Sharing my lifetime experience in export/import. Product sourcing specialist.

[Walter Hay]

INTRODUCTION.
Through my eBook on safe sourcing and easy importing I have helped thousands of people in more than 40 countries learn how to enter the high profit world of importing. Their questions through my support channel provide the subject matter for all of what I plan on posting here.

There are myths and misinformation in abundance on forums everywhere. I am here to dispel those myths and correct the misinformation that I see being published daily in business forums.

A bold claim? Yes, but all you need do is ask me some questions about sourcing and importing and you will soon find that because I have been there – done that for most of my long life, I do actually know what I am talking about.

I have been self-employed since 1967, and I started with just enough cash to buy a typewriter and some letterheads. My first job after college was with a big shipping company. Eleven years after I started that first business in 1967 I began exporting my products to Asia/Pacific countries including China which I have visited on countless occasions.

After selling that business in 1987 I began importing from countries including China, Taiwan, Korea, Singapore, Malaysia, Vietnam, and Brazil. This new business sold products B2B. I had no retail sales. Business boomed and soon I ran out of family members to employ, so I expanded by selling franchises until I had franchisees operating my importing business in 4 countries.

Heart surgery a few years ago forced me to sell that business but my brain won’t slow down so I wrote my book and am now having more fun than ever helping new entrepreneurs get a safe start into importing.

Fire away with your questions.

Walter

EDIT: This is a long running thread and product sourcing and importing is always subject to changing conditions. For this reason you should be careful about relying on early posts without doing a search of the thread for the same subject to see if I have posted a revision.

It should also be noted that this is the reason why I revise my book every year. Over a period of a year there are many changes, some of which are extremely important. As a service to my previous book buyers I provide a free copy of each new edition. Those who don't have the latest version which I announce on the forum when it is published, need to contact me via PM with details of which version you have, and evidence of purchase.

P.S. My book now shows you how to locate manufacturers in 40 countries.

 

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[Walter Hay]

Welcome Walter and thanks for this AMA.

You mentioned in another comment that you can lose the relationship with a supplier in your first email by not realising the language style you should use. Can you elaborate on wording and things to avoid in emails with suppliers.

Thanks.

There are things you should say, but there are more things you should not say when you make your first contact. Here is what I posted yesterday on another thread:

Lack of response is common when newbies communicate with suppliers on any B2B platform. The reason is simple - they know that the inquiry comes from a newbie and they hate dealing with people who don't know what they are doing. They think a) Another opportunist looking for freebies, or b) This person is going to need too much help.

To help your chances of getting a reply, newbies should follow these rules:

Remember, it is not so much a matter of what to say, as what not to say.

• Don't mention that you are new to the business.
• Don't tell them you are a sole trader.
• Don't offer your business plan like you would to a supplier in the USA.
• Don't ask what is their MOQ. They will tell you soon enough. That is when you might start working on them to supply a lot less.
• Don't offer your tax or business registration details.
• Don't ask for samples early in your communications with them, and don't expect them to be free.
• Don't haggle. Most "experts" will tell you to do so, but there are good reasons why you should not and I teach why you don't need to. This issue is even more critical in the early stages. If you try to talk the price down early on you will suddenly find no more emails arrive.

There are a few things you should say:

• Tell them you are an established importer.
• Tell them that you want to have an inspection service do a quality control inspection.
• Ask them for a copy of their catalog, preferably a printed version.
• Give them your business name. Don't have one? Invent one.

Finally, look at places other than Alibaba and the other popular B2B sourcing sites.

 

[Walter Hay]

Some things you should know or do before you start product sourcing.


Do your market research. Work out what to sell, how to sell it, and what prices you can confidently expect to sell it for. That confidence must be based on thorough research, not just checking sold prices on eBay. Determine what maximum landed cost is affordable in order to be competitive and profitable, making sure you take into account all selling costs.

You should not be put off by stories about the complexities of importing. It is possible to simplify the importing process and you don’t have to learn all the rules and regulations

Not understanding freight can lead to costly problems so you must learn the meaning of freight terms. If you don’t know anything about shipping bulky lightweight goods, don’t consider such products without a lot of research on freight implications.

It is important to know the difference between air freight and air courier services. Air freight should be arranged through a freight forwarder, but air courier shipments can be handled by your supplier. Get all your freight quotes in writing.

International trade uses standard terms known as INCOTERMS. You can find them on Wikipedia. One term that is commonly misunderstood or misused is FOB. Officially it relates only to sea freight, but in China it is very often used in relation to air freight or air courier shipments. It means that the supplier bears all costs to the point where the goods are loaded on board the carrier’s transport.

Unfortunately many Chinese companies quote FOB when they really mean EXW. That stands for Ex Works. This is one reason why you must get freight quotes in writing and they must include everything. For example if your supplier has a factory in Shenzhen and quotes FOB Shenzhen, that might lead you to think he will bear all costs until the goods are loaded on board a vessel in Shenzhen harbour. It should, but unless he has confirmed that in writing, he may mean FOB his loading dock, which amounts to EXW and you will have to bear costs of transport to the harbour, wharf cost, export clearance cost, and handling charges.

If you think that getting an exclusive agency is the best model, you need to understand agencies and distributorships. Such arrangements with suppliers in China are rarely achieved. If a Chinese company agrees to an exclusive agency or distributorship it will involve a very substantial initial purchase and you should be aware that they may open their own office in your country if your sales are good, and you are left out of the picture.

Standards. Does your product have to comply? You can find out by asking an appropriately qualified Customs broker.

Before starting to send out inquiries to suppliers, get a disposable email address. When your inbox gets swamped as it inevitably will, you then change to a different address.

Free samples may be available but you will have to pay freight. When asked to supply your courier account number, tell them that you have found deliveries via the postal service from China (or HK) to be very satisfactory so please use that service and you will prepay the postal charges.

Don’t be put off by the huge MOQs that are usually quoted. They are negotiable, but don’t ask what their MOQ is. Don’t try to negotiate a smaller order until you have communicated with them for several weeks.

Do not haggle. I know many “experts” will tell you to do this but Chinese business people will be offended if you do it. It may be OK at street markets but not for serious business.

It is essential that you calculate actual costs before you place an order. Think of every possible cost and work out your landed cost. Here are some things to consider: Purchase cost, freight, Customs Broker or Freight Forwarder fees, Insurance, Duty, Sales Tax, freight to your location. Don’t forget when calculating duty and tax for yourself that it is always calculated on the total of Cost of Goods + Freight.

 

[Walter Hay]

Thanks for doing this, and making the forum a better place to be.
Your value add is much apprecated. Rep+++

So to fire things off...

Since you've been on both sides of the equation, exporting to Asia/Pacific, and importing from Asia Pacific, what differences do you see?

What are 3 cardinal rules you NEED to know about importing to/from Asia Pacific?

Also, which one do you prefer, exporting to Asia, or importing from Asia, and why?

The big difference is that regulations for those importing goods to most Asia/Pacific countries are still bound up in a lot of needless red tape, but importing from those countries has been greatly simplified.

3 cardinal rules would be:

1. If exporting to Asia, find a good agent in the destination country. Don't try to export direct to commercial end users. A good agent will have "cousins" in business and that can be the start of a good network.
   
2. When importing from Asia Pacific countries carefully attend to due diligence. Part of the need for this is cultural differences. For example Chinese business people will rarely say no. If they say yes, it could mean maybe, possibly, no, or even yes. Because they sometimes say yes when they should say no, don't be annoyed, just frame your question so that a yes or no answer is not required.
3. Get everything in writing. Dot every i and cross every t, so that there can be no misunderstandings.

