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

[Walter Hay]

CHINESE NEW YEAR ALERT!

27th January 2017. If you want orders delivered before China goes crazy to celebrate the Chinese New Year, place them urgently NOW. Orders placed in early December just might be delivered before the country shuts down

For several weeks before and at least a month after that Jan 27, dealing with businesses in China can become an exercise in frustration and futility.

Even if you don't need to place orders at this time, don't forget to send greetings to your suppliers or potential suppliers. Send them about a week ahead of the holiday.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Brian C.]

Updates?

Hey @Ronak ! Thanks for your interest. I've made some progress, although a bit less than I'd like to admit. I'm currently importing three more products, and plan to import a few others in the coming months.

I'm confident in dealing with manufacturers overseas because of @Walter Hay 's book. After my first import several months back, I spent maybe a month or two talking with several factories about future products. It was practice mainly, just didn't have the funds/risk tolerance to go through with the orders.

Thanks to my business in copywriting, I can fund these orders, and better market them (which is where I struggled). I plan to make a big push in 2017. We'll see how it goes. I'll be providing updates via my importing & ecommerce thread.

Again, thank you @Ronak . The book was huge.

If @Walter Hay is onboard, I'd like to reciprocate. I'd like to buy a copy of Walter's book for someone here on the forum. So, for those interested in receiving a free copy of Walter's book, shoot me a PM explaining what action(s) you will take once you receive the book.

Best response gets the book. Available until January 7th.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

GREETINGS for Chinese New Year

Don't forget to send greetings to your contacts prior to the Chinese New Year. It is a good idea to express your appreciation for the way they deal with you. Think of something relevant to your circumstances, such as "your prompt service", or "your answers to my questions", or "for always keeping me informed of progress" etc.

It can also help to say something reassuring about continuing your business relationship.

Do It Now, or at least no later than Jan 20th.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Thanks to those who have contributed to this exchange. I have always found that talking something over with someone, even if they don't quite follow my reasoning can be very helpful.

I have sent Drew a PM that might help him in relation to choosing a niche. My book doesn't go into that subject in any detail because I prefer to leave it to those more expert than I am. What I do write about is how to find products that are not currently on the market in your country.

I am not alone in recommending searching for products not yet being imported, Vigilante does likewise. There is still the need to satisfy yourself that there is a demand. There's no point finding something that looks amazing to you, and only gets yawns when you advertise it for sale.

I agree with Roli that there's no future in starting off with high stakes. You need to have a good idea of the marketability of your product before you import any sizeable quantity. If you think you have found a winner, import a very small quantity, (that's after first importing a sample for quality testing,) and put that small quantity on the market for market testing.

Walter

 

[amp0193]

@Walter Hay This was the best B2B post I've seen on this forum in a long time.

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.

This was a lightbulb moment for me. I've been frustrated at how few free samples I send out actually convert into an order. I really like your idea of a deeply discounted initial "sample" order, to make them feel it in the wallet a little bit.

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.

Very cool method. You've got my mind turning on how to create some cool tri-fold brochures on my products.

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.

This is actually how I ran the wholesale side of my business for the first year. I made a wholesale catalog, that had every item that my manufacturer offered. My manufacturer actually gave me all the high-res images for me to use. I would just tack on any wholesale orders to the skus that I was already having manufactured for my B2C channels. My lead times were pretty short... 7-12 days to my door from order being placed.

Although it was amazing for cash flow, Doing it this way was stressful. Any last minute additions or changes to a customer's order, or requests for customization, or delays on the manufacturing side, could send me scrambling to try do damage control or make fast changes to something. My customers generally wanted the product within 2 weeks, which I think is pretty typical for most retailers.

I am a lot more at peace now that I'm carrying more inventory, have everything in stock, and am able to ship out next day. My customers are happier too. The process is also more automated.

 

[Walter Hay]

Latest Edition Now Available

I am pleased to announce that the latest revision of my importing book has now been published and is available here: https://provenchinasourcing.com

All those who have purchased previous copies will be notified by my support team at Jim Cockrum's Proven Amazon Course (PAC) and will receive a link to a free download. If you have bought a copy but did not give permission for email contact, please send your purchase details to msteamwebmaster@gmail.com and they will send you the download link.

The new edition is the product of a lot of work to provide updates in an ever changing importing scene, with particular emphasis on sourcing beyond China.

