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

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by Walter Hay, Sep 17, 2014.

  1. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    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.
     
    Last edited by a moderator: May 6, 2018
  2. maleek
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    maleek Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER

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    Have you ever tried reach out to a manufacturer and ask for a tour of the factory? I find that's a relatively easy way to find out if they're the real deal or not
     
    Last edited by a moderator: May 6, 2018
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  3. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Yes that is a good way to sort them out, at least to establish that they are not a manufacturer if they can't/won't allow a tour of their factory.

    However, as I will outline in more detail in my forthcoming post on "Traveling to source supplies. Visiting manufacturers.", even if they do agree to take you on a tour that is no guarantee that the factory they take you to is theirs.
     
  4. boldaction
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    boldaction New Contributor

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    immensely helpful thread, thank you walter
     
  5. Dicky Dee
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    Dicky Dee Contributor Read Millionaire Fastlane

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    May i ask what is the time allowed to let alibaba know not to release the funds?
     
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  6. Dicky Dee
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    Dicky Dee Contributor Read Millionaire Fastlane

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    Great info you have given us here, this post is especially helpful as it allowed me to find out the supplier im working with is a trading company after all, although i dont mind because their communication with me through email is very fast and english is pretty good as well. Sometimes i deal with suppliers that take a few days to answer which really slows down the process and will not deal with anyone that takes that long to reply again.

    I got a question though @Walter Hay

    -what is the red tick with blue circle and where can this be found on alibaba? I cant seem to find it anywhere when i search for suppliers.

    -Also generally how much more do the traders mark the item up as opposed to the actualy manufacturers?
     
    Last edited by a moderator: May 6, 2018
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  7. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    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.
     
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  8. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    When you search by product you will find a line near the top inviting you to sort by Gold Supplier, Onsite Check, Assessed Supplier, Escrow, and e-Credit Line. The red tick in a blue circle is next to the Assessed Supplier.

    Regarding the wholesalers' markup, it will vary substantially, but I have seen the manufacturer's price doubled. I think more often you will find that you are paying 25% to 30% more if you buy through a trader. This can be difficult to establish in some cases, because a very small number of manufacturers cooperate with traders and operate something like the US MAP pricing system and will not undercut their trader partners.

    The simple way to deal with that is to find another manufacturer who does not work through traders. They are the ones who will give you the best prices. You will only find them by getting quotes from multiple suppliers.

    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.
     
  9. OnlineGodfather
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    OnlineGodfather Contributor

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    Hey Walter,

    can you help me figure this part out. I have read the whole thread and saw this part of what you wrote:

    "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."

    Now, when i got alibaba`s certain manufacturer i see on their company overview these two things most of the time:
    - Supplier Assessment Report
    - Main Product Lines Verification Report(s)

    these two documents are most of the time audited by TÜV Rheinland or Bureau Veritas.

    The second thing i go to look is under their industrial certification where it also states that third-party verification company confirmed the legal existence of the supplier which is usually done by China Credit Information Service (P.R.C.) or Hangzhou Zhongde Information and Technology Services Co. Ltd.

    Basicly, my question is, are these reliable at all? or should i perform some other step aswell, i did check on TUV site directly for example, to check if the report exists. Hope it makes sense what i wrote.

    Thank you.
     
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  10. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I am having connectivity problems with my broadband connection and will be back online as soon as it is fixed.
    Walter
     
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  11. Dicky Dee
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    Dicky Dee Contributor Read Millionaire Fastlane

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    Thanks for the response as i found that button you were talking about, another question... i go to the canton fair once a year usually, are all the companies there reliable as in not scammers? I do believe they have to pay a nice sum to be in the fair so i would think that would help filter the good and the bad a little better.
     
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  12. Cruiser
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    Cruiser New Contributor

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    Thanks for the wealth of info!!!!
     
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  13. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    The Supplier Assessment reports provided by TUV and Bureau Veritas are in my opinion, reliable. It would be extremely difficult for a supplier to forge one of these reports so I would not be concerned about that.

