7 Rules on Safely Importing from China
Quality has continued to improve, and there’s certainly a value and flexibility there that’s hard to achieve in the US for custom or labor-intensive projects. But there are many potential pitfalls which can cause take a toll on your time, your finances, and your sanity.
1. If you don’t have the lead time, don’t do it. You can think about it, but don’t do it. Even if your purchase order is very direct in indicating a bill of lading date by which you require shipment, most factories regard this as a strong suggestion, and don’t understand just how important it is for your client, especially when the goods are being used for something like a date-sensitive special event. An agreement for the specific stages of the production plan and the boat you’ll ship on helps. So does the ol’ ‘fake date,’ where you actually have an extra week to accommodate eventualities in case they occur. Of course, to employ this latter technique, you need the time.
2. If you don’t have the quantity, don’t do it. If the project is under $5,000, the factory is likely to sideline it if a bigger fish comes in for production, and then you may again be running into a ship date problem.
3. It’s tempting to over-negotiate with the factory, but it make backfire. Sure, if your project is $100,000, and you have plenty of lead time with which you can do lots of due diligence, have at it. But, if a factory quotes you, say, $.66/pc. for something, and you insist on $.60, they’ll potentially say ‘yes,’ but may also potentially use cheaper materials or sideline your project (see 1 and 2 above). In short, you need them to make money. And, you need to make money at their first quotation. Get a few quotations, but once you select one, don’t over-negotiate.
4. Don’t start any production until you have a final final confirmation sample. Embroidery almost okay but not quite? Color a bit off? Packaging not finalized? Don’t assume that these are trivial things to rectify. Seeing is believing. And, with this final/perfect sample in hand, go ahead. The Chinese have a well-deserved reputation for being good copiers, so they now have something to copy.
5. On the road to this final confirmation sample, how was the communication? Did they keep their word in the timing for the sample? Was it accurate according to your mockup on the first try? Speed/accuracy/communications are the keys to achieving quality and ship date. If you smell trouble, don’t do it.
6. You need someone on site. At the very least, you need to do a final inspection, comparing your production to the confirmation sample. And, ideally, you should do this at the beginning/middle/end of production. Are you working with the factory, a Chinese import/export rep, or a Hong Kong agent or trading company? All have their advantages and disadvantages. The communications will be easiest working with Hong Kong, but they may want to do little in terms of quality assurance once they actually have the order, especially if the production is not in Guangdong Province. The communications may be rough at the factory level, but, if the rep there is a good communicator and willing to do lots of quality assurance work, this may fly. A Chinese I/E (or import/export) company may work much like the Hong Kong company, but may be closer to the factory (an advantage) but may be less savvy as to the ways of Western business or have somewhat-lower English or communications skills (a disadvantage). And, there are many independent quality control companies that can be employed for your project, too. A typical daily rate for such a company may be $300 or so, but often well worth it.
7. Be extremely careful before you pre-pay anything. Most factories will ask for a 30% deposit, which is reasonable, especially if you’re slapping a company logo on the item, since these goods aren’t exactly liquid once that’s on there. But on the tail end, work to get them to agree to a dated bill of lading before you pay the final 70%. Or, use a letter of credit on larger projects ($50,000 or above) for added security, if the factory will agree to it. Of course, if you have an ongoing relationship with the factory, and you’re shipping out goods every couple of months, well, you may even be able to negotiate better payment terms, and the factory will be more motivated to perform, since it’s not one-off. Unfortunately, in our industry, many of the projects are one-off, and therein lies the challenge. Keep these rules in mind, and you should be well on your way! And, we’d be honored to help with any/all aspects of your import project.
From The LogoMole Team in Las Vegas
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