International background：
Nowadays, we have to admit that it is very easy to do business with other countries. But at the same time, international business is still full of risks, filled with much more challenges when a buyer is choosing new suppliers.
For importers, buying goods from China comes with benefits as well as the risk of fraud.
Here, there are some suggestions to help you find a true supplier, especially in the refractory industry.
1. Check the website.
If the website is too simple, photos are very few, unclear, with too little information, or no even contact information. It indicates that the supplier doesn’t care too much about the website or a cheater’s website.
I believe if a company is willing to do the business, then a homepage is necessary. Like, www. ****.com， or www.****.com.cn, etc.
2. Check the company address.
If the suppliers declare that they are manufacturers, but the address only shows one, Room 2002, Rd. xxx, xxx Mall/Plaza. Then it shows that the address is not a factory, it is an office.
If the address indicates xxx Industry Zone without Room xxx, it is possible a factory.
3. Check the background.
Ask a Chinese friend to help if possible. From the supplier’s established date, legal representatives, shareholders, the status of the company, patents, brands, and so on.
If a company has been established for more than 5 years, it should be trustworthy.
4. Try to choose the suppliers at the Exhibition.
It takes a lot of manpower, money, and time to participate in the exhibition. Especially for the oversea exhibition.
If it is a cheater, I don’t think they will spend much cost and time to do so. And not to mention that it requires professional knowledge when face to customers.
So, I think you can believe most of the suppliers at the exhibition. At least, they are not a cheater. But when it comes to quality, it is another issue.
5. Introduced by friends in the same industry.
For example, you can ask the competitor or other items’ suppliers.
I think this is a very good way to find trusted suppliers.
6. Visit the factory/company in person.
Seeing is believing. I think this is one of the best ways to verify the suppliers. You can see the real production line and contact the products in hand, talk with real persons that you connect with.
However, it will take lots of money, time, and energy. It is suitable for a big project.
What about the small project?
7. Make phone calls or Video meetings with suppliers.
If it is impossible to visit the company, you could require to have a video tour of the factory or have a video meeting, then ask the representative to take the video around the factory to have a picture of the suppliers.
8. Ask for a sample.
Samples are not always free of charge. But it is worth doing so even if sometimes needs to pay.
If the suppliers are very responsive to your questions and requirements, very professional in proposing solutions, and very patient in improving samples until you are satisfied. It is very possible that it is a good supplier.
Anyway, it is better that place a small trial order at the beginning. Then release bigger orders after the sample stage.
9. Ask suppliers to send photos of real products before packing.
If it is a small order, ask suppliers to show the finished products or even take a video of the product checking before paying the final deposit.
10. Ask the third party to carry out the inspection.
If it is a big order, you could fly to China to do the inspection on your own.
Or it is highly recommended that you should hire a third-party agent to verify the company and products to avoid being cheated. It will cost you a part of the expense. But at least, you can know the goods are genuine products and not trash when you open the container and whether the sizes are correct.
11. Watch out for warning signs.
The supplier refuses to produce a business license or other documents requested by you for verification.
They say they can produce any and every product.
They fail to send you a sample.
They change the mode of payment or ask you to wire the money to a different bank account or recipient.
12. Payment methods.
When you receive the proforma invoice from suppliers, you need to check whether the bank account, beneficiary, and address match the company name or address and whether they are in the same city.
If the beneficiary is their export agent, the bank address is usually based in the same city in China Mainland or Hongkong.
If you suddenly receive an email from the company that the bank information has changed, or if you notice that the bank information in a revised proforma has changed in routine correspondence, please pay attention to that. You’d better confirm this by calling the company officials or contacting suppliers via Skype, WeChat, or WhatsApp and talking to them at once. Make sure the bank account and contact email are accurate.
To illustrate the importance of this issue, I have to tell you one of our sad stories below.
My previous working company’s email was once hacked maybe 8 years ago.
The cheaters applied an email address that was very similar to our customers and sent us. And they did the same way to our customers. But they changed the bank account on the PI.
In this way, several customers lost their money because they transferred the payment to the cheater’s bank account without confirming with us. Some customers avoid transferring to the cheater’s version due to calling us about this issue.
So, payment frauds by hacking company emails are very common. If the suppliers suddenly changed their bank account, you should pay more attention.
Most scams occur when sending money to a non-Chinese company or individual.
Otherwise, the payment couldn’t get back any more and you may lose the cooperation relationship with a good supplier.
Normally, there are some payment methods that are commonly preferred by Chinese exporters.
1) Advance Payment
T/T 30% (or even 50%) of the order value as a deposit before production is one of the most commonly accepted methods. The buyers will have to pay the balance before shipping or against the BL.
This method is suitable for the first cooperation and the value is not so big. And also for old customers.
2)Cash Against Goods
This is the riskiest form of payment for the exporter. Most Chinese suppliers do not prefer this method.
However, it can be preferred in cases where deferred payment applications are typically due to large-scale companies or the industry. In this payment method, the exporter and the importer agree on maturity.
The maturity may expire when the exporter receives the goods or cover periodic maturities of 30, 60, or 90 days. It is normally based on the BL date.
(3) Cash Against Documents
This payment method is not among the payment methods preferred by Chinese suppliers. The process works just like the “Cash against goods” method.
The exporter completes the production and delivers the export documents to its bank. The bank of the Chinese manufacturer sends the export document set (BL, invoice, packing list, Certificate of origin, etc…) to the importer’s bank with the phrase “CAD payment” and a “remittance letter.” The importer can only receive the documents from his bank if he pays the export invoice amount.
Since the importer company needs these documents for customs clearance, they cannot get the goods from customs without payment. But if the importer does not have enough money to pay for the goods, they may give up or reject the goods directly. As you can see, the loss will be significant for the exporting company.
(4) Letter of Credit L/C
A letter of credit (L/C) is the most guaranteed payment method for both exporters and importers. L/C is an agreement between the exporter and the importer’s banks.
It works as follows: Per the sales contract and proforma invoice prepared between the exporter and the importer company, the importer company has its bank prepare a letter of credit. Then, the importer’s bank, “Issuing Bank,” transmits this letter of credit to the exporter’s bank, “Advising Bank.”
However, there is still uncertainty about this method especially for the bank credit is not so high.
Conclusion
As Chinese, we instill confidence in new importers not to be afraid of importing from China as scams are rare now.
However, receiving crappy products or poor-quality goods happens more often.
It indeed requires suppliers to improve the packing condition and average quality of the products.
With a little effort, it is possible to work with ethical and like-minded suppliers in China and turn your China dealings into a successful and fruitful experience.
