This post is by Maegan Burkhart, a Content Specialist at Asia Quality Focus.
Go to the listings for just about any type of product on Amazon and you’ll probably find a large portion of those goods are made in China.
China is still the premiere manufacturing location for many importers, despite rising labor costs and recent trade tensions. Especially for inexperienced ecommerce sellers, it makes sense to start importing from China. It’s easier to find suppliers with the expertise to manufacture quality goods for overseas markets in China than elsewhere in Asia.
But although ecommerce sellers have been importing from China for years, they still face many challenges with Chinese suppliers. Many misconceptions persist about how to import from China and effectively manage product quality there.
Most misunderstandings with Chinese suppliers are a result of poor communication, unclear requirements and poor preparation. So here are some of the main things ecommerce sellers get wrong about importing from China.
1. Sourcing the wrong products
The first question ecommerce sellers face is “What are the best products to import from China”?
China has long been known as the “factory of the world”, where you can easily find many suppliers for a wide variety of products. But just because you can import a product from China doesn’t always mean you should. Some products are less suited for ecommerce than others, especially if you’re just starting out with a limited budget.
Always research your market, intended product and customer base before proceeding with placing an order with a Chinese supplier. And consider ordering a small test order to see how the product sells before investing further.
Here are three types of products inexperienced ecommerce sellers should avoid when deciding what to import from China:
The first mistake ecommerce sellers make when importing from China is trying to import a product that is too complex. The primary reason these are unsuitable for small ecommerce businesses is that maintaining quality standards is more difficult for complex products.
Complex products can include consumer electronics, watches, jewelry made from high-value materials or even just a handbag made from multiple materials.
Complex products often require many different parts and materials which must be sourced from multiple sub-suppliers. While a Chinese supplier can likely source these parts for you, your transparency into who they source from and the quality level of their materials will likely be limited.
There’s simply a higher margin of error when importing complex products from China. Your supplier could misunderstand product specifications, how it will be used, or the production processes they need to follow.
Misunderstandings often lead to quality issues or nonconformities in finished products. And quality issues in complex products can be more difficult and costly to fix than those in simpler products. Fixing defects may require disassembling the product entirely or sourcing a replacement part, for instance.
Labor-intensive products might include garments, shoes, luxury goods and handcrafted products.
The danger of importing labor-intensive products is their greater tendency for quality issues and higher labor costs.
Automated production processes tend to lead to more consistent results and fewer human errors. An injection-molded part will come out the same almost every time, but can you say the same for a hand-knitted sweater?
Some examples of quality defects more common in labor-intensive products include:
- Untrimmed threads on a garment: A factory worker must manually trim these after production.
- Excess glue on a shoe: A factory worker must manually remove this after application.
Another concern when importing labor-intensive products is that manufacturers of these products are increasingly leaving China for cheaper locations like Bangladesh and Vietnam.
China’s minimum wages have increased over 60 percent since 2011 and now range from $143 to $348 per month. This increase in labor costs has eroded profit margins on some products for Chinese manufacturers and ecommerce sellers alike.
Finding a supplier in China to produce labor-intensive products at a competitive rate is much harder than it was 10 or 15 years ago.
This one should go without saying, but surprisingly, many ecommerce sellers still think it’s a good idea to import counterfeit products from China. There’s no future in importing counterfeit products, even if you can import these products cheaply and make a good profit initially.
More than ever, importing counterfeit products will expose your business to legal risk and repercussions from platform operators and customs officials. Many platform operators have launched robust anti-counterfeit programs in response to complaints about counterfeits from third-party sellers and government agencies.
Amazon launched Project Zero in early 2019, a program which uses machine learning to continuously scan product listings and proactively remove counterfeits. And Alibaba’s Anti-Counterfeiting Alliance has already led to the shutdown of 524 manufacturing locations and the seizure of $536.2 million worth of counterfeit goods.
There are plenty of other products to import from China – don’t put your business in the line of fire by buying counterfeits.
2. Placing a large order without vetting the supplier first
Once you decide what to import from China, it’s time to find a supplier to manufacture your goods. But don’t get too excited and rush ahead to place a huge order with the first supplier you find.
