Our company has extensive experience working with clients who have chosen to procure equipment from China themselves, and we would like to share our observations and recommendations.
Firstly, it is worth noting that the price of Chinese equipment may be lower due to the inferior quality of materials and assembly. This can lead to frequent breakdowns and high costs for repairs and maintenance. For example, household appliances from China often fail shortly after being put into operation due to the use of cheap components.
Secondly, when making independent purchases in China, you may encounter problems with customs clearance and delivery. Failure to comply with necessary rules and requirements can result in fines and delays in product delivery. Additionally, it may not always be possible to return or exchange a product if it does not meet the stated specifications.
Lastly, it should be considered that when dealing with an official dealer, you receive a guarantee of the quality and reliability of the equipment, as well as professional support and consultations. Dealers usually have direct contracts with manufacturers and can offer favorable terms for delivery and service maintenance.
Cargoes from China go to all countries of the world
Therefore, before deciding to engage in independent wholesale purchases in China, it is necessary to carefully weigh all risks and opportunities to avoid losses and misunderstandings. Ultimately, it may turn out that working with an official dealer is a more advantageous and secure strategy for your business.
Now, let’s delve into all the risks in more detail.
Manufacturer Sourcing
Finding a reliable manufacturer is a crucial step in the wholesale procurement process. Many entrepreneurs believe that conducting independent research on suppliers on platforms like Alibaba is the optimal solution. However, it is important to note that on Alibaba, the majority of companies act as intermediaries rather than direct manufacturers. Actual equipment manufacturers typically do not engage directly in international trade deals and delegate this function to intermediaries. Chinese companies and foreign enterprises operating in the local market prefer to use other platforms for supplier discovery, as they can find more advantageous offers from manufacturers focused on the local Chinese market.
When independently sourcing a manufacturer without the involvement of intermediaries, there is a risk of encountering a situation where the found «supplier» is actually an intermediary who may sell goods to foreigners at inflated prices or even deceive them. It is essential to emphasize that such «suppliers» may be fraudulent, leading to financial losses for the client. Therefore, it is crucial to exercise utmost caution when selecting a manufacturer and prioritize reputable suppliers with a solid reputation and positive reviews.
Map of Manufacturing in China
Challenges in Negotiating with Chinese Suppliers
Once a supplier has been selected, lengthy negotiations and discussions regarding production or procurement details in English commence, which can pose challenges due to differences in mentality and culture. Chinese prefer face-to-face negotiations over a cup of tea and a cigarette, which may differ from traditional online negotiations. Understanding the culture and language is essential for successful bargaining on favorable terms. Having employees fluent in Chinese and familiar with local traditions can greatly facilitate this process and enhance the chances of successful cooperation.
Customs Duties, Taxes, and Currency Conversion Fees
When dealing with Chinese suppliers, it is important to consider not only the offered price but also a range of additional factors affecting the final transaction cost. One such factor is customs duties and taxes, which can significantly impact the financial aspect of the deal. For instance, Value Added Tax (VAT), an additional tax on imported goods, requires special attention and payment during customs clearance. It is crucial to remember that experience with VAT and its application specifics may vary significantly across different countries, so being prepared for additional expenses and complexities is necessary.
Additionally, a crucial aspect is the currency conversion process when conducting financial transactions with Chinese counterparts. Currency conversion fees, transfer fees to China, and using the SWIFT system can result in significant expenses for the entrepreneur. Deep understanding of these processes is required to avoid unforeseen costs and minimize financial risks.
When dealing with customs clearance, it is also important to consider the complexities that may arise without professional assistance. Assigning this task to a customs broker for an additional fee might be a reasonable choice to ensure a smooth customs clearance process. Therefore, meticulous planning and consideration of all financial aspects are necessary when conducting business with Chinese partners.
Conclusion of an International Trade Agreement
The signing of an international trade agreement is just one of the steps towards a successful procurement of goods from foreign suppliers. In order to prevent potential problems and disappointments, it is crucial to conduct a thorough verification of the supplier and equipment before shipment.
Difficult choice: buy it yourself or turn to an agency in China?
It is important to understand that signing a standard contract with a Chinese supplier does not guarantee successful cooperation. In China, the value of contractual relationships is often low, especially in disputes where the Chinese court may not favor foreign companies. This means that in case of issues, the supplier may only offer apologies and promises of discounts, without addressing the root of the problem. Therefore, it is essential to not only conduct a legal, but also a financial verification of the supplier before signing a contract.
When purchasing expensive equipment, it is necessary to pay a visit to the potential supplier in China. During such a trip, valuable information about production processes, working conditions, and equipment quality can be obtained. It is also important to ensure that the presented photos and information correspond to reality in order to avoid fraud.