Here is a list of the major changes:

• Addition of a substantial report on Vietnam as the new China, including details of cultural business practices.
• Major review of Alibaba who have made big changes on three occasions since our 2017 edition was published.
• Changes to GlobalSources.com supplier rating system, including a new optional supplier assessment procedure that importers pay for!
• Addition of a paid advertiser badge on HKTDC and why it should be ignored.
• Details of significant changes to Made-in-China's rating system and why the new "Top Rank" badge should be ignored. Also advising readers that Made-in-China no longer even try to give the appearance of a buyer protection scheme.
• Expanded information on Importer of Record.
• More information on air and sea cargo consolidation services, including identity of one major company that will handle shipments from more than one supplier and send as one shipment.
• Important new section on freight scams.
• List of more than 1,000 suppliers used by KMart, with instructions on how to use the list to find trustworthy suppliers.
• Expansion of the Alibaba section, with advice on how to safely use that site.
• Detailed report on Alibaba's Trade Assurance system. Their rules have been expanded substantially.
• Addition of a section on obtaining binding duty rates in advance. (Can save a lot of pain.)
• Addition of sections dealing with Importer of Record, Customs Bonds, and Power of Attorney.
• There are now 27 links to help source products outside of China, including more detailed site navigation help, and a few paragraphs on making sourcing requests through places other than B2B sites.
• Expanded chapter on Inspection Services, mainly resulting from changes to Alibaba's listing of those services.
• Additional resources for labeling requirements.

I hope that this newest version will help importers gain from the changes brought about by the tariff turmoil and changing Amazon scene. My book can be obtained free of charge as part of PAC. Here is a link to obtain that: The Planet's #1 Amazon Seller Training Course

I am currently working on providing a list of sourcing sites worldwide that will blow your socks off! Keep a lookout for an announcement.

Walter
EDIT: Since I published the 2018 edition, Alibaba have removed the Assessed supplier filter, so buyers will be reliant on the now sketchy reports by SGS or TUV, some parts of which read like they were written by the supplier's marketing office.

 

[1step]

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.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[SBS.95]

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.

 

[Walter Hay]

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.

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.

 

[Walter Hay]

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?"

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.

 

[Walter Hay]

Hey Walther,

I got my landed cost! It's still from the same manufacturer as the others I emailed did not respond. For me to get wholesale pricing, I would have to order 200. So the price for 200 and 50 replacement parts is 3283$. If I wanted to sell one product and one set of replacement parts at 47$, my total profit would be 3357$. Does this seem worth it to you?

Edit: I could also only sell the product for 35$ and make 3457$ profit and just sell the replacement parts separately.

There seems to be a discrepancy in your figures. Your edit states a higher total profit when selling for less.

Regardless of that, my concern is whether the profit is net after selling costs such as eBay, Amazon, PayPal, and postage. If it is a net figure, then doubling your money is probably OK, although I would not settle for that personally.

If you want to proceed, I would now try to negotiate a sample order of maybe 100 in order to reduce your risk. The smaller order may increase your per unit freight cost slightly, so you would need to decide if the small reduction in profit is worth it for your first order.

It seems to me that selling replacement parts separately makes more sense.

Walter

 

[Walter Hay]

I'm pretty new to importing (started about two months ago) and I've already learned so much as well as made a decent little chunk of cash. When emailing suppliers who I find on Alibaba, I've found that a bunch of suppliers will email me with a quote for the product I want, along with ipads for $56 or whatever their price may be. Although these suppliers are giving me a quote for my desired product, I usually skip over their emails because their little email-catalog of knockoff apple and samsung products seems too sketchy to me. Am I wrong for doing this? Do a lot of manufacturer's/suppliers sell this apple stuff (obviously knockoff or stolen)? I should note that these guys are usually the ones giving me the best quotes as well which in my opinion is just them saying "Hey dude... I'm going to scam the shit out of you ".

Great thread btw!

You are absolutely right. These are scammers.

None of them are manufacturers because it is only traders and wholesalers who offer a lot of unrelated products, whether fakes or not. You need to find real manufacturers if you want to make real money. The only ones you can be sure of on Alibaba are those with a red tick in a blue circle, (provided the audit report identifies their manufacturing capacity) but they tend to be the bigger ones.

Look for some of the less popular sourcing sites and see if they have a proper verification system that includes identifying genuine manufacturers.

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?

 

[Walter Hay]

Sorry, I should've been more clear.

I didn't mean I was going to write an ebook or something. Rather a service.


Sent from my iPhone using Tapatalk

Thanks for clarifying the point.

There could well be a place for someone with appropriate knowledge to do what you are thinking of. I am constantly receiving requests to mentor newbie importers. I can't handle that because of the time I devote to support my book buyers, but someone who wants to go down the mentoring route could do well in this field.

 

[Walter Hay]

Walter,

The value you have provided in this thread is excellent. Thank you.

I have a question. I've imported 500 units of an item, and had them shipped from China to an intermediate inspection warehouse in the US before forwarding them on to Amazon FBA. 48 of those units (approx $600 worth of product) is damaged. Not the item itself but the packaging, which is high end, essentially has rendered the items non-salable. I think the manu did a poor job and protecting the product within the boxes. 10% damage rate seems high.

1) What is a common course of action in this situation? Should I go hard on the manu and request refund? Ship it back at their expense for repackaging?Am I screwed? What advice would you suggest in these scenarios.

Thank you.

