Top Ten Pitfalls to Avoid When Trading With China

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We often get approached by clients who have tried sourcing and buying products from China but have run into difficulties .  Many are new to this but some have been buying from China for years.  We see some common threads and many of these problems are easily avoided by careful planning before you start searching for suppliers.  So here is our top 10 pitfalls to trading with China.

  1. Language mis understanding. It goes without saying there is a major language barrier between the UK and China.  Thankfully many Chinese speak good conversational English which is great for a nice chat.  However their business and technical English is often more shaky and this often leads to mis understandings and problems. You can of course take a crash course in Mandarin but it might take a little while to become sufficiently fluent to negotiate a business contract.  Alternatively you can just employ the services of a specialist trade consultant to help you
  2. Lack of appreciation of the effects of size on shipping costs is another common problem. To get the best prices and biggest savings you need to ship in bulk and that means containers, preferable big ones like 40ft HQ.  These huge cavernous units can house vast quantities of goods and you need to have deep pockets to buy the goods to fill them.  But if you really want to make serious money this is what you need to do.
  3. Sizing problems with clothing. Getting Asian manufacturers to understand Western European body sizes is extraordinarily difficult (you only have to look at size variations in your local high street stores).  You need to be prepared to try a few samples before you get the sizes right.  Telling a factory in China you want size 8, 10 and 12 is hopeless – you need to give precise measurements and even then be prepared for a few trial samples before you get it right.
  4. “My supplier is offering free shipping”. I am sure you have heard the term ‘there is no such thing as a free lunch’.  Well it’s never been so true as here.  This is particularly common with part container loads (PCL).  The factories’ shipping agent will often offer to ship for ‘free’ however what they don’t tell you is that you as a customer and importer are likely to be faced with a hefty bill for port charges when it arrives in the UK, much of which goes back to the shipper and their agent.  It is not possible to calculate these charges until the container arrives in the UK, by which time it’s too late.  Using a UK freight handler is far safer and avoids these problems because they can quote you a full price for delivery to your door including charges.
  5. Realistic quantities. Many UK customers fail to appreciate the size of China and the size of its industry.  Whilst buying 1,000 items may sound a lot to you, to a factory selling 20 containers a week each filled with 8,000 items your order is small fry!  Choosing the right size factory to service your order is crucial to a good outcome.
  6. Realistic Pricing. We often get approached by people looking to buy items for a fraction of the price available in the UK. In reality this is rarely possible in 2019.  Yes savings can be made but don’t try and become a millionaire by buying a couple of containers of goods.  Even in China the cost of raw materials to make your goods is rising. Remember also the cost of the goods is only half the cost.  The rest is typically taken up by shipping, UK road haulage duty and VAT.
  7. “I’ve been talking to this factory ……. “.   The chances are you have been talking to an agent not  a factory.   Does this matter?  Well it depends what you are buying and what quantity but it helps to know exactly who you are dealing with.  If you look for goods on well known Chinese sites such as Alibaba almost all the sellers are agents, despite claims to the contrary.  Dealing through a third party rather than direct with a factory ads another layer to the communication chain and can lead to further mis communication problems.   If goods are faulty getting redress can be extremely difficult if buying through an agent.
  8. “Do they offer Credit terms like my UK suppliers?” The short answer is NO!  Until they get to know you really well and you have place a substantial number of orders over a significant period of time they will expect payment up front.  For small orders 100% upfront Is usual.  For larger orders 30% deposit plus the balance when ready to ship is the norm.
  9. “Can I return the goods if faulty? “  Well it really depends on how your contract with your supplier is written.  Remember it’s the Chinese version which will apply in the courts so you ought to brush up on your mandarin reading skills (or get help from a specialist).  Often broken or damaged items will be replaced FOC by the supplier but you will have to pay for shipping and the cost of returning the faulty item – in practice the cost of shipping often makes such measures impractical and in practice such warrantees may be worthless.
  10. “I need the items in 4 weeks time no later”. China is 5000 miles away and shipping takes time. The quickest is by air 11 hours, followed by rail.  This relatively new link takes on average 21 days, or by sea 35 days.   You need to remember to add on time before dispatch in airports, ports and rail depots awaiting customs clearance and further delays on arrival in UK obtaining port and customs clearance. These extra times are very significant and days to the delivery time (so for instance shipping by air increases from 11 hours to typically 5-7 days!).  Things can and do go wrong, cancelled flights, broken trains and storms at sea can all lead to delays.  If you bought a new wedding dress don’t plan for it to arrive the day before the wedding – it’s not worth the stress!

We hope you find this list useful.  We are used to dealing with, handling and avoiding many of these issues.  If you feel you would like some help or advice give us a call or you can fill in our enquiry form and we will be happy to help.