Paying for an order upfront without first evaluating your supplier exposes your business to potential risks like fraud, receiving unsellable goods, supplier bankruptcy and more. Beware of any supplier that asks for 100 percent payment upfront.
Even ecommerce sellers with a limited budget can still conduct an informal background check on their supplier before proceeding with a purchase order. Some questions ecommerce suppliers should ask themselves about a supplier include:
- Do they have an Alibaba “Gold Supplier” badge? Every Gold Supplier is a legally registered company who possesses a valid business license.
- What other products do they manufacture and where do they export to? You can also find this information on the supplier’s Alibaba listing. Are their products and markets similar to yours?
- What documents can the supplier provide to verify their operations? Business licenses, ISO certificates and test reports can all demonstrate proof of a supplier’s legitimacy. You can also contact the issuing body to verify certificates.
- Can you audit the supplier’s facility? Even if you don’t intend to follow through, you could still suggest an audit to the supplier. If the supplier says no, they probably have something to hide.
- Can you review a product sample before placing an order? Reviewing a product sample is one of the most reliable ways to verify a supplier’s actual production capabilities and quality standards.
Consider a third-party quality audit
Searching for information about Chinese suppliers online can be difficult, since most official databases lack English resources. If you do have the budget, this is where a formal third-party audit of your supplier’s facilities can help.
Third-party auditing firms can physically go to your supplier’s facilities and verify their operations, as well as cross-check business licenses and documents against official Chinese databases.
Many third-party audits are based on the international standard ISO 9001. These audits typically evaluate:
- Basic production facilities
- Equipment maintenance
- Quality management system organization
- Incoming quality controls, during production controls and finished goods controls
- Any lab testing capabilities
- HR recruitment and training practices
- Engineering, research and design capabilities
Third parties can also review a product sample for you, helping you avoid the fees and delays resulting from shipping a sample internationally.
Once you’ve qualified a supplier, don’t undo all your work by negotiating the order price too low. In China, as with elsewhere, you typically get what you pay for.
Negotiating the order price too low often pushes your supplier to cut corners with production or source lower-quality materials or parts. This will almost always lead to lower-quality goods that are worth less than if you had just paid a fair price initially. There’s more on how pushing the price too low can lead to quality issues in How Experienced Importers Limit Product Defects.
3. Assuming the supplier understands their product requirements
Ecommerce suppliers are often surprised to discover their Chinese supplier doesn’t understand their product requirements.
You might think your product requirements make perfect sense. But do they make sense to the average production worker? What about someone from another country? Language barriers, cultural differences and inexperience with your product type can all lead to misunderstandings with suppliers.
Common misunderstandings that sellers experience with Chinese suppliers include those regarding:
- Intended product use: Make sure your supplier understands the intended function of your product, even if it seems straightforward to you. You might be surprised to learn that clothes dryers and ovens are rarely found in Chinese homes, for instance.
- Measurements: Clarify units of measurement for product and packaging measurements. The metric system is more commonly used in China than the imperial system.
- Labeling and packaging: Provide all necessary wording for labels, instruction manuals and packaging in an easy-to-print format that doesn’t require any editing. You can also provide images and diagrams showing where to position text, logos and symbols.
Create a QC checklist
Providing your product information and requirements to your supplier in an easy-to-understand format can help you avoid misunderstandings.
A quality control checklist, or QC checklist, is a quality control document that typically outlines:
- Product requirements, like weight and dimensions
- Packaging requirements, like labeling, assortment and materials
- On-site product test procedures, like function and safety testing
- Required inspection equipment, like gauges, scales and electrical testing equipment
- Defect classification, usually according to critical, major and minor definitions
You certainly can create such a document yourself, even if you don’t have formal quality control training. After all, you know your product requirements and quality tolerances better than anyone. Even a well-organized Excel spreadsheet can go a long way in clarifying your requirements to your supplier.
It may be helpful to get a third party’s help with drafting a QC checklist if you’re less knowledgeable about your product’s manufacturing process.
QC professionals can help you classify common quality defects into critical, major and minor defects, as well as determine statistically-significant sampling sizes using acceptable quality levels. They can also advise on legal requirements and common testing standards for your product type. A third party might also be able to help translate your QC documentation into Chinese for your supplier.