I am guessing that you did not have the shipment insured. In that case your only recourse is with the manufacturer.

First, I suggest you take photos that clearly show the damage, and if possible showing all 48 units with damage in one of the photos.

If this is your first shipment they will be wary of you, just as you might be of them. Approach them gently, not hard at first. Be very polite, and if possible give them a way to save face. Maybe you could say something like: "Perhaps the outer packaging needs to be stronger in future." I would not ask immediately for a refund, but would report the problem and ask them to suggest what should be done.

Depending on their reply you will know what your chances are. I would be prepared to accept a discount on the 48 if there is any possibility of selling them minus the packaging, but don't suggest that until it becomes obvious that a full refund is not going to be given.

Walter

 

[Walter Hay]

Q&A 1

I get a huge number of questions from individuals and have decided to share those that do not contain confidential information, such as specific products or suppliers. Those who rely on me for guidance would not appreciate it if I broadcast their niche or their perfect supplier's name.

I will post a new question and answer periodically.

Q: I have seen some great products that look almost identical to one of the well known brands, but they are unbranded. Can I buy these and put my own label on?

A: Never ever try to import branded goods either for personal use or especially for resale.

One thing often overlooked is that unbranded copies of big brand goods can also land you in big trouble. Designs are copyrighted, so if it looks even almost identical to the real thing it is illegal to buy or sell it. The differences in appearance might make you think that it does not infringe copyright, but is it worth the risk of losing all your money, a lawsuit, and possible fines?

A second point overlooked is that rebuilt, renovated, repaired, or refurbished genuine branded goods can also land you in deep water. One of the reasons is that in virtually every case, the parts used for the refurbishment will be non-genuine, but the main reason is that Customs in every country have automatic alerts that flag anything with those brands, so even a single refurbished item is likely to come to their attention.

You will never win an argument with them about the goods being second hand, and do you want the hassle and likely loss of your money anyway? Once you have come to the attention of Customs, even if you were not committing an offense, chances are all of your imports will be delayed from then on.

 

[Walter Hay]

Q & A 7.

Q. How much of the rules and regulations do you really have to learn before it is safe to start importing? Like, I looked up the Customs site and it is scary.

A. I don’t blame you. For someone new to the industry it must be very scary. There are thousands of pages of rules and regulations and the worst part is that they are changing all the time.

Those constant changes were a big factor in me deciding that although I was qualified to handle my own Customs clearances, I would leave that to others to do for me. I figured that my time was better spent sourcing, importing, and selling, rather than reading, reading, and reading, just to stay up to date.

It was also more cost effective for me to pay someone else to do the work for me than to do it myself.

I certainly did not have enough shipment volume to set up the online links to Customs that are used by Customs brokers to streamline the process. A broker can lodge a clearance quickly, sometimes in a matter of seconds, and rarely would it take more than a few minutes.

You will have already worked out from my answer that you barely need to know any of the rules, and that I would advise using the services of a Customs broker to do the clearances for you.

There is one rule you must learn. You are legally responsible for the facts declared in any declaration lodged for clearance purposes. Even if your broker makes an error, you are legally responsible.

One area that few consider in this respect is declared value. It is almost universal practise for Asian suppliers to under declare the shipment value, thinking they are doing you a favour. When shipping documents arrive in advance of the shipment reaching your country, you should check the invoice value, and notify your broker if the value is not correct.

It is preferable to instruct your suppliers in advance that you will not accept invoices for less than the true value.

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.
■ Part2. Traveling to source supplies. Visiting factories in China.
■ Do your suppliers use child labor or slave labor?
■ Q & A 1,2,3,4,5,6

 

[Walter Hay]

@Walter Hay - first of all thanks for all your contribution in the field of importing. I am interested in importing as I do have a product that I wish to sell here in my country.

I read and re-read this thread, took some notes and am trying your advice as a newbie. I do have a couple of questions though just to insure that I am moving along correctly.

1. I did a search for a product and found a couple of search results (Assessed Supplier - checked). I saw that these 3 products are from one Verified Supplier or Company, so I clicked on the company itself to be redirected to its own alibaba page. I did noticed something, on the company's own alibaba page, there is a contact supplier option which is different from those from the product results page. Does this indicate that the Contact Supplier name in the product result page can possibly be a wholesaler and not the manufacturer itself?

2. I have been going through a couple of suppliers and their assessment report has been verified mostly by Bureau Veritas, is this as trust worthy as INTERTEK, SGS, SINOTRUST?

3. When contacting the suppliers, you said to introduce yourself as a Established Importer, does using a generic email like gmail, yahoo, etc...a concern to them?

4. Once I find a supplier and ready to order just a couple of the product < minimum, to test the market, the options of payment are: T/T,Western Union,MoneyGram,Paypal. Its a no to consider WU, what other types of payment is considered safe?

Thank you in advance sir.

