Common Mistakes Made by Importers
During my experience of helping business people sourcing from China, I’ve seen many mistakes that importers made when sourcing from China. Below are 8 most common mistakes:
1. Using PayPal
Almost all beginner guides will tell you, only choose suppliers who accept PayPal. We say otherwise. There are a couple issues when it comes to using PayPal. You’re required to pay service fees. This can end up costing a ton and ruining your profit margins. A lot of guides will explain, PayPal is great for that added piece of insurance. The problem with this, if you’re using PayPal as a piece of mind to know your supplier can’t run away with your money, then you have not been vigilant enough with your sourcing. You should never choose a supplier unless you are absolutely confident they are capable of performing to your qualifications.
International Trade is an industry that is older than all of us. PayPal disrupts the system. Maybe this is my old school mindset coming into play, but a supplier is going to have a hard time taking you seriously if you demand PayPal. PayPal for international trade tags you as an inexperienced buyer who can easily be taken advantage of. Regardless of your buying power, it is important to act like you know what you are doing, even if this is your first purchase from China.
In the long run, PayPal isn’t going to help you. You’re buying from China, and because of this, you’re expected to conduct business with Chinese business understanding. A true business in China is built on trust and relationship. Using an American processing company notoriously known for favoring the buyer over the seller, and holding/confiscating funds for unknown amounts of time, is not going to help you in your efforts of extending the olive branch.
2. Neglecting Compliance
Regardless of your import country, there are product laws that extend much further than getting past customs. When buyers don’t fully understand the product they are importing and all the necessary rules and regulations that go along with said product, serious issues can arise at any part of the life of the product. As the importer, it is your duty to import responsibly and legally. While a common issue is not understanding the necessary certifications to get past customs, resulting in fines or seizures, another overlooked mistake is further compliance with various government agencies and entities protecting buyers, products and the environment.
3. Not sourcing forwarders
Not all shipping prices are equal. The shipping industry is large, competitive, and as ‘out to get you’ as any industry looking to make a quick buck off small, inexperienced importer. Just as it is vitally important to obtain product quotes from various suppliers, it is just as important to obtain quotes from forwarders too. If you don’t already have a strong relationship with a logistics company, or understand the cost structure of various ways of shipping, the best way to ensure you’re not being quoted an over inflated price is by shopping around.
4. Showing your size
A common mistake new importers make is assuming Chinese suppliers have the same vision they have of their small but mighty startup. Chinese culture works much differently than western culture. In China, everything bigger is better. Because of this, some suppliers will refuse to work with importers who are clearly of small size because it is assumed, the more amount of employees you have, the bigger your warehouse, the nicer your car, dictates your businesses success and buying power. When in reality, for the west, this is far from true.
When creating on online buying profile, it is important to exaggerate just enough so Chinese companies don’t quickly discard you as insignificant. Instead of explaining you’re a small startup, build yourself up so when they quickly glance over you and your website, they have trust that your purchases won’t be a one and done deal.
5. Expecting the sales person to be organized for you
Mistakes in production happen, and they happen a lot when you assume the sales person is the one taking all the notes for what you intend to purchasing.
Make sure everything is 110% understood, clearly written down in an organized fashion, and confirmed multiple times by the supplier.
6. Assuming you can ship defects back to your supplier
It is illegal to ship defective goods into China. Chinese customs will seize the goods. The cost alone would eat up profits because you’d be expected to cover all shipping costs. There are easier and less expensive alternatives to look into, such ask supplier for some percentage of free replacements, get a certain percentage of refunds from supplier, and so. Most importantly, you should always find a trustworthy QC to do pre-shipment inspection for you, so as to find out defects in China, problems are much easier to be fixed by China suppliers.
7. Assuming the factory is going to follow Western business customs
Many buyers assume that because they are messaging factories from the comfort of their own computer screen, that they are not doing business in China.
By not taking the time to learn about Chinese business culture, you’re doing yourself a great disservice. Your understanding will be recognized and greatly respected if you can adopt to Chinese business customs.
8. Not building a personal relationship with your supplier
The suppliers you are speaking with are not faceless drones taking you order, they’re actual people. A great way to build a relationship is to also build a rapport with these sellers.
Chinese business is fueled on relationships. Any personal relationship you have with someone at the factory you intend on using continuously, will allow you to greatly excel your imports.