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4 ways to avoid being scammed by a supplier

The most asked questions I get are “how to avoid being scammed by a supplier” or “how do I make sure this supplier is legit?

To be honest with you the easiest way to make 100% sure is to go visit the factory but I realise that most of you won’t be able to do so.

The goods news is there are ways to figure out if a supplier is legit or not without going to China. The bad news is that some of these options will cost you some money.

Here are my four proven ways of researching a supplier. I will go into detail for each one of them.

1) Factory audits

2) Alibaba research

3) Certificates & reports

4) Skype call

 

1) Factory audits

A factory audit is where you hire a Third-Party Inspection Company to conduct an audit at the factory’s facilities.

This way you can make 100% sure your supplier is legit.

Be aware that not all factories allow you to perform an audit at the location which is in turn already a huge red flag.

If they are willing to undergo an audit straight away it is a good sign already. You don’t necessarily need to perform an audit but announcing to a supplier before you order that you will conduct an audit already gives you some idea on what your supplier is up to.

Lets take a look at the procedure when booking a factory audit. There are many Third-Party Inspection companies out there and I mention them in a few posts (TUV, SGS, Bureau Veritas etc.) but I always use Asiainspection because they are efficient, cost effective and reliable. There are companies out there who charge half the price but you don’t have a convenient interface/dashboard online that lets you do the booking trough their system. Most of the cheaper Inspection Companies have only email/phone conversation bookings available.

Lets take a look at how you can book an audit with a factory online trough Asiainspection.

Login into your account and click on “BOOK NOW” and then click on “Factory Audit”. This is how it looks like:

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Next thing is you need to start inputing general information such as your reference, the requested audit date etc.

You also need to let them know if this is a first audit or re-audit. Then they will take extra care for issues that you can input later.

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In the next mask you input the factory’s detail, contacts and addresses where you want the Inspector to go. The system also stores this information and makes it easier for you next time you want to audit or book some inspection at this factory.

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Do you have what it takes to start your import? 10 steps reality check

Starting your business from the scratch is not as easy as you might think. Trust me, I have been there.

Even if a friend of yours has a successful importing company and he is making millions, at some point he was probably close to bankruptcy and did not know what to do next.

Everyone starts off the same way; there is no get-rich-quick scheme that works. Well, none that I know. Your expecations are often not what reality will have in store for you.

It takes a lot of hard work and dedication. Especially when you’ve been working on your project for months with no results.

For me, the less money I had the more creative I got.

I was thinking of ways to make money I had not thought of before but at a certain point it was suddenly so clear to me. Things started to roll and I wish I had a guide to tell me what to do.

With the IMPORT BIBLE and the following checklist you have a guide on what you need to consider and questions you should ask yourself.

1) Do you have it in you?

  • Are you motivated enough?
  • Are you ready to work longer hours than ever before?
  • Do you have real passion about your project/business?
  • Do you have the financial means to pull this off?

If you answered any of the above questions with NO then it probably isn’t the right time to start your own business.

2) Reality Check

Don’t fool yourself; having your own company is the hardest work there is:

  • No guaranteed salary at the end of the month.
  • No one is there to push you or give you directions.
  • Are you organized enough?

I hope you realize that from now on you will work harder than ever to achieve financial success.

3) Experience & Resources

  • Are you experienced enough in your industry?
  • Do you have the technical and basic skills to succeed?

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Alibaba Hacks: The most efficient way to find suppliers on the biggest sourcing website

Get some insights how to sort, filter and find suppliers in the most efficient way.

Watch the video for all details or read the article below to understand the process.

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Today you want to source for an action camera, similar to the GoPro cameras.

You can start by going to the main page of Alibaba.com and input “action camera” in the search option.

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Ok, so you found 106,946 products. At this point you want to filter your results for the most relevant suppliers. You will definitely want the suppliers to be:

Gold suppliers:

This is a paid membership from Alibaba for the supplier. They get featured and can put up a lot more items in their catalogue (among other functions).

Onsite Checked:

The onsite operation of the factory has been checked by Alibaba and a third party confirmed its legal existence.

Assessed suppliers:

This is a third-party assessment usually done through a testing company to verify various parts of the company. This includes machinery, staff, engineers, workers, certification, and much more.

After you have filtered for this you are down to 8,258 products:

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Insider tip:

Now you filter down to the relevant manufacturing province. Why? Because each province in China is specific for different product categories.

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Alibaba Hacks: The most efficient way to find suppliers on the biggest sourcing website

Get some insights how to sort, filter and find suppliers in the most efficient way.

Watch the video for all details or read the article below to understand the process.

Today you want to source for an action camera, similar to the GoPro cameras.

You can start by going to the main page of Alibaba.com and input “action camera” in the search option.

