Trading with China is a promising and interesting direction for both large companies and entrepreneurs. But to do business in this country, it is important to understand its mentality so that cooperation that seems profitable at first glance does not turn into a failure. After all, despite the huge number of offers on local marketplaces and international trading platforms, finding a reliable supplier or business partner in China is not easy. To avoid losing money invested in goods and to avoid losses, it is always necessary to check factories and suppliers before concluding contracts. How to do it correctly if you don’t have established connections and experience in international trade yet? Read on.
Where to look for suppliers in China
Conventionally, all Chinese manufacturers can be divided into three groups:
- Those focused on the domestic market with delivery only within the country and accepting payment only in yuan from local accounts (most of them are represented on the 1688 marketplace).
- Those working in the foreign market. Such companies sell goods through their websites.
- Those trading in China and beyond. Usually, they have their own product lines and trademarks.
To search for detailed information about Chinese factories, you can use the Baidu search engine. You can search for specific goods on the b2b platform 1688 by description (in Chinese) or by photo. There you will also find manufacturers who do not have their own websites and work on order. Their contacts can again be searched for via Baidu, and then discuss delivery terms in correspondence, or, for more productive communication with representatives of Chinese business, visit specialized exhibitions that are held in the country annually.
Trading platforms
To search for primary information about a potential partner, you can use internet platforms like Alibaba, 1688, DHgate, where reliable information about the status and reputation of many Chinese manufacturers is collected. Some resources have their own “black lists” containing unscrupulous suppliers and contractors. You should start getting acquainted with sellers from their account – a personal account on the website. For example, Alibaba has this grading:
- AssessedSupplier – “verified seller”. This status means that the company has passed an official inspection with a thorough audit. That is, representatives of the trading platform personally visited the production. The products of such sellers are usually 10-20% more expensive.
- GoldSupplier – manufacturers purchase the “gold supplier” mark from the marketplace themselves. Such firms have a legal address and a real operating office, but their inspection is limited to a document audit, without an on-site production visit, so this status does not guarantee integrity and responsibility.
- VerifiedSupplier – “verified supplier” means that only documents have been verified. That is, you will have to figure out all other aspects yourself. Ideally, personally communicate with factory representatives, visit the workshops to get acquainted with the technological process, and request trade samples before ordering a large wholesale batch to make sure that the product characteristics correspond to the description.
On 1688.com, the highest status is the “bull” sign. It is given to the best sellers with a good reputation. Also, an indicator of the manufacturer’s reliability, selling its products on this site, is the verification badge, confirming that it has passed the check. When choosing a supplier, you should also pay attention to the number of transactions, the time of its work on the platform, the presence of its own warehouse or production. When studying the account, look at the “About the company” block. It should contain the official legal address, phone number, link to the website, date of foundation, and other important data.
For wholesale purchases from these and other platforms in China, it is important to learn to distinguish manufacturers from resellers who do not take responsibility for the goods. For example, on 1688, goods from factories are marked with hieroglyphs: 生产厂家. Also, productions will have a more uniform assortment. But in this case, when ordering different goods, you will have to contact several sellers. But you will get technical support and a guarantee. Buying a large number of diverse items is more profitable from trading companies.
Advantages of direct cooperation with manufacturers
- Lower price due to the exclusion of intermediaries.
- Quality guarantees. When concluding a direct contract, you can request the necessary certificates and come to the production site or send your representative there so that he sees the entire technological process and makes sure that the product characteristics meet the required criteria.
- Opportunity to agree on discounts, customization, manufacturing of batches with your own design. This is convenient when ordering products under your own trademark.
- Lower risks. Marketplace sellers do not always provide reliable information about the manufacturer of the goods, so it is difficult to check their reliability and competence. When communicating directly, this is excluded, and you know exactly who you are dealing with.
When working directly with Chinese factories, it is important to control the delivery process, as many of them lack experience in international transportation. For this, it is better to turn to an experienced intermediary.
Documents for working with Chinese suppliers
According to the country’s laws, local manufacturers must provide a foreign customer with a complete set of documents for international delivery. Therefore, when conducting negotiations, it is necessary to request all the necessary data and official papers for the legal formalization of the transaction. These are:
- Business license or permit to conduct business (营业执照);
- Certificate of registration;
- Export permit;
- A document confirming the authority of the director with a corporate seal;
- Certificates confirming the quality and safety of the products.
If the company sells its own unique development, it must provide a patent or certificate of invention registration. If the supplier, when concluding a supply contract, refuses to provide any of the listed documents, it is better to refuse to sign the contract.
Checking the legal authenticity of Chinese companies is often difficult, as registration documents in the registries are usually in Chinese. For translation, you can hire a translator in China or contact certified agencies that will not only translate the important information verbatim but also check it at the Russian representative office of the Chamber of Commerce and Industry in China. This organization also provides a supplier verification service. You can check the registration documents of enterprises via WeChat. The license indicates the exact name in Chinese, which is important because on marketplaces it may be unreliable.
When checking through aiqicha.baidu.com, pay attention to the “scope of activity” column of the company: a manufacturer will have the appropriate permit there, while a seller or reseller will have a trade license.
Ordering samples
To check the quality of goods, you can order their samples on Alibaba, 1688, or directly from manufacturers. Please note: most likely, their delivery will be for an additional fee. Having received the samples, you will be able to evaluate their appearance and make sure that they are suitable in terms of characteristics. If everything is in order, you can order a large batch for a significant amount. If problems, inconsistencies, or defects are found, you can discuss these issues with the supplier. Or organize an additional inspection of the plant before placing an order, especially if we are talking about serious scales.
When conducting negotiations in China, keep in mind that they have peculiarities due to the local approach to business and mentality. For the best results, we recommend following simple rules:
- State requirements clearly and precisely. Describe characteristics, dimensions, packaging, and the availability of certificates as detailed as possible. Chinese believe that what is not confirmed in writing is not obligatory.
- Formulate requests gradually. First, it is better to clarify prices and general working conditions, then you can delve into details: minimum order quantity, production time, customization, etc.
- Bargaining is common in China, so do not rush to conclude an agreement immediately. With a reasonable approach during negotiations, the initial price can be reduced by up to 20-30%.
Issues of quality, delivery time, and guarantees for the return of defective goods must be discussed before the contract is concluded and recorded in writing.
Working with suppliers and internet platforms in China requires knowledge of the specifics of local legislation and the market. If you do not have the relevant experience, it is better to involve professionals to search for and verify suppliers, conduct negotiations, and conclude a deal. Our company is ready to take on the issues of product sourcing and inspection before shipment to Russia. We will control packaging and shipment, provide cargo escort until the moment of arrival at the final warehouse, and handle the legal support of the deal so that your business does not stand idle for a single day. Submit an application on the website, indicating the type of product and requirements for it, we will do the rest ourselves!