Importing from Asia Pacific countries is easy once you understand the process, but exporting to those countries can be hard work even when you do understand. I prefer the easier life of importing.

Walter

 

[Walter Hay]

I promised a post about visiting factories in China, and here it is:

TRAVELING TO CHINA TO VISIT FACTORIES

For those who have both the time and money available, face to face visits are impossible to beat when it comes to building relationships, conducting due diligence and checking manufacturing facilities and procedures.

Never go to China without thorough preparation. If you intend visiting factories, there is no point in the exercise unless you are very confident that the supplier is one you want to do business with.

It is important to remember that China is a huge country and travel within Chinese cities can be appallingly slow. It is acceptable to let the potential suppliers know when you will be in the country and that you will contact them on arrival in the city where you will be staying. Having arranged to visit them, check all travel arrangements necessary to be there on time. The hotel staff will usually help you with this.

I will introduce this subject with a story about finding a supplier’s factory in Taipei. When I first started visiting China as an importer, I already knew my way around Taipei in Taiwan because I had for some years been exporting to Taiwan as well as mainland China where my biggest customer was.

As an exporter I had been introduced to many businessmen, mostly “cousins” and from those introductions I eventually set up as an importer in 1987. The problem was that most of the cousins could not satisfy my product requirements so I had to look elsewhere.

I knew how to make contact with potential suppliers, and I made a point of visiting them as part of my due diligence. One of the reasons was that I wanted to deal only with manufacturers, so I needed to visit their premises. This is where the fun began.

Unlike India or Pakistan, the addresses of people and businesses in China (and Taiwan) are set out in a very orderly fashion. On one visit I had to find two potential suppliers whose addresses did not sound auspicious. They went something like this: No. 75, Alley 16, Lane 23, Nanking East Road. An alley off a lane!

The two could not have been more different. Chalk and Cheese! The first I found after a hair-raising taxi ride which stopped in the lane, unable to reach the alley, because of heaps of cartons, bicycles, motor scooters etc., clogging access. Eventually on foot I found the alley, then the premises.

In the usual fashion I was treated to tiny cups of Jasmine scented green tea, but there was so little room that even the sofa where guests should be received had to be cleared for sufficient space to sit down. The staff of 3 were continually interrupted by the telephone, and it did not take me long to decide that this was simply a wholesaler, or reseller, or agent, who knew little about the product type I sought although they had advertised it.

The second one was not very far away so I walked and was amazed to find in their alley a gleaming showroom, with well set up offices, and the light manufacturing process being carried out in immaculate premises upstairs. I dealt with that manufacturer for about 4 years until my business began to leave that product line.

Once you arrive at the business premises, you will usually be greeted on arrival by someone who may appear to be a junior staff member, but it is customary for a female staff member to be appointed as your hostess. She will speak good English and her mission is to make you feel like an honored guest while observing strict propriety.

She will often have some authority to negotiate, but price negotiations on the first contact are not desirable. Do that later in your visit, or even later on your return home. Visits are usually restricted to the reception area, where you usually drink Jasmine flavored green tea. If you empty your cup, it will be refilled.

Before leaving home you should have asked to visit the factory. If the factory is on the same premises as the office you are in, you may be sure you are dealing with a manufacturer. If taken to another location, do the following to determine whether or not the people you are dealing with own the factory: Assuming you cannot read Chinese, just compare Chinese characters on signs outside the premises with those on the business card supplied by your hosts.

Bear in mind that factories are often multi-story, with a multitude of businesses in the same building, so there may not be a noticeable sign. In that case ask the factory manager for his card. If this causes embarrassment or he cannot supply one, it strongly suggests that you are dealing with an agent, not directly with the manufacturer. If you request a card, you should also offer yours. Ask your hostess, “Do you own this factory?” You will only know the answer is truthful if she says no. If she says yes, you cannot be sure. This is not necessarily due to dishonesty, as she may misunderstand your question, or she may interpret it to mean, “Is this the factory that produces all of your products?” The investigations done prior to your trip will also help in your assessment.

One thing that you will find is that determining whether or not the supplier is a genuine manufacturer is not easy. I now find it easier to determine that by using the reports published by independent European inspection services and found on a few B2B sourcing sites, and I would limit my visits to those suppliers that have been verified in that manner.

Don't forget, if you want to find your way back to your hotel, make sure you have the hotel’s card to show to the taxi driver.

Walter

 

[Walter Hay]

Since no one is asking the big question....I will do it. Lets say, hypothetically, that I want to locate and contact a manufacturer of toolboxes or something. What is your method of getting past the wholesalers and getting straight to a manufacturer?

It is important to remember that without certification by a reliable third party authority there is no 100% sure way of verifying that a supplier is a manufacturer without visiting them. Even then you cannot be absolutely certain in some cases. I am drafting another post on the subject "Traveling to source supplies. Visiting manufacturers." and this will explain in more detail the difficulties.

I am assuming that like most people you will be using the popular B2B sourcing platforms, so this is what I would do:

First I would ignore Gold Supplier, Gold Star, Premium Member and other such status badges because they add nothing to the merit of suppliers displaying them. Begin your product search, filtering for manufacturers and for ones with Audit reports. The search result may show a large or small number depending on the product category.

Some websites list suppliers with "Audit" reports that are no more than the near worthless verification inspection that almost all of them carry out.
If the Audit report has been performed by Intertek, SGS, Sinotrust, or KRT Audit Corporation you can trust it but you must read the entire report. You may have to pay to view the report in some cases. A shortcut on Alibaba is to filter for suppliers displaying a red tick in a blue circle.

After selecting at least 8 or 10, preferably more, that look suitable, lodge a product inquiry with them and await responses. Some will identify their website, so that will allow you to start checking to see if they really are manufacturers. If they have a .cn website that makes your task a lot easier, because the Chinese government requires all companies to display an ICP number on their websites. If there is one, the business is genuine and a genuine business is far less likely to lie about the nature of the business, so their claim to be manufacturers is quite likely true. If no ICP number you should forget about dealing with them.

The website photos that you see will not necessarily be photos of the advertiser's premises. The photos of factory workers in rows and the impressive machinery may not belong to them either, so start checking phone numbers and addresses. If they have an office address, even if it is in HK, and a factory address elsewhere, you have probably found a manufacturer.

If you see the identical product listed by several suppliers all claiming to be the manufacturer, there is a good chance that they are all traders.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.

EDIT APRIL 4 2022 Alibaba have now made it compulsory for sellers to only use Alibaba websites. The result is that instructions above relating to ICP numbers no longer apply. Your only alternative is that If you find a name on Alibaba that looks as though it could be a suitable supplier, do a Google search for that name. You might find their website outside the Alibaba system, and that can provide you with more information.

 

[maleek]

Glad you decided to do this thread. My questions are:

1. What types of items should absolutely be avoided? I know Will Mitchell over at Startup Bros says anything technically complex should be avoided, but there's obviously more to it. I recently got one of my sample products, a unique piece of clothing, and the buttons were cheaply attached, and the zipper was already defective and doing that thing where it splits open while trying to zip it up. How do you avoid wasting your time with manufacturers like this?

2. Is there a way to avoid manufacturers who simply "disappear"? I recently had another product come in which I was very pleased with. It sold within hours of me listing it for 5x what I paid. I immediately went to order several more, and found the item was no longer available for sale. Of course I tried contacting the manufacturing, but I don't actually expect them getting back to me.