 

Screen Shot 2015-05-04 at 2.31.50 pm

 

Ok, so you found 106,946 products. At this point you want to filter your results for the most relevant suppliers. You will definitely want the suppliers to be:

Gold suppliers:

This is a paid membership from Alibaba for the supplier. They get featured and can put up a lot more items in their catalogue (among other functions).

Onsite Checked:

The onsite operation of the factory has been checked by Alibaba and a third party confirmed its legal existence.

Assessed suppliers:

This is a third-party assessment usually done through a testing company to verify various parts of the company. This includes machinery, staff, engineers, workers, certification, and much more.

After you have filtered for this you are down to 8,258 products:

 

Screen Shot 2015-05-04 at 2.32.26 pm

 

Insider tip:

Now you filter down to the relevant manufacturing province. Why? Because each province in China is specific for different product categories.

If you find a few suppliers (compared to hundreds in other provinces) on Alibaba in a certain region it is almost 100% certain they are a trading company. They either buy this certain product from somewhere else to round up their product catalogue (95% in all cases) or they are really manufacturing it.

But even if they are manufacturing it in their region they are likely less attractive in terms of prices, less experienced in manufacturing this product and their raw material suppliers are also somewhere far away. Ultimately making them less competitive.

There are several reasons why you will find suppliers for a specific product settled within a province.

  • The infrastructure for this product is good. Meaning there are a lot of suppliers in the area supplying components for the suppliers end-product
  • The workers in this area are skilled in producing this specific product. Making it easier to manufacture the end-product. Most likely, this also improves the overall quality.
  • The province has favourable tax rates for the factory on certain products.

Now lets look at this again. Even though you didn’t know the province and where the product is mainly manufactured you can get some insights on this very easily:

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Sample communication with your suppliers. An in-depth guide

I ll cover three topics in this post about sample management:

  • Sample costs
  • Communication
  • Supervision

Sample costs

Once you have settled on a supplier for your new product it is time to purchase a sample.

Most suppliers will charge you for sending a sample. There is usually no way around this unless you have worked with the supplier for a longer time.

Even for me, being here and dealing with suppliers on a daily basis I can’t guarantee that I don’t have to pay for a sample.

Here are some Insider tips to “try” to get a sample for free.

  • Introduce yourself as an assistant of a large company. Suppliers tend to smell money when a large company is interested and are more likely to give away samples for free.
  • State that if the sample is OK you will place a large order
  • State that you have especially chosen this supplier to be your exclusive supplier for this product and he has the chance now to do business with you.
  • Ask him to put the sample cost on top of the official order that may follow if the sample is what you are looking for.
  • State that it is company policy that you/your company don’t pay for samples and if he wishes to do business he should agree to your sample terms.
  • Split the costs. Offer to pay for either the samples or the freight costs.

If none of these work I recommend you to agree with the supplier to deduct the sample costs from the official (larger) order. At least this way you save the sample costs if you decide to order from this particular supplier.

Be wary of sample costs in general

On one occasion I was sourcing for a textile accessory. The item itself can be made for approx 2 USD.

I screened around 10 suppliers and eventually narrowed my selection down to 5 suppliers. They were all in a similar price range.

When it came down to ordering samples one of the suppliers (who was also the most expensive) asked me for a sample fee of 100 USD to be transferred to his bank account. That didn’t make sense.

I immediately knew it must be a trading company with no factory background.

They probably outsource the work to a factory because they have no own facilities. Eliminate suppliers that have high sample costs right in the beginning.

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Advantages doing business in China

So why should you visit China or do business there? Honestly, so many reasons! Here are 8 reasons for you:

1) You will want to see the production and how your product is being made. It’s a great experience.

 

2) If you want to develop your own products you may want to do so in person with the factory.

It may be difficult to handle trough email.
Details are often misread or misunderstood in emails, especially when they are of a technical reason. A simple meeting with a supplier can solve many problems and obstacles.

 

3) See the real factories and not the trading companies behind Alibaba’s “curtain”.

 

4) Meet the people you have solely been dealing over email so far.

Get to know each other and perhaps even become friends.

 

5) Get the best prices and negotiate prices one on one. Believe me, negotiating with someone face to face will get you further than any email.
Over the phone or email I have been told so many times that this is the last price they can do. Being at the factory a few days later and convincing him in person that I need this price and his business depends on it made him agree.
This also applies to claims & compensations

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Seasonal products – be aware on timelines

Just a quick post guys.

The other day I was talking to a fellow reader and it made me consider to post about it.

The reader wanted to import a seasonal product but wasn’t taking the season into account.

You might see a product that is advertised trough your local store or online retailer and you think it would be a great product.

Sure, but keep in mind delivery times and seasonal timing. 