Thanks to ljb7 for his answers to your questions 3 and 4. I agree that an email fromm your own website address is much more likely to produce a good response. If you can't do that, gmail would be preferable to the other free addresses because many businesses are now using gmail. The general format for first contact emails as provide by afterjoule is very good.

ljb7 is also right about payment methods. PayPal gives you a lot of protection. Escrow provided by Alibaba has considerable drawbacks in my opinion, but is still much better than risking payment via WU or moneygram. T/T still carries some risk and you must be sure exactly who is receiving the funds. Take great care if you pay by T/T.

Regarding questions 1 and 2.

1. It could well be the same company using a different name. Almost every company I know in China uses several business names, and some of them are careless about which ones they display in different places. For example you might see one name on the listing on a B2B site, but another name appears when you click on the more details button. Then there can be yet another name on the business profile and another on their website. All very confusing, but it can actually help you. Yo may now have 4 business names to check out as part of your due diligence.

You can search for all of them on Google, on review sites, and on Ripoffreport.com etc. You can also search for them on other B2B sites. It may be tedious, but it is your money, so why not make the effort to protect it?

2. Bureau Veritas is totally reliable. I will soon post a full list of independent inspection services that I consider to be reliable.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Walter,
This thread is one of my favourites. Thanks as always.

I have a question: Two of my suppliers do not have a product I am looking to source. Rather, they offered to help me source it from elsewhere. I presume this is not a free service. Can you advise what is typical in this scenario, that is how the deal would break down if they find a supplier I would like?

Also, is this advantageous to find products not listed on alibaba?

The service will not be free. Typical charges for sourcing services are 10% commission, but as you will see in an article that I am currently drafting, you might finish up unknowingly paying a lot more than that 10%. I expect to post it later today.

You will have noted that Alibaba is one of my least favorite sourcing platforms, mainly because it is so difficult to determine if you are really dealing with a manufacturer, but for those who like to use it, here is an important hint: Use a big variety of keywords in your search. For example, if you are looking for acrylic key chains, you could search for...... acrylic, acrylic key chains, acrylic key rings, plastic key rings, plastic key chains, key chains, key rings, promotional key chains, promotional key rings.

This is important because Alibaba's search function is quite limited at times. Also, as you will see above, I have used both US and British keywords (key chains, key rings). There is also the limitation caused by lack of vocabulary on the part of the suppliers. Much patience is required.

Although Alibaba has a massive number of suppliers listed, with millions of products, there are many more suppliers who don't list there, and many more products that are not listed there either.

I could have made a lot of money as a a product sourcing agent because I know where to find virtually any product imaginable, but I have chosen to teach others how to do it for themselves and save lots of money in the process.

 

[Walter Hay]

What is the sea port issue you speak of?

There are union disputes delaying shipping at LA and Long Beach.

This is the time of year when disputes often happen, and they are usually resolved in time, with the dock workers getting plenty of overtime to get the cargo moving into the stores and warehouses.

This should not be an excuse for air freight charges to rise, because both the disputes and the resolutions are so predictable every year.

 

[Walter Hay]

Q & A 9. This is part of a question put to me by a Fastlane member and I have expanded on my answer here because I think it could benefit all members.

Q. Is it safe to deal with unverified suppliers?

A. Yes, just because they are unverified does not disqualify them. They may be testing the waters for exporting or they may be small businesses. In fact it may be possible to get a better deal from them than you could elsewhere.

It will often be the case that free advertisers (unverified) have products that are not being offered elsewhere, and this can be a huge benefit to you because of the lack of competition, so the extra work could be very worthwhile.

You will need to search for their names in every possible way in order to get as much information as possible about them. If they have their own website, that can be a good place to begin your research on them.

Do a Google search first and be prepared to go past page 1 if necessary. I would search to at least page 5.

Once you are satisfied that they are a genuine manufacturer, and there are no bad reviews recorded against them, you can then start communication. Slow and steady is the best way, so that you can build up a good relationship and also satisfy yourself that they really are a business you want to deal with.

 

[Walter Hay]

Is there a way to make sure your supplier/manufacturer cannot raise the prices for you when you start making more sales and are dependent on them?

This is a very good question because this situation happens often.

Your best protection is to avoid having all your eggs in one basket. Always try to have more than one supplier that you know is capable of supplying the product. Obtain quotes and keep them on file.

You can then respond to notices of price increases by saying that you have another supplier who has quoted you $.... You will need to send a copy of the other quote but I would advise hiding all identifying print such as company name, address, phone number and product ID numbers. If the quote is a year old, the date may be a problem, so you may need to get a new quote.

You can flatter your supplier a little, saying how pleased you are with their product and service, and that you would prefer to continue to deal with them, but then say that such a price increase is not acceptable.

Bear in mind that costs may well increase over time, so you may have to accept moderate increases. Inflation in China is low, but labor costs can be increased due to the government gradually requiring better working conditions for workers.

 

[Walter Hay]

B2B Scams.