Before I respond, I just want to say I'm not trying to steal the AMA, just simply trying to help:

1)Here's a general guideline that I follow for people just starting out: Electronics. Electronics have a high probability of failure, somewhere around 60%. Generally, if you think in terms of shipping, the best items are light, easy to pick up, and 'impossible to screw up'. Liquids, are another bad item to import, in terms of shipping. Things that are fragile as well (coffee mugs) and defense items (swiss army knife, brass knuckles, you get the idea). Defense items are more so difficult with the customs side of things, from my understanding.

With that being said, you have to be very specific in dealing with suppliers. Never assume they understand what you mean. You have to remember that their culture is different, and you are dealing with a language barrier, that sometimes make things hard to effectively communicate. If you are having a car manufactured, tell them it has to come with an engine. Don't be surprised, if it shows up at your door engine-less, if you never mentioned the car must come with one in the first place. I hope that analogy made sense.

2) Depending on where you source from, a supplier's company page will generally say how much supply they can handle on a monthly basis. This is why I always tell people to deal with manufacturers if possible. There is nothing dealing with a trading company, just be aware that, if for some reason the trade company and manufacturer of your product no longer do business together, you're hooped. The last thing you want is to have all demand, but no supply, it's a great way to lose customers.

To add to the first point, if you insist on doing something complicated like electronics, use a third party inspection company. These companies come in, and inspect all of your product for any flaws, before it leaves the manufacturing plant. I mean from major defects (like a non functioning item), to a spec of dust only visible under a microscope. These companies can become costly however. Generally, you have to pay them per man hour, and have to pay for their travel to your suppliers manufacturing facility, and hotel. Alternatively, you can hire a sourcing agent who will go out a find a reputable manufacturer from the get-go. They typically require some fee upfront for their services. Or they will judge it on case by case basis. If it's too small of a project they won't get involved typically, unless they think the particular project is cool (and yes I have seen this happen)

In your specific case, that is exactly why it is imperative to always order samples. And from at least 3 different suppliers. That ensures you can judge quality for yourself, and are never stuck with just one option. If for some reason you only ordered from one supplier, and were not satisfied, but still want to work with them I would:

Tell them that after reviewing the product, you think these slight improvements can increase the quality rather inexpensively. You want to go at this from a win-win stance. I guarantee, if you make them lose face (blame them for their sub par quality product) you will ensure that you get screwed over, and or have them stop dealing with you entirely.

 

[Walter Hay]

Fantastic info in this thread.

I have a question about your product selection process.

Do you look for products and then investigate potential demand?

Or do you find a need in the market and then see if a product can be sourced?

Or is there another way?

Cheers

I am no longer selling any physical products. I retired a few years ago, and I have never done any serious online marketing.

With that disclaimer behind me, let me just say that the two highly successful businesses I started from zero both involved products that were in high demand. I knew about the first one because I had been a successful salesman in that industry.

My first real business: I knew there were major product improvements possible, but my boss would never allow me to make any changes. A year after I left that job and could not find any suitable sales position I said "Heck, I know where there is a market for a product that has not yet been developed!" It was an industrial chemical product and I played around with formulas until I found the right one, and I launched it on the market. Within 3 years I had a national monopoly in that specialized area, and within 11 years I was exporting the product to Asia Pacific countries. Price was not an issue. I could ask whatever I wanted because the product eclipsed the competition from some of the biggest chemical companies in the world. They were stuck in a rut. I thought outside the square.

My second real business: A passing complaint by a family member about the atrocious service his business was getting from every supplier they had tried for a particular product, triggered an idea. During my many visits to China as an exporter I had been urged by numerous contacts to consider importing what they manufactured. One such product was the exact type that my family member had mentioned. I started by buying locally to test the market, but quickly tired of the poor service and indifferent quality, so I began buying from China. Wow! Better service, faster delivery, and substantially superior quality all at incredibly low cost. That low cost did not stop me from selling at prices way higher than my local competition, because I was also selling something they could not get: service.

So to answer your question more directly, I found a need in the market and then in Business #1 developed the product and made it myself and in Business #2 I accidentally found a need in the market and I sourced the product overseas. By the way I did not buy from the business that offered me their product while I was in China.

Walter

 

[Vigilante]

I got just bought the book, i expected more pages but i guess you only put in important things without using whole stories to explain it.
I am going to read the book within the next few weeks and make lots of notes of it and the thread.
Also i'm going to put a review on this thread of it.

Make sure you keep some of his references from the book private. There are a few tidbits he has intentionally left out of this thread, and based on his continued contributions to this forum, I would like to leave it that way in hopes that people reach out and support him and buy his book.

This thread could be a lesson in how to network. He didn't walk in here spamming the forum. He walked in here, added value to people's lives, and the natural byproduct of that is people want to know more... learn more... and buy his book.

So just make sure that in your review, you don't take it outside the construct of his wisdom in this thread. Leave room for people who want to know more or dive deeper to pick up his book. That's one way we, as a forum, can reward his exemplary contribution to our knowledge base.

 

[Silverhawk851]

Thanks for doing this, and making the forum a better place to be.
Your value add is much apprecated. Rep+++

So to fire things off...

Since you've been on both sides of the equation, exporting to Asia/Pacific, and importing from Asia Pacific, what differences do you see?

What are 3 cardinal rules you NEED to know about importing to/from Asia Pacific?

Also, which one do you prefer, exporting to Asia, or importing from Asia, and why?

 

[Walter Hay]

Thread marked GOLD! Thanks @Walter Hay for providing all the wonderful details.

Thank you. I am honored to know that my contribution is regarded as gold.

I would like to say that the Fastlane Forum is Gold. I have been a contributor on a few other business forums and I must say that not one of them is even a shadow of Fastlane.

Here we have mostly serious people wanting to make a difference to their own lives and to the lives of others. I feel at home here.

 

[Walter Hay]

Hey Walter,

Nice thread man, lots of good info. You seem to have a lot of experience in importing.

I'm currently looking to get into importing as well. So far, I have found a manufacturer (not a wholesaler) and sent them an email requesting their product catalogue and their pricing list. I also spoke about working with them exclusively. They said "Our ------* have supported OEM service to our regular client from USA. You can exclusive our "-----------" brand in USA. But we can not stop our -------* OEM service for client from USA. ---------** is looking for distributor in USA." 1. Does this mean I would be able to sell both of their products, and get exclusive rights to their -------** since they are looking for a distributor? 2. Or I would I only be able to sell under their brand name? However, I think i'm actually going to be rebranding their products, 3. do most manufacturers allow this?

4. Their products look really good, I've also done a bunch of research on competitors and prices. There are some competitors but this manufactuer's product is substantially better quality, and I think I would be able to penetrate the market easily. Also, do you have much experience with selling on amazon? I see 2 brands trying to resell one of their particular models but their branding, copy, and product listings are pretty bad, I can definitely improve this. There are also 2 other brands selling similar items from different brands but these are the ones with mediocre quality so I would definitely be able to beat them, the manufacturer even made a video comparing their product against the other brands. I also do not see their other model on amazon, so i'm guessing they would allow me to become the exclusive distributor for that product.

The 2 brands of similar products are both selling for 20$ each, and the 2 mediocre brands for one of the models from this manufacturer are selling for 35$ each. 5. My wholesale pricing for this product is 13$ and the replacement parts are 9$. All four brands also offer free shipping. I was thinking of including one set of both the replacement parts with the product, as this would make it more appealing and pricing it at 47$ and including free shipping. I'm also in Canada so our shipping charges are ridiculous, I'll probably end up using FBA. Does this sound viable to you?