In addition to verifying the supplier, it is also important to inspect the equipment before shipment. This will help avoid the delivery of faulty or low-quality equipment, which could significantly harm the business. Inspecting the equipment before shipment is an additional guarantee of quality and reliability of the delivery.
Photo report of a ready-made machine from the manufacturer is not a solution
Many companies that procure from Chinese manufacturers often rely on provided photos as the main method of quality inspection. However, it should be noted that Chinese manufacturers may not always take quality control seriously and may not disclose product defects in the photos. Furthermore, some manufacturers may change components of the product after sending the photo report, substituting more expensive and higher-quality components for less reliable ones.
For example, a situation where a manufacturer replaces servomotors on a machine with less powerful ones than originally stated can significantly impact the equipment’s performance and lead to future problems. Therefore, relying solely on photo reports from the manufacturer is not recommended, and it is important to conduct a more detailed inspection before making a purchase.
To ensure the quality and reliability of the product, it is recommended to personally visit the manufacturer, inspect the production facilities, and conduct equipment checks before shipment. It is important to have a full understanding of the manufacturer and their production processes to avoid unscrupulous suppliers and receive a quality product.
Shipment of a machine from the warehouse
The shipment of a machine from the warehouse is one of the stages of the equipment delivery process that is often overlooked by the customer. However, this stage can lead to serious problems that will negatively affect the quality and condition of the received equipment.
Let’s consider specific facts and examples of how improper shipment of a machine can lead to negative consequences. For instance, incorrect loading of the goods or careless handling of the packaging can lead to equipment damage. A common problem is shipping equipment during rain, forcing it to be loaded outdoors because the truck cannot reach the warehouse doors. Moist equipment loaded into a sealed container can be subject to corrosion and damage during transportation, which can take anywhere from 50 to 100 days depending on the destination country.
Such situations can come as a surprise to the customer who entrusted the shipping process to a logistics firm and container ship. It is important to understand that the time and conditions of transportation directly impact the state of the equipment upon delivery. Therefore, customers should pay proper attention to this stage of the delivery process to avoid negative consequences and ensure the preservation and quality of the received equipment.
Delivery from China to client’s production facility
When selecting a company for delivering goods from China to the client’s production facility, many customers tend to focus on budget options with tariffs of «3-5 dollars per kilogram.» However, it is important to remember that saving on transportation costs can sometimes lead to negative consequences. For instance, when it comes to shipping equipment, such an approach can result in unpredictable outcomes. While insurance may cover the loss or destruction of the cargo, it does not guarantee the quality of the services provided.
Texterra.biz has been collaborating exclusively with reliable logistics companies in China for a long time, ensuring the safety and reliability of delivery. With extensive experience, we are confident in our partners and can guarantee clients a high level of service. It is important to consider that the delivery time from China to the client can range from 50 to 100 days, depending on the destination country, making the choice of a reliable partner critical for the safety and integrity of the cargo.
Post-sale customer support
Post-sale customer support is a crucial aspect of working with suppliers, especially when it comes to purchasing equipment from China. When dealing with Chinese companies, challenges arise due to language barriers, lack of clear instructions in English, and issues with warranty service. It is important to understand that without quality technical support, production downtime can occur, leading to financial losses and delays.
Our company aims to address these issues by providing a high level of service and technical support. We offer equipment warranty service for a minimum of one year, giving our clients confidence in the reliability and quality of our services. Our specialists are ready to troubleshoot equipment, train staff, perform assembly and repairs, thus avoiding lengthy waits and additional costs.
Clients who turn to us often find that the expenses for technical support and equipment maintenance with us are significantly lower than when dealing with official dealers in their own country. We guarantee the quality of the work performed, provide a warranty for replaced or repaired parts, ensuring long-term reliability and partnership with our clients.
Translating operation manuals
Difficulties in translating operation manuals can be a serious obstacle when launching and maintaining machinery. For example, misunderstanding safety instructions or incorrect equipment connection can lead to accidents and damage.
Our company offers high-quality instructions in the customer’s language, which helps avoid such problems and ensures safe and efficient operation of the machinery.
In summary, purchasing equipment directly often involves risks and complexities, whereas turning to a sourcing company with a proven reputation guarantees reliability and convenience. Our company offers a simple and transparent equipment acquisition process, starting from configuration selection to employee training.
Our team of specialists will provide support during equipment commissioning, train personnel, and provide necessary technical support. This will help the customer avoid operational issues and increase the machine’s efficiency.