The popular B2B sourcing sites attract not only legitimate businesses but also many professional scammers from various countries, not only China. Scamming is big business, with thousands of scams being reported every year.

The biggest problem from my point of view is that most B2B sites are not providing realistic verification of suppliers and this leaves great opportunities for those who know the simple procedures that are needed in order to look genuine. Here is a comment on this subject by Mr Yulin Yuan, the owner of a well-established inspection service in China: “Normally the scammers cannot obtain a real Business License or Export License from local officials, but they can obtain some license samples online in China, then they will use Photoshop or other technics to change the names, business scopes or registered captial etc. They can even 'make' an official Stamp or Chop easily. This is why you can see there are so many scammers online worldwide. The license look exactly the same as the real one, you can hardly check them out without professional knowlege in Chinese. A Business License can tell you whether they are real manufacturer or not in China ( their business scope, registered capital, legal representative, history and address etc. ) Good luck, everybody!”

There are some sites where verification is thorough and real, but I consider it irresponsible to send people to those safe sites unless I know they have an understanding of safe sourcing practice. From my experience in dealing with many hundreds of newbie importers I know that very few really understand the risks. Many are lucky, but a greater number make costly mistakes.

Most would-be importers still flock to Alibaba for product sourcing, so that site gets the lion’s share of my criticism, but when you read through this post you will see that other sites are just as bad.

In an earlier post I wrote about a news item “Alibaba and the 2336 thieves” dealing with Gold Supplier scams admitted by Alibaba. Well, the system used by almost every big B2B site is very similar. The purpose of this post is to alert Fastlane members to the fact that there are risks in using the popular sites for sourcing.

Rather than rely on the fact that so many people say Alibaba or some other site is great, why not do some checking for yourself?

I will start with Alibaba: There are many places to look and get the stories from people who won’t recommend Alibaba and I will mention one of them later, but there is no place better than Alibaba itself !

Alibaba have their own very extensive forum. Below is a link to the section of Alibaba’s discussion forums where Alibaba staff and buyers post comments. Please note that some of the posts with various user names are obviously posted by Alibaba employees.

When looking for comments from buyers I suggest you scroll down the threads list until you find threads with numerous replies. http://resources.alibaba.com/discussion_board/88/Safe_Trading_Basics.htm

The thread THREE SIMPLE SIGNS OF B2B SCAMS in the Forum section: “SAFE TRADING BASICS” begins with a much too basic introduction by admin and includes this: "Just because a company has a professional-looking website or has set up shop in an online marketplace like Alibaba.com doesn't automatically make them legitimate."

Then a potential buyer new to Alibaba posted in reply to that point: “And Alibaba claims these suppliers have been verified. How do you reconcile this contradiction?”

Like almost all critical comments posted on the Alibaba forums, this one went unanswered. The reason must be that it is unanswerable. The verification process is clearly intended to make buyers believe that the verified supplier is legitimate.

Tradekey also has a community forum at http://community.tradekey.com/forum-88/Report_Suspicious_Companies/0/1320.html There you will find many posts by Tradekey buyers complaining about being scammed by suppliers found on that site. It is necessary to start at Page 133, because the first 132 pages are full of spam. As is the case with Alibaba, Tradekey staff post a lot of replies.

Here is one post from a UK Tradekey user, minus the last two rather offensive paragraphs: ”Its a typical situation that tradekey makes money from, GOLD MEMBERS a lot of the gold members pay to get there Gold membership and tradekey does nothing to verifiy the legitimacy of these companies
1. so eventually a GOLD member scams and makes alot of money from unsuspecting buyers,
2. buyer complains to trade key
3. the GOLD member gets shut down
4. All complaints get logged, BUT THE SELLER IS NEVER FOUND BECAUSE HE/SHE IS USING A FRAUDLENT ADDRESS AND COMPANY DETAILS (tradekey.com fault becasue they fail to check and verifiy if the seller is legitimate) the same seller then PAYS FOR ANOTHER GOLD MEMBER PASS, NEW COMPANY NAMES MADE UP (tradekey.com MAKES MONEY)

EC21.COM has a community forum here: http://community.ec21.com/forum/viewforum.jsp?forum_id=90000006 This is a link to the Report and Verify Fraud forum. Note, EC21’s Gold Supplier equivalent is Trade Pro. Here is one of the posts. Sorry it is all in caps, but the buyer is clearly very upset.

“EC21 DOES NOTHING TO STOP FRAUD - AMITY SAMCO TRADERS FRAUD


THE SELLER THAT RIPPED ME OFF STILL HAS AN ACTIVE PROFILE THAT SAYS TRADE PRO VERIFIED SINCE 2014. THESE SCAMMERS HAVE THE ENDORSEMENT OF EC21. EC21 HAS DONE NOTHING ABOUT THIS FRAUD EXCEPT TO CONTINUE TO LET AMITY SAMCO TRADERS KEEP A PROFILE UP WITH THEIR ENDORSEMENT, THIS IS TOTAL BULLSHIT. YOU CANNOT RELY ON EC21 TO DO ANYTHING ABOUT FRAUD.”