6. I want to make a good impression on this manufacturer as I see this as a huge opportunity. How would you proceed in this situation?

P.S. 7. I forgot to mention, do I need an import/export license?

I can help you regarding the buying process and the importing, but I am not an expert on internet marketing.

I have numbered your points to make it easier for you and others to follow.

1. and 2. As I read it, they have given you a two part answer, both parts meaning the same thing. They will grant you an exclusive agency for their brand. I should add that it is rare to be granted an exclusive agency by a Chinese company unless you are willing to place a very substantial order, quite likely well in excess of their usual MOQ.

In addition, you need to be aware that when granted, it is common for exclusive agencies to be used for market testing, and if successful, the manufacturer will then open their own sales office and you lose the business.

3. Yes, almost every manufacturer will allow this. The trendy idea of private labeling is nothing new.

4. Do your own product testing. Don't rely on the manufacturer, and certainly in these days of Photoshop, it is possible to make Dracula look like Prince Charming, so photos can be deceiving.

5. I assume the price you have been quoted is FOB. In that case I would want a much better price than $13. When you take into account freight, duty, Sales Tax, Amazon or eBay fees, PayPal fees and postage you will not have much left if you sell at $35. When I was running my importing business I taught my franchisees not to bother with a product unless at a minimum they could sell at total landed cost X 250%. Sales were all B2B, so Amazon and eBay did not figure. The margins were often higher. To obtain a landed cost you will need to get a quote on freight, and for that you need first to ask the supplier for package sizes and weight per package. Then you can obtain quotes for freight, but you will always be asked dimensions as well as weight.

6. First I would look for other manufacturers of comparable products and get quotes. Assuming you get a better price I would then blank out all identifying information and email a scanned copy to your preferred supplier and ask if he can match the price. Say you have been impressed by their service attitude and would prefer to deal with them.

7. You do not need an import/export license. Whoever clears your first shipment for you will obtain a number that will henceforth identify all your shipments as belonging to you.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.

 

[Walter Hay]

How to Find Unique Products

First a little preamble.

Competition is all well and good. Yes it does stimulate the market, but good marketers can stimulate without competition.

When running my own businesses I loved having no competition. How did I achieve that?

• I built a better mousetrap. I saw that in a particular industrial application that I was very familiar with, the product almost universally used had some very undesirable characteristics. Simply put, it had once been the best thing since sliced bread, but I knew that I could substantially improve on it. I did just that ― then I sold it like crazy, charging nearly double what the old product sold at. I achieved 100% market share in my own country, then built an export market. I did not even discount the product for my agents, because the product was so good!

• I found a USP that worked wonders. I was now importing and selling B2B. My biggest local competitor had a 90% market share in the market sector that was the most lucrative. The USP was the word FREE. The complacent competitor charged huge set up fees. I offered FREE set up. It was as simple as that. Like a frog in a pan of water slowly coming to the boil and not noticing the increasing heat, he did not realize what was happening until I had consolidated my grip on the market, and I had 90% of that market. He sold his greatly devalued business to a small competitor, but they never became a threat. I franchised the business interstate and repeated the process, then took my franchise system overseas to 3 more countries where I was able to do exactly the same.

Now .... the easiest way I know how to find unique products. When people think of product sourcing the vast majority think of China. That is where everyone buys cheap isn't it? Yes, and most buy the same products as hundreds of competitors because they are all looking for suppliers of those hot sellers that they have researched on eBay, Amazon etc.

The easiest way that I have found is to source from countries other than China. Too difficult? Yes it is a little harder than sourcing from China, but those who do it are moving into the fastlane quicker than most new importers.

Prices are too high? You might pay more for a product than you think you would pay in China, but China does not make such products. They may make jewelry by the ton but they don't make the classy designs that you can buy in other countries. They may make cheap shoes but they don't have the marketability of "Made in Italy."

Those wedded to Alibaba or China in general will find a lot more excuses to not consider other countries, but I know that a lot of my students have done very well by sourcing outside China.

 

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[Walter Hay]

Traveling to source supplies. Do you need to visit China?

In this post I am concentrating on trade fairs, but later I will post on the subject of traveling to China in order to visit manufacturers at their factories. It will include the proper protocol when visiting a Chinese business.

For those who can afford the time and money to take a trip to China I would highly recommend it. Nothing can beat face to face contact with potential suppliers.

There are a few things potential importers need to know before going to trade fairs in China.
1. Trade fairs can be mind boggling. The vast product range will fill your head with ideas, so you need to make sure you take detailed notes, as well as collecting catalogs.
2. Be prepared to spend two or three days at a fair. They are massive.
3. Always contact exhibitors well before you travel. Deal with them via email as though you were not going to China. You should have narrowed down the field before you go. Do let them know you are coming to the fair.
4. DON'T commit yourself on the day, unless you have had plenty of prior contact with the supplier. Your mind will be in a whirl and after committing yourself you may find a product or supplier a few stalls away that will be much better for your business.
5. Don't accept any statement that the supplier you are talking to is really a manufacturer. Just as you will find happens on B2B sourcing portals, many trade fair exhibitors claim to be manufacturers but are not.
6. Allow time to visit other suppliers that you may have previously contacted, who are not exhibiting. China is a big country so plan your trip and in particular all the internal travel carefully.
7. Make your travel and accommodation bookings early. Check with the fair organizers to see if they have special deals with any hotels. When you leave your hotel take the hotel’s business card with you to help taxi drivers understand where you want to go at the end of the day.
8. Remember that Chinese business people have a different concept of the word "Yes". To them it can mean maybe, perhaps, possibly, probably, no, or even yes. They are not being dishonest, they are just trying to please, and to them, saying no is impolite.
9. I would not bother going to the biggest fair in China. It is known as Yiwu market, and it is mind boggling. The market covers 1,000 acres and has 70,000 stalls. Many, and in my experience most, of the stall holders do not speak English, so you would need a translator. Having been required to use a translator in my exporting days when I was selling product to China, I can tell you that it puts you under a serious disadvantage.
10. This may seem out of place but it is worth considering visiting trade fairs in your own country. Depending on the industry sector featured, there will often be many overseas exhibitors.
11. To find trade fairs, check out http://www.tssn.com

Walter

 

[Walter Hay]

Q & A 2.

Q: I would like to know approx. how much cash one needs to begin buying products from overseas?

A: It is possible to start with a few hundred dollars, but that is doing it the hard way. It is critically important to first do your homework on product selection. I am not an expert in that area but there are others on the forum that can help in that regard.

If you have selected a product that you are very confident will sell, and you know the price that it will most likely sell at, as well as your selling costs such as postage to your customer, eBay, Amazon, and PayPal fees, that will tell you the maximum landed price you can afford to spend on buying the product.

To work out the landed cost you should first get the total of the unit price + freight. Then add the duty calculated on that total. Remember that in most countries there will be duty exemptions for shipments below a certain value. It varies from country to country. After adding duty, then add Sales Tax. This final total is your landed cost.

If the final figure is at or below what you have worked out as the maximum landed cost, you can then proceed to check out a sample or multiple samples. If you have thoroughly researched the manufacturer, you might choose to import a small quantity as a sample shipment in order to reduce the freight cost per unit. Freight on single samples can cost almost as much as freight on 10, 20, or 50 items.