When I worked for the buying office in my last job we were placing orders for seasonal items nearly 1 year in advance. Sure there were very large quantities (50 containers or more), sea shipment (30-45 days to reach the warehouse), inspections to be booked (needed planing & coordination), testing (we tested trough third party & that took 2 weeks), multiple suppliers (arranging samples and send them to the customers (3-4 weeks), negotiation rounds (2-3 weeks) etc.

But it all comes down to the same. A seasonal product needs meticulous preparation.

In this particular case the reader was interested in decorative solar lamps. While it is a good product you need to consider that it is mid-May and most sellers already have their stock. If you were to start sourcing now in small quantities, selecting suppliers and samples 3-4 weeks could pass by until you place your order and another week  & up to 10 days to get your products.

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Lessons learned. Re-cap of the Global Sources & Electronics show in Hong Kong

As most of you know I exhibited at the Global Sources Electronics show from 11-14th of April with my brand “Mandarin-Gear” and I went to source at the HKTDC Electronics show on 15th of April.

Here is a re-cap and lessons learned from the shows.

Global Sources show (exhibiting part)

 

Mandarin Gear Ltd

 

  • When you exhibit, make sure you get a corner booth or a booth in the middle of the hall where people pass by.
  • Create some buzz on your booth and show enough of your products or just the packaging, play some music if the venue allows it and have some banners that quickly show what your booth is all about.
  • Make sure you have friendly and approachable people ready to explain what your product is all about at your booth.
  • Ask your friends to come visit you. It gives the booth a crowded feeling and people will want to know what’s going on.
  • Have enough marketing material ready (catalogues, business cards etc.)
  • Know your products and make sure any assistants or other people at your booth know everything as well. Be prepared for questions that are unusual. Study your products that you are displaying and make sure that you fully understand them.
  • Take notes and follow up immediately after the fair. Buyers tend to forget who they have visited.
  • Take photos with people that visit you at your booth and send it to them afterwards. Create a relationships. A fair is not just about sales it is more than anything else a networking event.

 

Hong Kong electronics show (sourcing part)

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Prepare an introduction for yourself before you go sourcing at a trade fair.

This comes across as more professional and people will be more willing to invest time and resources into you if they feel they deal with someone professional who knows how to do business properly.

You are more likely to build a good relationship if you leave a good first impression. Here is an example how you could introduce yourself:

Hi, I am Manuel and I am the Managing Director of Mandarin-Gear Limited in Hong Kong. I run a Sourcing & Buying office for many large retailers worldwide such as COMPANY X, COMPANY Y. My customers are looking for product “X” and I am interested in discussing more details or to receive a quotation based on my customers requirements.

After the introduction ask questions and once you are satisfied ask him to provide a quotation based on your requirements. Hand him your business card and MAKE SURE that he wrote down everything you discussed.

  • Prepare an introduction of yourself and / or your company
  • Bring name cards, your own catalogue (in case you have one), comfortable shoes and a trolley to carry all the collected catalogues.
  • Pre-register online often saves you money and time
  • Look at freely available maps to find out where the products you are looking for are located before you start walking around. Plan your way through the fair systematically. This is especially important for bigger trade shows.
  • Take photos of products that you are interested in.

Prepare and ask the suppliers questions such as:

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A day trip to the factory

I like to do day trips to China these days as I have a lot to follow up from the exhibitions and its quite convenient to go to my factories (around Shenzhen) from Hong Kong.

So I met this factory at the Global Sources exhibition here in Hong Kong and I decided to look at their factory as I have never seen the production of drones.

Hong Kong is super convenient in terms of transport. I usually take the MTR (subway) to China. Yes, you can go all the way from Hong Kong island to Shenzhen by subway.

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It takes about 45 minutes from my office to the border by train. Fortunately I have a APEC card, so I don’t need a visa for China. Actually with this card you don’t need a visa for 13 countries in South East Asia. I can just simply fill in arrival cards in most countries and don’t even need to pay for a visa.

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If you don’t have a visa for China you can go trough the LoWu border station and get a visa on arrival. But you are only allowed for 3 days within Shenzhen. I went trough the 2nd border which is called Lok Ma Chau station as its more convenient for me to go from there. Be aware, there are NO visa’s on arrival at this border crossing.

 

Most of my factories are within an hour drive after I have crossed the border but I decided to take the subway today. After crossing the border I just head down to the subway. Everything is in English these days so I am not worried on getting lost.

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I agreed to meet with the supplier after a few stations as the traffic to their factory is really bad. Sometimes they pick you up in a Mercedes and sometimes in a delivery van that has no proper seats. As in today’s case.

 

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Live from the factory

Hey guys,

Come Monday I will be at one of my factories in Shenzhen and will post about it.

If you ever wondered how it looks like to manufacture drones and smart watches drop by on Monday/Tuesday morning and check out my latest post.

best,

Manuel