Common Pitfalls When Sourcing from China
- Carson Block, China Primer
The following are the most common problems that arise when purchasing from China. Doing Business in China for Dummies chapter 12 has a more comprehensive discussion of each problem and potential solutions.
Losing your brand. Even speaking with potential suppliers in China might inspire them to register your trademark for themselves in China. Do not let this happen – register your trademark in China immediately.
Losing your technology or design. The best way to protect proprietary is to compartmentalize, and source various components from different factories. The factories should not be located near one another. The downside of this strategy is that it is complex to manage all of these sources.
Not getting what was promised. This is probably the most common sourcing issue – getting products that do not match the samples. Have the factory make at least four samples, all signed and dated. When you approve the samples, send back only two. Keep the others in a sealed and date-stamped box.
Being outsourced. Sometimes, you place an order with one factory, but they then charge another factory with producing it. This will render your due diligence worthless, and possibly create quality problems. The only way to prevent this is to be present during production.
Toxic substances. This is one of the costliest – if not the costliest – pitfall you will commonly face when sourcing in China. The big substances you need to watch out for are cadmium, lead, mercury, and chromium. There are testing companies that can test for these substances. It is a good idea for your purchase contracts to require the supplier to indemnify you for all liabilities related to toxic substances. Finally, you may want to consider paying more for products that can mean the European RoHS (Restriction of Hazardous Substances) standard.
Related Articles:
Types of Sourcing in China
Sourcing from the factory vs. using a trading company
China Sourcing and Due Diligence - Factory Visit Checklist
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