4. Assuming the supplier is familiar with overseas sales channels
Many ecommerce sellers make the mistake of assuming their Chinese supplier is familiar with the ecommerce platform they are selling on. While Amazon and eBay are ubiquitous in the US and Europe, they’re rarely used in China over local options like Taobao, Tmall and JD.com. Even suppliers who regularly export to Western markets often don’t understand legal requirements for those markets.
As a seller, expect that you’ll need to explain platform-specific requirements to your suppliers, such as:
- Suffocation warnings on polybags
- Fulfillment by Amazon (FBA) labels
- Legal requirements for market of sale
But how can you ensure your supplier actually understands these requirements and complies with them during production? You have a few options, depending on your budget and the level of risk you’re willing to accept.
Amazon FBA prep centers
When it comes to packaging requirements, Amazon prep services are a relatively new option for ensuring compliance with Amazon requirements. A prep center can inspect, prepare and package your inventory before shipping it to Amazon.
The downside is that prep centers inspect goods after they’ve already left your supplier’s facility. It will be too late to correct any quality issues, aside from just removing them from the final shipment quantity.
If possible, find a reliable prep service based in China so they can send any defective products back to the factory for rework. Performing this step locally will also help you control your service cost, due to the lower cost of labor compared to the US or EU.
Quality control inspection
A pre-shipment inspection on-site at your supplier’s facility performed by a third-party inspection company is another option to verify quality and compliance. You can also consider hiring your own full-time inspection staff or inspect goods yourself. Though most ecommerce sellers find this option prohibitively expensive or unnecessary given their order size and volume.
Quality control inspection helps you verify compliance with platform requirements through:
- Visual inspection for cosmetic defects, like scratches and color differences
- On-site function, safety and performance testing to identify issues with product use
- Packaging inspection, including assortment, labeling and markings on shipper cartons and retail packaging
Quality control inspection is one of the best ways to ensure your ecommerce business stays within your platform’s seller performance targets, like order defect rates and late shipment rates.
Lab testing is essential for some products to ensure compliance with mandatory legal requirements. In most cases, suppliers lack the necessary equipment and expertise to test to these standards themselves. And some legal regulations require that certified laboratories, rather than the manufacturer’s own lab, perform testing.
Some mandatory legal requirements that require lab testing to verify compliance include:
- The Consumer Product Safety Improvement Act (CPSIA) for US children’s toys and products
- Flammable Fabrics Act for US apparel and children’s sleepwear
- REACH requirements in the EU regulating the use of harmful chemicals in most products
- RoHS in the EU regulating harmful chemicals in electrical products
At the very least, you should request reports of previous compliance from your suppliers. You can also contact labs yourself to ensure the reports haven’t been falsified.
But remember that previous compliance cannot prove current compliance. If you don’t have the budget to ensure legal compliance, these products might also be a category to avoid importing from China until your ecommerce business is more successful.
Don’t overlook quality control
Sourcing high quality products from China is certainly possible if you plan ahead. Preparing to import from China can be as easy as a few key steps:
- Research your market and identify a suitable product
- Evaluate potential suppliers’ capabilities and legitimacy
- Set clear product and quality requirements
- Inspect the order before shipment to ensure compliance
Many ecommerce sellers don’t think they have the budget or resources for a comprehensive quality control program. But what they fail to realize is that by overlooking quality control in the short term, they’re losing business in the long term. Quality defects and products that don’t match their listing can cause ecommerce businesses to lose customers over time.
Ecommerce competition is fiercer than ever. Robust quality control procedures will help avoid negative reviews, distinguishing your products from your competitor’s and propelling them up the bestseller lists.
This post was by Maegan Burkhart, a Content Specialist at Asia Quality Focus, a Western-owned, third-party QC firm headquartered in Shenzhen, China. Asia Quality Focus helps importers improve their product quality and manufacturing experience by offering product inspections, factory audits and lab testing throughout Asia.
Your Article spells Volume of truth and I thank you for this. All the information is so true and I can Attest to this since I have been researching, sourcing, have done black label with China Manufacturers. And I lost a lot of Money doing so as well as valuable time.
Unless you have at least a basic understanding of International rules and regulations and the International way of Business economics you should stay away from investing your hard earned US money.
Always remember there is no free lunch. Might be free now...but you'll pay later.