From the posts I read, Gold member and Trustpass ratings don't actually mean anything.
Quoting from [gcc888]: I have been reading many posts of people who fell victim to scammers in Alibaba and note your comment of doing due diligence or checkings on potential suppliers. Short of going to the supplier's address in China, how do you really do checkings/due diligence?
Good question and a fair question for me considering the fact that I push due dilligence so much on the forum.
The short answer is that there is no easy answer nor one sure-fire method. Protecting your investment is a collection of methods and requires a good deal of common-sense, plus some luck thrown in for good measure. But let me try to sum up some ideas that may be helpful:
1. Stay away from brand name products and any suppliers that advertise brand name products even if you are not trying to buy those particular products from them. I would say that probably 75% of people who get scammed here in China were trying to deal with such suppliers.
2. Research the market here in China by doing some basic product searches here at alibaba and on the internet in general. China is really quite an easy market to deal with as production tends to be grouped in certain areas. Find out where those areas are for the product that you are looking for. Putian city and Fujian Province in general are not known for the production of electrical products.
3. Know your product and don't just go for something that you think you can make a quick buck off. If you know your product then you will be more likely able to spot scams.
4. Check the basic company information that you have or can find about the supplier and all the variants for that information. An hour or two spent on Google searching for all of these variants can bring a wealth of information and help to spot scammers.
5. Verify the contact information by actually taking the time to pick up the phone and call the suppliers office phone, not mobile, at some stage during the process.
6. Ask for a copy of the business licence registration just to confirm that the Chinese company name on the certificate is the same company that you are dealing with. You may need some help with Chinese for this step.
7. Export licence is not an important document if you ask me as many legitimate suppliers choose not to get export rights and instead export via trading companies for tax reasons.
8. Ask to see previous BL or SGS inspections or the like from previous orders for other customers and welcome the supplier to black out any identifying information of the customers.
9. I doubt that you will get references from a supplier from previous customers as to be honest most customers don't really want you buying from their factory!!
10. Get the supplier to send you photos of their factory, office, warehouse, front gate etc. Get as many pics as you can and then look for details in the pictures such as shipping marks on cartons in warehouses etc.
11. Get samples and be willing to pay for these as well as shipping costs.
12. Have a clear contract for the purchase. I am not a fan of complicated legal documents as in most cases simply worded agreements can be just as fruitful. I have experience in court rooms over civil matters and have always been successful in this arena by keeping things clear and simple.
13. Use a secure payment method such as 30/70% TT with the requirement of a pre-shipment inspection report; or LC at sight with the requirement of a pre-shipment inspection report.
14. Use common-sense. If something doesn't seem right then it probably isn't. Trust your instincts.
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You cannot beat an in factory inspection. It is by far the best way of verifying that the supplier you are dealing with is an actual physical entity and that they make the product that you are buying. Tieing a visit in with a pre-shipment inspection lets you verify the supplier and also check on the quality of the product before releasing payment.
If you don't want to visit the factory yourself for financial reasons then pay a third party company or person to do that for you. The costs of this are very small compared to how much you can save.
Hope that helps.
We have been buying from China for the past 10 years and now maintain a pool of about 12-15 regular suppliers most of whom we met during the Canton Fair. One or two even ask for T.T. payments to personal accounts which we complied with. We have never done any due diligence on these suppliers but thankfully we have never been scammed even if all of them could have possibly done so as they all require upfront payments.
I was naive not to think that there are actually scammers in China and only started to do some due diligence when I was looking for some items in Alibaba and read some of the posts in the forum about six months ago.
Going over Alibaba suppliers, I found many new potential suppliers whom I had never met previously in the sourcing mode we used to employ (i.e. trade fairs). However hearing all the scam posts has made me wary of buying from Alibaba.
Quoting from [gcc888]:
It is clear that almost all of the buyers that get scammed here at alibaba are trying to buy certain types of products, in certain low quantities, and at certain low prices.
Buyers that deal with otherwise legitimate products tend not to meet these types of scammers.
Your comments about dealing with suppliers from trade shows is a good one as you can be more sure that businesses partaking in trade shows are likely to be more secure than a company on the internet.
The downside to only dealing with companies that go to tradeshows is that you restrict yourself to dealing with a certain type of supplier and at a certain level.
Approaching new suppliers is of course always risky, but hopefully by following the steps above you can minimize these risks and also place yourself in a more secure position legally should you run into problems.
true chinese suppliers supply true service during business talk.
I think buyer can feel this point .
Thanks for all the tips
I understand that pre-shipment inspections should be mandatory for stuff like electronics equipment and other technical stuff - but what do you think of the necessity for pre-shipment inspections for small amounts of clothing - say 1000-2000 pieces? Vital?
Thanks for the help
To my mind a pre-shipment inspection can achieve a few things that ultimately protect the buyer - correct order shipments and quality products being two of these.
I think a pre-shipment inspection for any first time shipments from any supplier, and/or any shipments that you consider to financially high. Basically, if you can't afford to lose the money on the shipment then best protect yourself by having a pre-shipment inspection done.
You should choose the correct inspector however.
There is of course some value in choosing one of the people regularly promoted on this forum but only if:
a. they are located in the area that your supplier is located in; and
b. they have knowledge of the product that you are shipping
If you can't find an appropriate helper then perhaps you will need to get a professional inspection company to make the arrangements for you. SGS is of course one of the biggest, but not necessarily the best. I think you could be best off choosing an inspection company with experience in textiles if that is what you are shipping.
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