Most B2B sites don't have a community forum, but with little effort you can find comments posted online by buyers unhappy with the sloppy verification process used by most B2B sites.

http://alibabascam.com/ As of today’s date there are 738 denunciations of Alibaba suppliers on this site. If you go to the site tomorrow you will find more complaints added. Many of the suppliers mentioned are Gold Suppliers.

http://www.sitejabber.com/reviews/www.dhgate.com This site has recorded 1483 reports on dhgate and they rate 2.9. Over 600 people gave a 1 star rating and many lamented that one star is the minimum allowed.

I hope this rather depressing post does not deter entrepreneurs from entering the high profit world of importing. There are many who have succeeded, some without mishap.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Q. 11

Q. Do I have to register a business and provide a Tax ID in order to import.

A. The short answer is: NO, but read on, because I add a very valuable hint further down.

In almost every country, when you first import anything commercially, if the value is sufficient to have to pay Duty and/or Sales Tax, you will be issued with an importer number. It goes by different names in different countries, but it is an identifying number that allows Customs authorities to keep track of what you import, when, and the values.

It also makes it faster to lodge customs clearance documentation in future.

If your first import is handled by an air courier or a freight forwarder, they will automatically obtain an importer’s number for you. It is worth asking them to tell you that number for future reference. They will not volunteer it.

If an importer later registers a business and imports under that name rather than his own name, a new importer number will be issued. There is no requirement for the importer to cancel the old number.

This last fact is worth remembering should you ever make a mistake and foul your reputation with Customs. You can change your business name and address, and then your old importer’s number will not be matched to your subsequent imports. In effect you will have a clean slate.

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.
■ Misinformation Is A Wealth Hazard.
■ B2B Scams
■ Q & A 1,2,3,4,5,6,7,8,9,10

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Walter Hay]

Latest News From Alibaba.

Being registered as a supplier on Alibaba (although I don't list anything for sale) I get all the news from them.

Today's email says:
Happy New Year!
2014 is a significant year to Alibaba Group. Alibaba Group launched IPO in New York Stock Exchange in Sept.2014, next step for Alibaba Group is go global!
Alibaba took down 90 million fake products ahead of its IPO. In 2015, Alibaba will devote ourselves into developing a more trustworthy platform.

This leads to the interesting question: Why did this site that has millions of people relying on it, continue to allow the advertising by suppliers of 90 million fake products until it became necessary to do the right thing so they could list on the NYSE???????

Here is an admission that the platform until now has not been sufficiently trustworthy. Some readers have questioned my attitude towards Alibaba. This may help explain it.

 

[Walter Hay]

Hot Selling Products

It is important to understand that just because you get the best possible price from a genuine manufacturer there is no guarantee that you will automatically be able to sell the product profitably. You may still not be competitive when selling on places like eBay and Amazon. The problem may not be on the supply end, but on the sales end.

There are many factors that must be considered, and it is most important to do your market research before you start sourcing a product.

I appreciate that market research can be time consuming. Occasionally you might find a product that is a good seller, but when you get quotes from manufacturers the prices turn out to be too high to allow a reasonable margin, let alone a high margin.

This can be frustrating, but it is almost impossible to predict, except for the fact that if a hot selling product is selling at what is clearly a very low price, chances are you will not locate a manufacturer who will supply at a low enough price to make you competitive.

The main reason is that hot sellers are often the subject of price wars simply because of their popularity attracting too many sellers. This often begins a race to the bottom, and vendors finish up selling for somewhere around cost, or even lower.

There is nothing to do in such cases except look for another product and start again. This is why I would avoid hot selling products. Some eBay gurus recommend choosing such products, but you will almost invariably come up against the problem of price wars.

If a hot seller is one that is being sourced from dropship suppliers, you can almost certainly find a manufacturer who will supply you at a better price than all those vendors are paying from the dropshipper, but remember that you will still be up against a huge number of vendors many of whom will even be willing to sell at their cost or less, to maintain their rankings.

Unless the manufacturer’s price after all costs added leaves you with a margin that allows you to still do well after competing with those people, you should look for another product. Those costs must include all of the costs of buying and landing the product at your door/warehouse/fulfillment house etc. Those are you cost of acquisition. You also have cost of selling, and that can include packaging, postage, eBay fees, Amazon fees, fulfillment fees, PayPal fees etc. etc., ad nauseum.

There are also many unskilled newbies who beginning selling on places such as eBay without doing all their homework, and they sell at low prices without taking all costs into account. The result is that their very low prices are losing them money, but it also means that sensible sellers will find it almost impossible to compete.

