Doing Business in China For Dummies®

Avoiding Pitfalls When Working with Suppliers

In simple terms, when you’re sourcing from China, you’re usually worried about losing your money and/or getting bad or late products. Here, we discuss a couple of the more-common problems you can have when sourcing in China. Also, we go over the issues of intellectual property (IP) theft and toxic substances, which can cost you a good deal more money than your deposit.

Not getting what you bargained for

The most common issue in sourcing is getting products that don’t actually match the samples you approved. The best way to protect yourself is to keep evidence of the approved samples. Make sure your supply agreement includes the following approval process:

1. Request at least four final samples from the supplier.

2. Have the supplier sign and date all four samples.

3. After you approve the samples, sign and date all of them as well.

4. Give two of the samples to the supplier and keep the rest in a sealed box or container (if they’re small enough).

5. Either have the seller date and stamp the sealed box with its chop (official company seal) or go to a Chinese notary public to date and chop the box.

   If you have to go to arbitration or court (which we discuss in the “Binding arbitration” section and in Chapter 17), you have evidence of what the approved sample is.

You may also get something other than what you bargained for if the supplier switches materials ...