    It is more important to read right through the report to see whether they are a manufacturer or trader and to see what their capacity is.

    The third party verification reports provided by China Credit Information Service (P.R.C.) or Hangzhou Zhongde Information and Technology Services Co. Ltd. provide small comfort in my opinion. I do not doubt the veracity of reports by those companies, but to simply identify them as a business that actually exists serves very little purpose. Scammers do register their businesses in many cases, but they also have a supply of registered businesses under other names, ready to use when they have fouled the reputation of the first one.

    The only reports on Alibaba I would rely on are the Supplier Assessment reports identified by a red tick in a blue circle. Always bear in mind that without reading that report you will not know if they really are manufacturers.

    Walter

    Walter
     
  14. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Fairs such as the Canton Fair attract a similar range of suppliers as you will find advertising on Alibaba and the other popular sites.

    The amount they have to pay can give scammers a great ROI if they snare only a small number of gullible buyers, so be cautious.
     
  15. BusinessBen
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    BusinessBen Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    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." 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? 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, do most manufacturers allow this?

    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. 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?

    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. I forgot to mention, do I need an import/export license?
     
    Last edited: Sep 29, 2014
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  16. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    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.
     
  17. BusinessBen
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    BusinessBen Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    +Rep Amazing answer. Thank you so much. I will look for other manufacturers now, and also see if I can get a shipping quote. I'm curious though, what would you suggest as a good price? I think the high price is because this product includes different parts, they also have patents on their components. So, they would be the only ones with this specific product but ill look for similar items of the same quality.

    P.S. I forgot to mention the price of the other model. It's 21$ and 12.8$ for the replacement parts.

    Edit: Also forgot to mention that these were their prices for wholesale, their sample prices are 24.5$ and 30$
     
    Last edited: Sep 29, 2014
  18. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    You are probably right. A patented product can usually command a high price even if there are similar items on the market. With the advantage of a patent to enhance saleability for you, if not a higher price at your end, you may be happy to work on what I would regard as a low margin.

    Without knowing package dimensions, weight etc, it is impossible for me to anything but guess. If I guess freight at $3, I would have to buy at $4 to provide the margin that I always expected. Believe me, that is not necessarily an impossibility, but I would not haggle with the seller. I know that most "experts" recommend it, but haggling will damage the seller's respect for you. The best margin I ever achieved was landed cost X 700%, but one of my franchisees did slightly better. He wrote to me once and said "...It's nice to make that occasional $50,000 for half a day's work." His landed cost was $7,000, and he sold at $57,000 so his mark up was landed cost X 814%.

    I taught my franchisees to sell at what the market would bear whenever possible.

    Let me know when you have a freight quote.

    Walter
     
  19. Cruiser
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    I'm in the process of sourcing tin cans for the packaging of my product. The packaging is what is going to set my product apart so it is of vital importance to get it right. I contacted like 15 different companies on alibaba with the same questions (granted, I asked some of the newbie questions you mentioned:) ) and i got like 15 replies. some where barely understandable, some where one liners, but 5 where complete answers to every question, of this 3 of this companies are veritas assessed, so
    i guess i will stick with one of them.
    I'm a total newbie by the way.
    I have a ton of questions so I'll break it up in different posts.
    to begin, as i said the design of the cans is very important. Do you know how is the standard procedure or the best one to accomplish the design I want? Is it ok to ask for custom printed samples before the order? most of the companies are wiling to send me a sample of the finished product before shipping, but for that i have to order and pay 30% deposit. What happens if at that point I'm not satisfied with the product? what happens if I ok the product but when I get the shipment there is a considerable number of faulted items? what % of faulted items is acceptable?
    thank you very much for every thing you are aporting to the community
     
    Last edited: Oct 1, 2014
  20. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    First let me suggest that you keep communicating with all 3 of the Bureau Veritas assessed suppliers provided you have read the reports and confirmed that they are real manufacturers. Don't keep all your eggs in one basket.

    I need to know whether you are intending to import the cans and pack or have someone pack the product in them for you, or are you intending to have the product packed in your cans in China. Let me know and I will advise further.