You start selling after checking the goods, and assuming you have done your homework properly you should be getting profitable sales. You need to put aside all the sale proceeds ready to place another order. If sales continue to be good, you rinse and repeat until you have built up your business to the point where you can a) take out some profit and b) order some other product/s.

I have had quite a few people tell me about their success stories after starting off with only $300 or $500, but If I was starting off again, I would like to have at least $1,000 to spend on inventory.

 

[Walter Hay]

A Few Hints On Product Sourcing and Importing.

There is a lot more to the sourcing and importing process than just searching a site for suppliers, so I have set out a few hints that you can use to make sure you have at least done the basic work before you get in too deep.

I see too many people on forums like this who jump in at the deep end without doing adequate research.

I could just give out the names of a couple of safe B2B sourcing platforms, but I know that some newbies, maybe even a lot of them, would go there, like the trustworthy suppliers they find, and start placing orders. That could still cost them big bucks.

It is not uncommon for people to go off half-cocked knowing almost nothing about what is involved in buying overseas. In effect they treat the overseas buying process as though they were buying from the corner store. Some even turn to me for help after they have ordered goods without knowing what to do about actually getting the goods delivered to them.

I have on my files tales of woe that include one who ordered a large shipment of bulky goods. Great price! The problem was, this person discovered that freight was going to cost several times the value of the goods and by the time she came to me for help she had already paid for the goods. I find it hard to believe how careless some people can be with their own money.

If someone intends going it alone without obtaining expert guidance, they should at least think carefully about the project from start to finish. Here is a very brief step by step guide. Intending importers should at least complete the first two of the following steps before even starting to source products.

• Market research. What to sell, how to sell it, are you sure you will be able to sell it, and what prices can you confidently expect to sell it for at a profit. That confidence must be based on thorough research, not just checking sold prices on eBay or Amazon.
• Determine what maximum landed cost is affordable in order to be profitable, making sure you take into account all selling costs. See first point.
• Search for suppliers using a safe sourcing site. Don’t just go to any site casually suggested on forums, because on many of them everything is not what it appears. For example, “Verified” means the business actually exists. “Gold” or “Premium” Supplier means they paid out hundreds or sometimes thousands of dollars to gain that status. Alibaba were for almost a year discounting that fee by 90%, so that means a whole lot more suppliers have bought status without scrutiny.
• Remember that Chinese businesses almost invariably trade under multiple different names, so bad reviews don’t bother them and bad feedback rarely appears. They simply leave their bad record behind and trade under the next name on their list.
• Avoid suppliers falsely claiming to be manufacturers. Some popular B2B portals have big lists of suppliers claiming to be manufacturers, but they are not. They add their profit to the prices they pay real manufacturers. You lose that part of your potential profit.
• Avoid middle men falsely claiming to be wholesalers. They do not even carry inventory, but are opportunists who will offer for sale anything from paper clips to million dollar machinery.
• Avoid dropshippers too because they take profit out of your pocket.
• Conduct due diligence on the chosen suppliers.
• Convince the supplier to allow you to order much less than their stated MOQ.
• Get quotes. Don’t forget freight.
• Beware of freight collect quotes. A common scam in this area could lead to your bankruptcy.
• Negotiate payment terms. Beware of W.U., and Telegraphic Transfers. Scammers love them.
• Ensure that all costs to your door are covered and that you have them in writing.
• Obtain sample/s. Beware of freight ripoffs in this part. Ask for delivery by the postal service.
  
• If satisfied, place a small trial order crossing every “t” and dotting every “i”.
• Pay deposit.
• Pay balance as negotiated.
• Check the goods.
• If all is well to this point, you are in business. You can do your test marketing and be ready to place another order.

Now this is not an exhaustive list, but it may help those who prefer to risk their money rather than seek expert advice. There is much, much, more. It takes me 83 pages to set it all out in detail for those new to importing.

 

[Walter Hay]

I highly recommend the book Walter wrote on importing, if you are interested in importing from China it's a must read.

I placed an initial order with a supplier that is extremely slow. They initially quoted me about 20 days to manufacture the products, after about 15 days they told me it would be MUCH slower. They then set a new timeline of about 20 additional days which is approaching soon and I don't believe they will meet.

Do you have any tips on becoming more of a priority to manufacturers you can tell will be slow? Could monetary bonuses for meeting deadlines be effective? I have no interest in placing another order with this manufacturer but I could tell early after placing the order that it would be very slow to get my product and wonder if there is a way to possibly increase the speed if a similar situation occurs again.

Payment arrangements can have an effect on speed of dispatch but if it is early days in your dealings with them that will not apply this time.

In the case of this current order there is little you can do because you have probably paid a deposit. If you like the product well enough, when placing your next order I would insist upon a smaller upfront deposit with the balance payable on proof of dispatch.

If you begin dealing with other suppliers in future, one of the best tips I can offer is to communicate with them frequently before placing an order, and see how quickly they respond. Slow responses on the sales side of things are a warning sign. If you order a sample and it is slow coming that is a bad sign also. I would also try to negotiate a smaller deposit from the outset.

Walter

 

[Walter Hay]

One thing I noticed on this forum and with people in general is that they know what importing is but they don't know how to reach the manufacturers, how to professionally contact the manufacturers, which payment method to use, etc. Make's me think of a fastlane opportunity here... I have a perfect domain name too..

You are tempting me to engage in some self promotion by telling readers that I have already done what you are thinking of doing. Oh well.....

No matter what you publish, the majority of people seem to prefer to listen to suggestions by amateurs. I find that even some Fastlane members seem to think that they can learn all they need to know about a subject by asking a few questions.

A post by jpmartin in the thread: 'Mindset, Motivation, Choices' started by xabi, Oct 3, 2014, that I thought summed it up well said: "If you think education is expensive, try ignorance."

I have seen so many people get burnt in importing when they could avoid that with some real education on the subject.

Good luck with your new opportunity.

 

[Walter Hay]

The difference between Alibaba and Aliexpress.

In my initial post I said I would deal with misinformation.

From what I read on forums including this forum it is clear that many people think that the main differences between Alibaba and Aliexpress are the MOQs quoted, free postage on Aliexpress, and slightly higher prices there than on Alibaba.

There are other differences worth noting.

1. Alibaba is a wholesale site, with a sprinkling of manufacturers among the wholesalers.

2. Aliexpress is a retail site. It is not an auction site, but in other respects is similar to eBay.

3. Alibaba vendors are expected to provide escrow, but many won’t unless the buyer pays the extra 5% that it costs the vendor to use that service. That is understandable if they are working on a low margin. Some won’t use escrow at any cost. These are potentially dangerous vendors to use.

4. Aliexpress vendors are obliged to accept payment via escrow.

While I do not generally recommend using Alibaba for product sourcing, I did say in my opening post that I would be willing to buy from suppliers with a symbol of s red tick in a blue circle next to their name, provided they accept payment via escrow, and if I was satisfied that they are genuine manufacturers.

Escrow. Because I emphasize the importance of paying via escrow I would like to alter members to a big risk. Both Alibaba and Aliexpress have strict rules that buyers must follow if they are unhappy with their purchase, and want to prevent the escrow finds being released to the vendor.

The big risk is related to time limitations. In a nutshell, you are limited in the time frame within which you can escalate a claim in order to have Alibaba stop payment. The vendors know the rules but most buyers don’t bother to read the fine print.

The buyers enter into compulsory negotiation and the vendor responds. The buyers work the system, procrastinating, using soothing words until they finally make it clear that they refuse the buyer’s claim. Too late, the buyer discovers that s/he has been tricked and Alibaba will not stop the payment because the time allowed has elapsed.