I would go even further and say that if a product is a "Hot Seller", you are probably wasting your time and you would be better off looking for a product that is in far less demand, and preferably not even on the market in your country. I have written in earlier posts about finding unique products in countries other than China.

Occasionally I am asked to recommend suppliers. I am generally reluctant to do so, but when I do, it is usually from my experience with that supplier, so the product categories are obviously limited. I also make it a practice to only recommend that supplier to one person. As a result I am running out of suppliers to recommend.

This is for the same reason that I don't sell lists of manufacturers. It would be so easy to compile lists for various product categories. People who buy lists are seriously hampering their prospects of success.

 

[Walter Hay]

Where Do You Rank In The Product Supply Food Chain? Are You Only a Bottom Feeder?​

The terms wholesaler and distributor are used quite flexibly, with different people meaning different things by those terms. Many wholesalers, distributors, and agents pretend to be manufacturers. Added to that are a multitude of sourcing agents who will offer their services to you to help you find suppliers.

Strictly speaking the hierarchy should be something like this:

1. At the top of the pile is the manufacturer. These people have a factory where they actually produce the goods. Some will supply direct to resellers such as you, but you will find that if you approach local manufacturers you will often encounter barriers. They usually have their sales network already in place and small resellers are seen as a nuisance. If however, you approach real manufacturers in China, or other exporting countries, they will usually welcome you with open arms. When you are buying from manufacturers you are almost certainly getting the lowest price possible, giving you the highest profit margins.

2. Next come the distributors who have been granted the right to sell the products to people such as you. They buy from the manufacturers at a discount because the manufacturer does not want to deal direct with resellers. Many people either out of ignorance or desire to deceive call themselves distributors when in fact they are resellers just like you, or maybe because they are actually wholesalers.

3. Wholesalers usually buy very large quantities and carry them in stock for sale to resellers like you. They have usually obtained the products at the best price that the manufacturer or distributor will agree to. They will sell to you at a price which is supposedly lower than the recommended retail price, but in many cases they charge resellers the same as or very close to the same as they charge individual customers. Those who do this are not genuine wholesalers, but are retailers in disguise.

4. Resellers, (you) are near the bottom of the food chain. The individual consumer is at the bottom. You buy at the lowest price you can negotiate, and try to make a profit on reselling the goods.

Profit margins are incredibly variable. I teach that it is best to go direct to the manufacturer if you want to maximise profits. The difference between wholesale prices and direct from the factory prices can be staggering. You may think that because you can only place small orders then you cannot buy direct, but that is not the case. There are ways to negotiate with manufacturers and get them to accept small orders even if they quote big Minimum Order Quantities. Profit margins, even on small orders can be amazingly high.

I have not included dropshippers because they are in effect wholesalers, unless they are “middle men” who pretend to be wholesalers. These people often set up turnkey dropshipping sites that provide free websites. The worst of them charge you to join. Although I said the consumer is at the very bottom of the food chain, dealing with middle men puts you in a similar ranking, but is far worse because it robs you of any hope of making any worthwhile profit.

Don’t give up. Make your way as near as possible to the top. Buy direct from the factories. If you know how to sell physical products that is the hard part. Safely sourcing them even in small quantities at best prices and then importing them are the easy parts.

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.
■ Misinformation Is A Wealth Hazard.
■ B2B Scams
■ Q & A 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16
■ Protecting Trademark, Copyright, and Other Intellectual Property.
■ How to find Unique Products
■ Success Story
■ Just in Time
■ Hot Selling Products

 

[Walter Hay]

STRAIGHT FROM THE HORSE’S MOUTH
Quote from Alibaba.com under the heading: “How to find legitimate companies on Alibaba.com”
“ In short, a Gold Supplier on Alibaba.com is a company that has had their legal business licenses and contact persons verified. However, this does not automatically rule out all dishonest enterprises – it just means that the company is registered with the government, and has a valid license to operate a business.”

"Registered with the Government" simply means they have a business registration without which it is not possible to legally conduct a business in China. That does not prevent an invented name being used by scammers. A lawyer in Beijing tells me that even business registration forms are now being forged, so the inspections by Alibaba and the other B2B sites that do them are useless unless they make a search in the Administration of Industry and Commerce records in every region of China. There is no national registry such as you will find in Western countries, except for those companies with national registration. Complex I know, but the Chinese system is still evolving.

The statement quoted above from Alibaba's own website proves that Gold Status is worthless as an indicator of an honest business. Don't forget that similar status symbols are sold on most B2B sites.

 

[Walter Hay]

Hi Walter,

I've read the whole thread, thank you for all the information you provided here!
In the beginning of the thread you mentioned that people shouldn't ask for samples early in their communications with suppliers. How would you typically start communicating with suppliers? And at what point would you ask for samples?

There are a few things that newbies typically do wrong when first communicating with suppliers, and the result is that they are often ignored.