    If you intend shipping empty cans, you need to consider freight cost before you spend money on samples. For empty cans you will pay freight on a cubic ton basis and that can be very expensive.

    Walter
     
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  21. Cruiser
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    Cruiser New Contributor

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    Hi walter,
    I need only the empty cans.
    thanks
     
  22. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    OK, The first thing you must do is to ask the supplier to tell you package dimensions, number of cans per package, weight per package, and the total number of packages.

    Also ask which port will they ship from. In other words FOB port.

    Then contact a local freight forwarder in your country, give them all those details and tell them what the goods are. Ask them for a quote for the shipment from that port delivered to your door. Specify that the quote must include all charges including clearance through Customs. Remember you will still have to pay duty and sales tax if sales tax applies. Get the quote in writing.

    Then you take the total cost of the product ex China, add the freight, multiply the total by whatever duty rate the freight forwarder has told you and you will have your landed cost. Add sales tax if it applies in your case. You then divide the total by the number of cans and you will know whether or not it will pay you to import them. I have my doubts unless it is a very large quantity sufficient to fill a 20' container.

    The % of faulty or damaged goods in a shipment will depend on the nature of the product and the quality of the packaging. Cans are semi-fragile, so I would expect as high as 10% unless they are in wooden crates. I carton dropped on its corner could damage quite a few cans.

    You might consider having your cans made locally. Let me know if you need help with that,

    Walter
     
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  23. Cruiser
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    Thanks Walter,
    So what happens with the damaged goods? Do I get a refund/credit? what about insurance?
    I'm in an island in the caribbean, not many options here.
    I will repost these questions:
    "...as i said the design of the cans is very important. Do you know how is the standard procedure or the best one to accomplish the design I want? Is it ok to ask for custom printed samples before the order? most of the companies are wiling to send me a sample of the finished product before shipping, but for that i have to order and pay 30% deposit. What happens if at that point I'm not satisfied with the product?"
     
  24. Cruiser
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  25. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I agree there are not many options if you are not located where there is a manufacturing facility.

    Because of their bulk, shipping will have to be by sea freight. In that case, insurance is essential and the insurance company will cover you for any damage. I suggest you pay by L/C and for the supplier to get payment they will have to provide a Clean On Board Bill of Lading. The shipping company will not provide a Clean On Board B/L if they consider the packaging to be inadequate.

    I am assuming design refers to the printing and not to the shape of the can.

    There are various methods available for printing cans, but Chinese can manufacturers will rarely use any printing method other than Lithography, and that involves considerable set up cost and big runs to make it viable. It may pay you to consider buying your cans in the USA, where the smaller run option of Digital Printing is available. One such can manufacturer that I know on the East Coast is http://www.ballsteeltinusa.com

    If your volume is sufficient to warrant using lithography China may be your better option, but freight cost may make the difference. Ease of communication and other factors may justify paying more.

    In any case, you will need to send your artwork, and specify Pantone colors. Pantone color charts are available online or from printing supplies businesses. Even some printers sell them.

    Your supplier will modify the artwork to suit their system and email a copy. Bear in mind that different computers present colors differently. For real life colors you must see a sample printed on the actual medium (steel) being used. I don't think you need a printed sample can, just a printed sample on sheet metal.

    If digital print is used, a sample will be low cost and quick. The production run price will invariably be higher than lithographic print, but smaller order requirements may compensate for that.

    If you are not happy with a printed sample, it will be costly to start over with a new lithographic plate. If the supplier has not quoted separately for the set up, it would be advisable to ask so that you know what cost you might incur if the original is unsatisfactory. In case you choose to cancel your order, you should have previously obtained written confirmation that your refund would be your 30% deposit minus that set up charge.

    P.S. I often advise my students to consider the USA as a manufacturing source. It is largely overlooked, but many US manufacturers are quite competitive. The same applies to a number of developed countries, including Italy and Germany, but in your case, proximity to the US is advantageous.

    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.
     
    Midas, Ross Morgan, Magneto C and 5 others like this.

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