Always read the fine print.

P.S. US taxpayers subsidize the free postage offered on Aliexpress that allows retailers there to compete with vendors in the US.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.

 

[Walter Hay]

Very sound advice. But now I am curious on how I would approach a manufacture and ask for a small to medium supply of products without letting on I am a novice. Do they even care?

Just curious but why is WU bad? I've never needed to use it before. Are there huge chances for scams or something of the sort?

P.S. About me I am a very skeptical person. But I also believe that all things worth while involve a little risk. The key is to minimize that risk as much as possible. Nothing Ventured Nothing Gained.

Skepticism is a good trait to have, particularly when you are thinking of spending money. But I agree that you should minimize risk as much as possible. In relation to that, I believe that knowledge is power. Sadly I see too many people jumping in the deep end just relying on snippets of information they have picked up on forums.

To avoid seeming like a novice, you need to:

• Identify yourself as an established importer.
• Give yourself a title such as purchasing manager.
• Don't ask what is the MOQ.
• Don't ask immediately for a sample. Instead, request a catalog, whether online or printed -- preferably the latter. It can tell you a lot that is hard to find online.
• Don't promise to place large orders.
• If completing an online sales inquiry form, leave out the expected order quantity. If it is required field, insert 000000.

WU is very risky because scammers rarely accept payment by any other method. In brief, the technique they use is to ask for payment to an individual. They collect cash and run. In exceptional cases, where you have built a relationship with a supplier WU can be used safely.

Walter

 

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[Walter Hay]

Misinformation is a Wealth Hazard.

Reviewing some “information” websites, eBooks, and posts on various forums relating to importing.

I don’t intend naming names, but if anyone is seriously interested in checking some of the “information” sources I am reviewing I will provide details privately.

Many of the people who publish misinformation rely for their income on those who would believe it if you told them that Webster’s had removed the word gullible from their latest edition. They tend to accept what they read because the person is an “expert.”

I have looked at some of the “success” stories of people selling exciting books teaching “how to import” and I have found not just exaggeration, but plain old BS. But then, a lot of people adopt the approach: “Why let the facts spoil a good story?”

You know how it works…. They give you a free teaser that contains pages of stuff about how they made a fortune importing small quantities, usually from China, and selling on eBay, Amazon, etc., then, when you are all excited they throw in a special offer to upgrade to the paid version.

But what have you been reading? Mark-ups of thousands % on items that they have been able to sell like hot scones.

Do yourself a favor, and before buying the special offer up-sell, do some checking. I did that for you because I know a lot of people never bother, they just accept what is written.

Let me give you a real example from a popular free eBook, offered like so many are, on an “expert’s” blog.

Here’s what was being taught: Buy X00 units of product XYZ from sites such as Alibaba, Aliexpress, etc., and pay only $0.75 each including postage from China. Sell for $13.50 and you will have the lot sold very fast, so you can order more and repeat the process, with a mark-up of about 1800%.

Here’s the reality: The product XYZ was clearly identified and I easily found it on Aliexpress, now slightly cheaper than what the free book said. I then went to eBay, and found the identical product selling, not for $13.50, but $1.95 with free postage. Mark-up 278% but that does not take into account the reseller’s selling costs which could include eBay or Amazon costs, PayPal and postage. A huge amount of work and risk for such a poor return when those costs are deducted.

I know that I have written in an earlier post that there were some products on which I and my former franchisees were happy to accept as low as 250% mark-up, but that was when we sold the items B2B by the hundreds or by thousands, not one at a time on eBay. I encourage new importers to look for high margin products and not stop their searching until they find something that will give them those margins.

Some of these free eBooks I have looked at contain some very good information, but they also contain some very bad advice. A lot of the information in some of them is obsolete too.

It is not only in eBooks that you find misinformation that is not only wrong but potentially hazardous to your wealth.

Here are a couple of items from posts and blog articles by “experts” I have found on forums and from How to Import information sites:

“I mainly use Aliexpress although I have used dhgate before, they are basically the same website.” .......
That is plain ignorance. Those sites are totally unrelated.

“Even better, they…. have onsite inspections from Alibaba.” .......
Every verified supplier has had an onsite inspection and it just proves that the business exists, so that is not better in any way.

“DON’T buy from non-gold members. Just following this rule will help you to avoid 98% of the scams and bad suppliers.” .......
I will soon post an article about gold member scams, because dealing with gold suppliers is no guarantee you will not be scammed.

“Another option is AliExpress.com, Alibaba’s site for smaller orders.” .......
Aliexpress is a retail site. It is not Alibaba’s site for small orders. With the right approach you should be able to buy small quantities on Alibaba at lower prices than you would pay on Aliexpress.

“If the company has a verified profile on Global Sources, chances of it being a scam are reduced to an absolute minimum as unlike Alibaba, Global Sources takes it’s verification process very seriously and there are stringent requirements for authentication. So depending on the number of stars a supplier has on Global Sources, you can be sure that you’re dealing with a real company.” ........
See my recent article about GlobalSources. They do not take their verification process any more seriously than Alibaba do. Stars are bought, not earned.

I could quote a lot more, but I don’t want to seem too negative. The main point of this post is to warn that people calling themselves experts who publish eBooks, run training courses, host webinars, post on forums are often (to me) obviously not experts at all, so do your own research to the best of your ability, don’t just rely on experts unless you can be very confident that they do really know what they are talking about.

That applies to me also. Before you take as gospel everything or anything I say you should check out some of the information I have provided. Have I been able to answer every question or have I avoided the issue? Have you checked at least some of my answers to see if they are correct? Bear in mind there will be differences of opinion but there cannot be differences of fact.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
■ Introduction. Dealing with myths and misinformation.
■ Some things you should know or do before you start product sourcing.
■ Part 1. Traveling to source supplies. Do you need to visit China? Trade Fairs.
■ The difference between Alibaba and Aliexpress.
■ Alibaba and the 2236 Thieves.
■ Sourcing from countries other than China. Is it worth it?
■ Part 2. Traveling to source supplies. Visiting factories in China.
■ Parallel Imports USA.
■ Do your suppliers use child labor or slave labor?
■ Inspection Services.
■ Sourcing Agents and Quality Control.
■ Q & A 1,2,3,4,5,6,7,8,9

 

[Walter Hay]

Q. 12 I have copied only one question here, but I have received very similar questions relating to the same problem encountered in dealing with other B2B platforms that offer escrow.

Q. I have received a parcel from a supplier I found on dhgate and it contains nothing but scrap paper! I had to sign for it before I could open it to check it, so Dhgate say it has been received and they will release payment within 2 days. The rules for disputes are too @#!!X*! complicated and they seem to be changing them when they reply to my complaint because I can’t find the rules they quote on the website. What can I do? This cost me $130.

A. You have seen in my forum posts that I would never recommend DHgate because of the huge number of scams reported, but I am happy to help for your future buying. There are many possible problems with the so-called protection provided by escrow services controlled by the big B2B sites, and you have been caught out by one of them. Because DHgate have told you that because you signed for the parcel, payment will be released to the seller, they will also ask you for proof that the package only contained paper, but any bunny would know that a photo is useless as proof. They will tell you to return the parcel to the supplier, but the supplier will either say they did not receive it, or that it had the goods inside when they sent it.DH gate are only going through the motions until you give up.