• Don't let them know you are a newbie. Give the impression that Your are an established importer and sign yourself buy manager or similar.
• Don't ask what is their MOQ. They will tell you soon enough. Just tell them that their product XXX fits well with your company's sales program and you would like to know more about it. Ask for a catalog, either online or preerably a print copy if they produce one. It can tell you a lot.
  
• Don't mention samples until a decent period of time after you have reviewed their catalog. Expect to pay for the sample and the freight. (Costly) It might pay to order a small quantity as samples.

I think these don'ts and related comments probably answer your question, but let me know if you need more info.

 

[Walter Hay]

It's been quite a while since I posted my last Q & A, but I now have 125 conversations in my file and they take up a lot of my time.

This question may be product specific but my answer reveals something that all importers should be aware of.

Q. I have been looking for leather jackets but all the prices I have been quoted seem too cheap for them to be real leather. Can suppliers call the product leather if it isn't?

A. They should not but they very often do. Resellers like yourself have often been caught out selling fake leather as real leather because that's what they thought it was.

To understand how they can be fooled you need to know something about the lengths Chinese manufacturers might go to to fool the unwary or ignorant. In China all is not always as it seems. I will deal with leather first, but many other products are also faked in a way that can fool many people.

Fake leather is often impregnated with a leather perfume. Smells like leather - must be leather? You can tell the difference if you can find an obscure place where you can snip off a tiny piece. Heat it very hot and if it is fake it will give off a plastic smell. If it is genuine it will smell a bit like burning flesh. No need to check if they identify it as PU Leather - that's Polyurethane. Faux Leather is fake leather. But.... often they just say leather when it is not. Using a powerful magnifying glass, look for tiny bubbles in the cut edge of the "leather". Faking techniques have improved, and those bubbled edges can be sealed with a hot knife, so if the edge is smooth - it's fake.

Here are a few examples of other fake processes:
Stainless Steel is often chrome plated steel. In some cases I have seen items painted to resemble stainless steel and it looks very authentic. Test: If a magnet sticks it is usually not stainless steel.
Gold Plating is often brass plating. In a test my importing business conducted some years ago, we found that most women preferred jewelry that was brass plated, thinking it was more attractive and was the real gold. Test: Brass is harder than gold of more than 14ct, so try scratching it.
Brass Castings are often made out of what is called a water extendable resin impregnated with brass filings or flakes. These give it some weight and make it possible to polish it like real brass. Test: Look for tiny holes at the base of the casting. They are produced by the bubbles in the resin rising to the top. The casting is made upside down.

The moral of the story is to never take things at face value, particularly if the price seems way under what you would expect to pay.

 

[Walter Hay]

Walter,

Is it common for Alibaba to have many more "listings" for a certain product compared to the sources you mention in your book?

The product I am looking for does not have plentiful listings on the sources you recommend, however, on Alibaba there are pages full. Perhaps this is product specific in this case. Any insight on this? I would obviously much prefer to work with a real manufacturer. Perhaps I could show the real manufacturer a picture of the desired product and they could work with me to design it. There are only minor differences across the board on this range of products, so I would imagine it is not overly difficult.

I am looking to make slight modifications to the product and brand it.

I appreciate any insight on this.

Sorry I missed your post.

It is very common for Alibaba to have a substantially bigger number of listings for a particular product than you will find on the safe sites that I recommend.

The reason is that Alibaba is seen as a short cut to riches by many young Chinese entrepreneurs who have few resources , but think that a listing on Alibaba will bring them wealth. A large number of the traders listed on Alibaba, supposedly as manufacturers, are in this category.

Here's how the system works for most traders:

1. They get a free listing on Alibaba, at least as verified suppliers.
   
2. It might not bring in any orders, so, if they have a small amount of capital they buy a Gold Supplier badge.
   
3. So far, no real checking is done except to see if they at least do have a physical address and have registered a business.
   
4. They advertise, usually at a low price with a high MOQ.
   
5. Buyers make inquiries and they hurriedly contact manufacturers in the hope of finding one that will supply them.
   
6. They then load their margin on and quote you.
   
7. They will usually not reduce the MOQ, because they fear that the manufacturer either won't supply, or will increase the price.
   
8. If the price looks good and you order, they take your deposit and place an order with the manufacturer.
   
9. Sometimes, if they have an idea of the usual price, they will not follow step 5 until they have received your deposit. This is why many orders with traders result in deposits being refunded - that is assuming the trader is honest. In that case all you have lost is time, your bank fees, and lost use of your money while they hold it.
   
10. They rank low in the manufacturer's estimation, so orders are often slow.

On another forum, a seller who has a substantial eCommerce business and has lived in China for many years has stated that only about 1% of suppliers listed on Alibaba as manufacturers really are. I think that is an exaggeration, but other Chinese members on that forum have posted from time to time saying that most suppliers listed say they are manufacturers because that is what westerners want.

This is a long-winded way of telling you that a small number of genuine listings is better than a large number of non genuine ones.

Walter

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.