Sample charges as a red flag

What people are saying about Mulberry Fields
“I have read through quite a few of your blog posts and have enjoyed them very very much. We do business in China and face many of the challenges you describe. Much of what you write resonates with me and there are some very helpful tips” – a children’s product company in Utah.

I was ordering some samples from a factory recently. This was a second round of samples and the factory was asking me to pay for them. This was a bit of a red flag for me simply because this is not a labor intensive product –laser embroidery which I know is not expensive.

For this particular project some vendors did not charge me for a sample. Others did. The vendor my client likes did charge for the first round and I gave them the benefit of the doubt, believing as they told me that they needed to buy some special rib knit material for the sample. But now I have my own doubts. This is of course why you can never be sure with who you are dealing with until you have met them. I expressed some concern to my client who said his solution would be to start out with a very small order.
Accordingly I wrote to my customer as follows:

“I personally think that you should not do business with anyone in China – small or large order – until you have met them. If you don’t audit someone before you give them an order, the message you are sending to them is that they can do what they want. Your goal in China is to get vendors to do what you want.

As regards Vendor X now there is a question in my mind, because of this second sample charge, if they are really the factory or just a trading company using the factory’s name. When you deal directly with factories they often will give you a sample for free simply because they have a sample room and it does not cost them much to make a sample. Two of the vendors I met in China last year did not charge to make a sample for your product. Unfortunately you did not like those samples. Some factories do charge if the material used in the product does have to be purchased for the sample. For this reason, I was OK with Vendor X’s sample charge for the first round. Benefit of the doubt. But this time I am disappointed that they charged you. Just an FYI, trading cos almost always charge for samples because they have to order them from the factories.

Don’t get me wrong. I am not saying I would not use Vendor X. But I think you really need to audit them before you give them an order. If you audited them and found out they were a trading co. you could still use them but you really should know all this up front before you give them any order (and they won’t tell you of course).”

http://www.theeastasiaco.com

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Is finding a good China vendor worth a bottle of fine wine ?

What people are saying about Mulberry Fields
“I have already learned a great deal about China and your business through your website and blog posts. Very impressive.” -Company in Toronto.

Someone came to me a couple of months ago inquiring about a project in China. They had been asked by a major global retailer to source a popular product. The QTYS are good. 4000-6000 units a week. I would think that many vendors would be interested in this business because of the QTYs and the retailer involved . The person who emailed me said he had gone on alibaba and DHgate and made some contact with suppliers there. But as the individual himself wrote to me “ I have the connection with ( name of retailer) but don’t have the expertise to source for myself.” I imagine he also does not have much experience with China.

I told him how I would go about sourcing this item for him, what I call my Five Step Process which is aimed at getting to know as much about potential vendors before you give them any money. I see my role as substantially reducing risk. Not elimitating it altogether ( that cannot be done). I also quoted him my flat rate for sourcing projects which is a three-figure sum, as low as you will find rates for 3rd party China sourcing or consulting or so I would think. I am not an agent and do not charge commissions. But I never heard from him again. Just another who came into the store, so to speak, looked around asked a couple of questions and left.

For me it is a no-brainer: If you have the opportunity to fulfill an order that will put you on the map, it is worth a minimal investment to have someone with 25 years of experience in China help you. Of course I understand what people are thinking. Why pay someone to source something for you when you can find it yourself for nothing on alibaba ? But where is the real risk? Is it in the fee you pay to the consultant or is it in the container of product you get from China? The answer is obvious. The real risk is in the vendor you select. If you don’t select the right vendor, then your business may come to a screeching halt. Don’t you think that substantially reducing that risk is worth the cost of, say, a bottle of 1972 Chateau Mouton Rothschild ?

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China as the land of opportunity for foreign businesses ? Not now. Maybe never

What people are saying about Mulberry Fields
“a very interesting blog” A company in France

There have been a couple good articles this week on success and more notably failure in China. In spite of all the headlines you see in national publications like the NY Times and Forbes extolling the opportunities for US companies there as China’s middle class grows China is just not an easy place to do business. Home Depot recently closed all of its China stores – and there were quite a few of them – citing years of doing an unprofitable business in China. Ditto for Best Buy which had a 5 year experiment in China and recently closed its last store there. Wal-Mart is also closing stores even though it owns only about 6% of Chinese market share now ( hypermarkets ). Wu-Mart on the other hand, a Chinese chain retailer, with both convenience stores and hyper-markets is doing quite well and is opening more stores. The reason for this is that Chinese consumers and the govt favor locally grown retailers to foreign ones, a point that was made in an Economist article in 2011 on Retailing in China. There are implications for this if you source in China as well.

I will paste the more positive article here, about Panjiva’s success in China. This 3 keys to China success as mentioned in the article pretty well encapsulates what it takes to succeed in China ( and make no mistake about it, China is still a very good place to do business, especially if you are sourcing there). However, I would add a 4th thing here. Luck. Because often finding a vendor in China or getting your order out on time needs some good luck in addition to all the due diligence and hard work.
http://www.inc.com/minda-zetlin/want-to-expand-into-china-read-this-first.html

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