If you paid through PayPal, lodge a dispute with them, but do not say that the goods are not as described, otherwise PayPal will reject your dispute. Tell them that this is a fraud and you signed for an empty package. Depending on which country you are in, contact any government fraud watch body and report this fraud, asking them to contact PayPal and DHgate.com on your behalf. This method has worked for others.

In future, ask the courier to wait while you open the package. If he/she is a reasonable person they will allow this and you can then refuse to sign for it if it contains paper or other filling instead of the product. I have known people to receive stones, and in one case a brick.

For the benefit of other readers, I add that you should save a screen shot of the page where you found the product listing, as well as keeping copies of all emails, whether through your own email account or your member’s email on the B2B site. Do this progressively from the beginning of your earliest negotiations to buy, right through to receiving notice of shipment. Save every email even after that point. A number of people report finding all their member emails deleted and that makes it impossible to pursue a dispute claim.

Remember that in almost every case you will be required to return the goods in order to have your claim processed. It is common for suppliers to not take delivery of your parcel, and so they can say you did not return it. That will be another loss to add to what you have already paid.

Make sure you have read the escrow rules, if you can find them. Copy them also.

SOLUTION: In future ask the supplier to accept payment through a reliable service such as escrow.com, telling them you will pay the escrow fees. If they refuse, look for a supplier you can trust, because if they refuse, it could be because they are not trustworthy. You may have to look on websites other than the one where you usually source products.

You can offer some evidence regarding escrow.com’s high standing:
In the US Government’s Strategic Partners List, escrow.com are listed first: http://export.gov/CSPartners/eg_main_051038.asp
eBay will only allow the use of escrow services provided by escrow.com see: http://pages.ebay.com/help/pay/escrow.html
Licensing of escrow.com by government authorities can be found here: https://www.escrow.com/escrow-101/escrow-licenses.aspx

 

[MJ DeMarco]

Thread marked GOLD! Thanks @Walter Hay for providing all the wonderful details.

 

[Walter Hay]

DON'T KEEP ALL YOUR EGGS IN ONE BASKET

My experience with a great supplier could be helpful to many of my readers.

When I was running my importing business until I sold out a few years back, I had a wonderful supplier that produced around 50% of the products bought by me and my franchisees.

It was a great relationship,and I had often visited them. The owner always personally picked me up at the airport and treated me like royalty. The product quality was exceptionally good and service was excellent.

Suddenly it all went pear shaped!

Orders were late. Emails and phone calls resulted in vague stories. Franchisees were getting restless. I caught the first possible flight and this time arrived unannounced.

I was received courteously as usual and later in the day was treated to a grand feast, but on my walk through the factory I could see the cause of the problem. They were flat out producing a massive order for a major international brand. Everything else had to wait. Their prize new customer had placed an order worth millions, and they were only holding orders worth a little under 1/2 million from our franchisees.

I diplomatically applied what little pressure I could exert under the circumstances, and finally told the owner that I would not go home until I could see our orders all being packed. For the rest of that week I went to the factory every day, dined with the owner in the factory's huge dining room and one by one ticked off the orders being prepared for shipment. Under pressure he had put aside one of his production lines for us.

I arranged with my franchisees to cancel the most recent orders that the supplier had not even begun to deal with, and send them to alternative suppliers we had been using for some time. I took time out from my boring days in the office and factory so that I could personally assure those other suppliers that this was just the beginning of a much expanded business relationship with them.

Just imagine the situation if I had not had the foresight to use several suppliers. My business empire would have collapsed overnight.

The moral of the story - Always be sure you have backup suppliers.

Walter
P.S. Our former supplier had put all his eggs in one basket, and is no longer in business. It is equally as risky to rely on one customer as it is to rely on one supplier.

 

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[Walter Hay]

Alibaba and the 2236 thieves.
There is so much about Alibaba that has been published but is not known to most people unless they read financial news, so I thought I would add a link to a news item from the Economist headed: Alibaba and the 2236 thieves. See the link below.

I know that this news item is now a few years old, but the Gold Supplier system is unchanged, so I believe the report still has value to those who have not seen it before.

For those who don't want to read the whole article, here is a small extract:

"Alibaba, China's leading e-commerce platform, faces the same challenge, but more so. It operates in a country where fraud is rife. And it has grown at a dizzying pace: 56m people use its business-to-business website, it claims, and 370m use Taobao, its online mall. This week it ran into trouble. On February 21st, in a filing with the Hong Kong Stock Exchange, Alibaba admitted that it had granted “gold” status (a mark of supposed integrity) to 2,236 dealers who it says subsequently defrauded buyers."

Two of Alibaba's senior executives at the time resigned in the usual Asian way of "accepting responsibility” which is in effect an attempt at taking the heat off the company.

In my opinion the situation was made worse when Alibaba discounted their Gold Supplier fee from $2990 to $299 for most of last year. This resulted in a flood of new Gold Suppliers on the site, but readers should realize that Gold Supplier status has always been bought, not earned.

It is worth noting the Economist's comment about Gold Supplier status: "(a mark of supposed integrity)" In emails that I have received from Alibaba they state that one of the reasons for becoming registered as a Gold Supplier is:

“6. Buyers trust you because your company is verified by the credit agency.” That credit agency verification is performed as part of the “Onsite Check” which happens to be identical to the onsite check for ordinary Verified Suppliers and is almost identical to the A&V check. Here is a cut and paste from Alibaba’s site regarding that process:

“Onsite Check is a verification process for China Gold Suppliers. The supplier’s company’s premises are checked by Alibaba.com’s staff to ensure onsite operations exist there. The suppliers’ legal status and other related information are then confirmed by a third-party verification agency.” What this all amounts to is that regardless of the badges displayed the only thing you can be sure of is that the business actually exists and at least has an office that they may have rented for the day. Does that reassure you?

There is an exception and it is the Supplier Assessment which is identified by a red tick in a blue circle. The report is lengthy and should be read in its entirety if you want to know if the supplier really is a manufacturer.

Here is the link to the news item: http://www.economist.com/node/18233750

Please don't think I am just knocking Alibaba. Almost all of the major B2B sourcing sites use a similar system.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:

■ Introduction. Dealing with myths and misinformation.
■ Some things you should know or do before you start product sourcing.
■ Traveling to source supplies. Do you need to visit China? Trade Fairs.
■ The difference between Alibaba and Aliexpress.
■ Traveling to China to visit factories.
■ Do your suppliers use child labor or slave labor?
■ Q & A 1

 

[Walter Hay]

May i ask what is the time allowed to let alibaba know not to release the funds?

That question is not easy to answer. I am one of those rare people who will always read the fine print. The trouble is that Alibaba have such a complicated way of explaining the rules that I can only answer by using cut and past to quote you what they say.

"How do I make a File Claim?

Buyers can make a File Claim 10 days after a dispute request has been made. Simply find your order in My Alibaba and click 'File Claim'. Your claim will be submitted to our Dispute Resolution Team.
If dispute requests are not approved within 30 days of submission, the Order will automatically be directed to our Dispute Resolution Team.

Buyers and suppliers should keep any evidence of shipments, deliveries or transactions that are relevant to their dispute and submit this material as evidence to Alibaba.com before claim begins:
1. When make a File Claim, you should also submit evidence at the same time
2. Requests for dispute will be cancelled if evidence is not provided within 7 days of application
3. Alibaba.com will contact both parties when mediation is approved and will judge each case according to evidence provided by both parties
4. If the supplier wants to appeal against the buyer's claim, they also need to provide evidence
5. All decisions made by Alibaba.com are final"

"You can submit an Open Dispute any time before you confirm delivery of your order. Open Dispute can be made if:
·Goods are not received 27 days after the supplier has confirmed shipment
·Goods are not received in satisfactory condition"

"Dispute Requests may or may not be approved by suppliers. Please negotiate with the supplier to reach an agreement. Most disputes are made because of miscommunication between buyers and suppliers. We advise you communicate with the supplier to resolve your problems.


