Selecting Wholesale Chinese Suppliers – Avoiding Common Mistakes

China’s business policies have always been an emotion churner among the foreign companies. It is a land full of business opportunities for entrepreneurs from others parts of the world. However, it is a business person’s paradise. They have to face lot of ups and down while doing business in China. All the suppliers from China function on their terms and thus sourcing wholesale items from China is never free from risks. There are certain common mistakes committed by the foreign companies which can actually create issues while sourcing products. Avoiding these mistakes will help in gaining profit for the retailers. The mistakes are:

Poorly Defined Strategy– Sourcing Chinese goods must have a well-defined strategy or a road map. Generally, the foreign companies do not do complete research on the Chinese suppliers and thus they do not get the best deal in terms of quality, price, on-time delivery and functionality. Use a sound social media strategy to avoid this mistake. Also, decide on the sourcing method and that will simplify things.

No Established Parameters– If there are no established parameters for choosing proper sourcing agents, then that might end up in a problem. Selecting wholesale Chinese suppliers in a proper way can help improve business. They can be chosen by keeping the geographic location in mind, figuring out their production capacity, establishing proper expectation for controlling quality, setting up your price range and also finding out your risk tolerance capacities.

No Research Conducted– Doing proper research is the most important thing that foreign companies should do on Chinese suppliers before deciding to work with them. Avoiding this step is a sure recipe for failure. To avoid making this mistake, you should check online reviews, verify the suppliers’ registration and certification, call up to review their website and verify it, find out the authenticity of the supplier’s local registration, visit suppliers yourself, visit a local AIC office, and hire a sourcing service provider.

Lack of Payment Protection– After all, sourcing products from China is an international transaction and thus keeping it transparent is extremely important. Before a single payment is made, it is important to establish a secure payment method. If you don’t have a proper method of payment, you might suffer a monetary setback.

Unwritten Documents– A written contract is always the best way to safeguard the interest of the company. Oral agreements do not stand a chance in case of any kind of breach. Moreover, to enforce the Chinese laws on your company, written provisions must be there without which you cannot ask for justice. The contracts generally include, parties involved, provisions on price, quality and logistics, definition of product quality and satisfaction, delivery time, payment terms, liability for breaching contract, dispute resolution, laws for the same, fees for attorney and arbitration clause.

Non-Reviewed Contracts– This is the biggest mistake that people make. Contracts are written to be reviewed from time to time to check their relevance and also know them by heart so that they can be applied if required. However, sometimes attorneys do not check or review the draft which is documented for protecting the company’s interest. However, if the interest cannot be protected then there is nothing the company can do.

Ignoring the FCPA– The FCPA or the Foreign Corrupt Practices Act deals in legal issues, labor law, trademark law, IP law and also anti-monoply and commercial law in terms of both American and Chinese organizations. Avoiding this practice mind end up in a mess for the companies.

No Chinese Translator– Thinking of doing business in China without a Chinese translator is almost equivalent to committing suicide. Right from negotiating deals with the suppliers to enforcing Chinese laws in court will require the presence of the Chinese translator. In fact, all the documents should be drafted in Chinese so that they are enforceable by Chinese law. If this is not done, then you might have to face downfall.

These are common mistakes committed by foreign companies while doing business in China with their suppliers. Avoiding these can save their day and thus the foreign companies have to careful before starting their business transaction with the Chinese suppliers.