with the supplier
•    Your risk tolerance

For example, it mightn’t be cost effective to inspect a $10,000 order of erasers from a company who has been making and exporting erasers to the West for 10 years. (Low value, low safety criticalness, high confidence in supplier)

However, a $50,000 order of erasers may be worthwhile inspecting.

At ChinaDirect, whether we’re doing an on-site inspection or not, we always put the responsibility of checking the goods onto the supplier.

We’ve devised a highly effective form that shows the supplier we’re not only serious about quality, but we’re going to hold him accountable for it.

It’s called a Supplier Self Assessment form, and we introduce it to the supplier when we’re negotiating the Purchase Order, so the supplier clearly knows clearly our expectations, and how he will be assessed.

The supplier simply fills out the Supplier Self Assessment form and sends it to you prior to your inspection of the goods, or if no inspection is being undertaken, before shipping your goods.

If everything looks ok on the form, you can approve delivery.  If there are any areas of concern, you have a conversation with the supplier to resolve it, BEFORE SHIPMENT.

Of course, the only instance where you would not have a third party inspect the goods is when the order value is low, your product is not safety critical, you have high confidence/history/relationship with the supplier, and/or you have high risk tolerance.

See here for further details on the Supplier Self Assessment.

In this post, you’ll learn about agents/brokers, trading companies and sourcing companies.

Like any unknown area that you move into in your life, when you are first dealing with China, it can appear quite daunting.  Just as you use an accountant to do your tax, a bookkeeper to do your books, and a lawyer to do law-related business, you’ll also need to choose a ‘partner’ to assist you with your importing matters.

So, who do you use?  Well, someone who will represent YOUR interests, not the interests of the factory.  Be aware that agents, brokers and trading companies make most of their money from the factory or supplier, even if you’re paying them too!

So who’s interests do you think they’re looking out for?

One of the questions I’ve been asked by clients is about agents or brokers they’ve found on the Internet that will source products from China for a 5% commission, or less.

Be aware these agents also receive a commission from the manufacturer or supplier who supplies your products, and to cover this cost the manufacturer or trading company will build in their commission into the offer price for the goods.

The result is that the commission paid by you to the agent can be anywhere from at least 12% to 100% and not 5% – you can never be 100% sure.

As most agents are profit driven, they may refer your business to the supplier with the cheapest price, resulting in substandard product, or to the supplier which offers them the highest commission (which isn’t necessarily the one with the most suitable product for you!).

My recommendation is to get professional support from an independent sourcing company to assist you through the importing process, allowing you to avoid the pitfalls, and work on your business, not in it.

At the end of the day, your importing business is about providing you and your family a better lifestyle.

Those who try to save a penny and not get professional help, their experience of importing from China can end up being a very expensive, frustrating exercise.

And, if you choose a reputable Australian sourcing company, your company may be eligible for a $20,000 government grant.

Enterprise Connect is a $251 million Australian Government initiative that provides practical support to thousands of small and medium enterprises (SMEs).

The first level of service offered through Enterprise Connect is a comprehensive Business Review, which is delivered at no cost to a client firm.  Skilled and experienced Business Advisers carry out Business Reviews on-site at your firm’s premises.

Your company may also be eligible for Tailored Advisory Services which reimburse your firm half the cost, up to a maximum of $20,000, of engaging consultants like ChinaDirect to help implement changes that improve your business performance.

We stumbled across this relatively new Federal Labour grant after one of our clients used it for our services.  We’re now on track to save that company $800,000 p.a. in purchasing costs!

Before you select an import adviser, or sign anything, make sure you read our special report on how to choose an import agent, which has questions to ask when you interview them. Go to the ‘Articles’ tab on this website to check out the free report.

When you’ve found a supplier you want to work with, you’re satisfied that they’re reputable, and you’re happy with the price of producing your order, the next step is to get a sample from that supplier… prior to placing an order for the full quantity.

Keep in mind that the first samples you receive from China may not always exactly match your specification and/or sample.

The Sampling Stage can be a back and forth process between you and the Chinese supplier, even when you’ve provided as many specifications as you can in the first instance.

If the supplier asks you for your international courier account, (e.g. ‘DHL account’), ensure they only send necessary samples to you, to avoid high courier costs.
To show that you’re serious about dealing with your supplier, proper and thorough documentation is required to create a foundation of understanding, and minimize the inherent risks.

We use a Sample Making Agreement which includes:

•    The agreed commitment from the supplier of a date by which they will have made the sample for you
•    The consequences for the supplier of not producing the sample on time, and
•    The specifications of the sample, as the sample may vary from the final mass production.

This Agreement helps to ensure we get the samples we paid for, and that if the samples are correct, that the final product will match the sample.

Further details of the Sample Making Agreement can be found here.

When you receive your samples, check their workmanship and material, compare the samples and then shortlist a potential supplier.

In this post, you’ll learn about negotiating with your Chinese supplier.

Many of us have enjoyed bartering for goods at markets in Asian countries.  Here the vendor starts high, you negotiate them down, and it can be a lot of fun.

Did you know that in business to business dealings in China, the opposite usually occurs?

Suppliers will generally quote low initially to attract your interest, then impose price increases over time.

Many western business people weaken relationships, receive poor treatment, or get sub-standard goods because they go in guns blazing on a price negotiation at the beginning of a relationship, often before they’ve even seen a sample to determine if it’s actually a suitable product!

The bottom line… In business to business negotiations, get at least six quotes to determine fair market price, and if your preferred supplier is around the mark, rather than negotiate for reduced price, negotiate for things like better quality materials, shorter production times or added features.

Once you have selected a supplier, are satisfied they are reputable, are happy with the price of the product, and the sample you received was up to standard, the next step is to draw up and negotiate the Purchase Order (PO) with the selected supplier.

Most suppliers prefer loose arrangements to supply the product because it minimizes their risk and liability.

I recommend that you minimize your risk as the importer by utilising a properly drafted Purchase Order.

The Purchase Order will need to include clauses covering the following areas:

•    Quality control procedures
•    Terms of payment
•    Moulds ownership
•    Packaging requirements
•    Penalties for quality issues and delivery delays
•    Any other additional clauses defined by your individual project

Having an established Purchase Order document creates efficient and effective
production and importing processes.

The Purchase Order template we use at ChinaDirect Sourcing is a tried and proven document to get the correct product delivered to the correct location at the correct time.

After much internal debate as to whether we should release this valuable template to
our subscribers, I’m pleased to announce ‘abundance mentality’ won out and it has just been made available.

See here for further information…

www.importingfromchina.com.au/purchaseorder

If you can give your supplier a sample or prototype of your desired item, it will greatly increase the chances of receiving what you want.

Just give a sample to your shortlisted top 1 to 3 suppliers, not to everyone you request a quote from.

Getting a prototype made can require a lot of ‘back and forth’ before you get what you want.

It’s therefore generally quicker and easier to have a prototype made locally in your own country, not in China.

Then you can send the prototype to China, and they can do what they’re best at… copy it!

Some people think their Chinese supplier will come back to them with suggested improvements, but this rarely happens.

The Chinese are generally not known for their creativity and free thought – they will just produce what you tell them to produce.

So, whilst it’s not critical you give your supplier a sample or prototype (and sometimes it’s just not practical to), it will increase the chances of your final product being produced to your standard.