If the supplier agrees to the refund request, money will be refunded to you and the transaction closed. If the supplier rejects your refund request, you can always modify the request based on mutually agreed terms.


However, if an agreement still can't be reached within 30 days of the initial Open Dispute, the dispute will automatically be submitted to Alibaba.com for mediation."

As above, they state that you can file a claim any time before you confirm receipt of the goods. The period allowed for negotiation before a claim lapses appears to be 30 days.

I have been informed by many unhappy people that vendors have begun negotiations with every appearance that they will either replace the goods free of charge, refund the payment, or give a big discount, but after some time the tone changes and they eventually either refuse any request or they just stop communicating. When the buyer then tries to escalate the dispute they find that the time has elapsed and payment has been released to the vendor.

 

[Walter Hay]

Awesome thread I've been looking to get into the import business for a very long time but have always been coming up short due to a lack of experience in a variety of areas. Besides reading your book which I will no doubt soon be reading what other advice would you have a a novice embarking on this en devour?

3-5 critical tips would go well.

Here are a few tips for newcomers:
Don't buy from wholesalers. They buy from manufacturers and you can too while pocketing the extra margin.
Don't believe everything you read on forums. Even the most generous and altruistic experts don't tell you the full story online. Many "experts" whose stuff I read are clearly amateurs who have been lucky with some importing but they feed unsuspecting newbies with bad advice. Don't believe me either without some evidence to show that I do give sound advice.
Don't be scared by some of the myths, such as "Importing is very complex," or "You have to buy big quantities to get factory prices," or "You need to haggle to get the best prices."
Don't ever pay by WU and don't place a big order first time, even if you have checked out samples.

TOPIC HEADINGS PREVIOUSLY POSTED IN THIS THREAD:
Introduction. Dealing with myths and misinformation.
Some things you should know or do before you start product sourcing.
Traveling to source supplies. Do you need to visit China? Trade Fairs.
The difference between Alibaba and Aliexpress.

 

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[Walter Hay]

DO YOUR SUPPLIERS USE CHILD LABOR OR SLAVE LABOR?

There is something quite simple that all importers from China can do to avoid buying from sources that take unfair advantage of employees or even worse, employ under age, indentured, or slave labor.

I teach safe sourcing and among the things I do is advise people to avoid the big popular websites. One of those big sites, Alibaba does have an audit system that sometimes includes social responsibility compliance verification, but it only applies to suppliers displaying a red tick in a blue circle and it is essential to read the whole audit report. Two of the sites that I recommend instead of the big sites routinely have supplier assessment processes that include not only verification of their manufacturing capability, but also verification of social compliance.

This means that they satisfy the strictest rules regarding employees' ages and working conditions, as well as social responsibilities.

During my many visits to China since I started exporting there in 1978, I have seen great improvements in working conditions. I have visited numerous factories and examined their manufacturing processes.

When I began importing in 1987, conditions in the factories operated by most of my suppliers were on a par with conditions I had observed in other countries such as USA, Australia, and the UK. A few had some way to go to catch up.

Now, when I visit those socially responsible manufacturers they have premises that look more like pharmaceutical factories than industrial premises. The industrial processes that generate dust no longer show signs of that dust on the floors. Cleanliness is almost clinical. Workers have plenty of room. Floors have line markings to separate production areas from forklift and trolley traffic areas so risk of injury is very small.

Some of these improvements are a direct result of Government regulations, but others are a result of a pragmatic decision to satisfy western buyers. In either case the outcome is good for the workers.

While it is a sad fact that China ranks as the 84th worst country for slavery I know that my importing students can be confident that they are dealing with manufacturers whose practices are as fair as those in any western countries. I can sleep with a clear conscience and I am sure so can my students who follow my methods.

 

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[Walter Hay]

Success Story.

One success story that I find very interesting is from a person who bought my book and did not have great ambitions. He wanted to get more profit out of the products that he was selling at fleamarkets, so he decided to import them direct from the manufacturer.

Other stall holders chatted with him and were amazed at the fact that he could buy direct, so they asked him if he could supply them at wholesale prices. He imported some products to suit those stall holders and before long he was making more money as a wholesaler than he had ever done with his market stall, so he gave up selling at the flea markets.

One of his USPs is that he can supply products that are not stocked by other wholesalers, and he has a policy of only supplying any particular product to no more than two stall holders in one town. That allows the stall holders to sell more profitably. In cities he varies that rule because there are often numerous markets there. It is rare to find importing wholesalers who will act as ethically as that.

Another USP is that he imports to order. He can do that profitably because he now knows how to get suppliers to agree to small orders. A big benefit to him from this is that he learns of products that he might not have otherwise thought of, and he can sell them to other stallholders who are not selling in places anywhere near where the originator of the request operates.

He travels extensively; visiting flea markets all over the country and now has a thriving wholesale business. Business has grown to the point that he has appointed commission reps for some areas, because he can’t possibly visit every place where there are potential customers.

The interesting thing about his success story is that his success was opportunistic and not a result of a carefully thought out plan, but he saw the opportunity and grabbed it with both hands.

Walter

 

[Walter Hay]

First of all thank you for all the great responses here.

Most questions here are about the sourcing, but I am more interested in the actual B2B selling process as an import company, and how to find out about b2b product opportunities, when you are not yet very connected in the business world.
As an outsider with not many contacts, it probably seems a bit overwhelming at first and just randomly writing emails and calling companies you research online can't be the most productive way.

Your question really requires many pages to answer, because it is asking me to explain the process of selling B2B.

Briefly, here is what I did to sell B2B with both of the businesses that I started from zero.

• First step was to find a need. In business #1 that need was for a technically superior product to replace one that had been on the market for many years and was a very poor performer in the production process for which it was being sold.
• Offer free samples of my improved product. This was done by personal cold call visits to local relevant manufacturers, and by mail to distant ones.
• Better results were obtained by offering heavily discounted large samples, sufficient for testing in production runs at those factories. People used the samples they paid for, but often left the free samples on the shelf.
• In business #2 the need was for more reliable quality, plus service better than the almost non-existent service that almost universally applied.
  
• Advertising in Yellow Pages, (now almost obsolete.) Heavy spending but more effective than the much greater spending by competitors.
  
• Large scale direct mail. Costly, but cost effective because I achieved a high conversion rate.
• Cold personal visits to prospective customers. In one segment of the industry that was highly effective because competitors never called.
• Developed a method that I call "warm calling" for most other industry segments. This involved going to the receptionist, handing her (sometimes him) a sample, brochure, price list, and business card, and simply asking "would you kindly pass this on to the person responsible for ordering such products. I then walked out. This was highly effective, often resulting in a phone call within minutes requesting me to return to talk. One such case was when the receptionist said "we don't order things from here it all goes through head office". I was about 300 meters away when I got the call to return and discuss a very substantial order.

In both businesses, establishing the need was the critical step.

Occasionally I was contacted by a business that wanted a large quantity of something related to my product line, and I pre-sold it to them before importing it. This is sometimes called indent selling. It can be very profitable, but not easy to find such business. I never looked for it - it came to me.

Walter

 

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