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When selecting a Chinese supplier for their products, certain companies will only perform a superficial check and won't go further than emails or online quotes, trying to zero-in on quick and efficient purchases. In fact, this often is an opportunist and unsustainable approach, as Chinese companies will also differentiate a short-term request from a long-term business relationship.
In general, it is essential for foreign companies to foresee building a lasting business relationship in order for your purchase to be successful.
The first thing to do when selecting a Chinese supplier is to visit the factory directly, one can't only trust online pictures!
It is also important to audit the internal organization of any potential partner before signing anything. It is important to check equipment amount and maintenance, potential outsourcing policies, pending orders list with a quick check if you are not last in line for production and last but not least payroll management and policies.
It is important to consider the size of the country first and then understand the specialization in certain areas.Lots of Chinese provinces regroup lots of specializations that have to be identified first. It is also possible for some specializations to be spread out from North to South.
Industry distribution map of Pearl River Delta
A few links to help identify potential subsidiaries: International fairs and exhibitions Local wholesale markets Chambers of commerce of Chinese provinces Specialized websites Business consultants and private sourcing offices Consular networks
During the first contacts and on-site visits, these criteria have to be checked:
-Accessible information: company creation date, number of employees, surface of office or industrial space -Client referrals -Ability to communicate in English, at least in written form -Reaction speed towards requests -Quality and amount of production tools -Innovation capabilities -Import-export license -Proximity with harbors, airports or quality of the road infrastructures -Respect of social and environmental regulations Gaialance Business Agency proposes contracts with qualified subsidiaries depending on foreign company specifications.
-Validity of information given online vs. On-site: does this company really exist, is the information given beforehand correct?
-Real production tools vs. the intended client order: go beyond showrooms and excuses to avoid visiting on-site and check the production tools directly at the factory . Similarly, pictures or websites will often not suffice for quality checks.
-Organization and installations in the workshop: production, storage, waste management areas, etc.
-Health conditions of the employees
It is of absolute importance to sell your buying potential to Chinese companies, especially if the volumes bought will start low first. The business relationship, reactivity and perseverance become essential.
-Assembly, packaging and labelling, if done by a third party -Quality check costs -Potential updating costs of the goods to abide by certain norms -Shipping costs by boat or plane -Customs clearance in China -Insurance of the goods and main shipping process -Harbor or airport arrival process -Customs clearance in the country of destination -Payment means costs in case of a letter of credit -Potential translation and printing costs of technical instructions -Buffer storage costs -Potential external provider costs: quality check, legal support, negotiation support, translation, etc. =Total cost, excluding any costs associated with commercialization or lack of quality: delays, losses, product launch delays, potential loss of clients, etc. The products for which raw materials represent the bigger part of the price will not generate tremendous competitive price advantages, considering all the other costs added on top. Indeed, the prices of raw materials do fluctuate over time and will thus not reliably and stably generate profits, even if those are made in China. However, labour-intensive industries will generate a stronger profit margin.cative.
Issues with quantity Small quantities won't allow manufacturers to really cut the costs of molds or tools, order processing, shipping, quality assurance costs and so forth. The prices will thus not always be as interesting as expected, especially if they accept the order request. It may sadly happen that independently from any contract signed beforehand, the manufacturer applies additional costs during the production of small quantities. Favor bigger orders Some manufacturers have a tendency to favor bigger orders, even if a previous agreement was signed. The order will then simply be postponed to a later date in production planning and orders won't be shipped at the expected time agreed by contract. Orders will sometimes also be botched or sent to subsidiaries, which often goes hand in hand with an increased lack of conformity. Production process It is crucial to check the status of production regularly and precisely 1.Define the production objectives on small time periods, regularly check the status and observe ways for the manufacturer to compensate for their delays. 2.Find a representative of the company on-site or a third party to follow production schedules and do regular check-ups in the factory. 3.Use this representative to also check on-site if the manufacturer does not produce requested products in excess. It can happen that production excesses may be sold without knowledge or consent of the buyer. It is similarly important to oversee and control the product defects and rejects that may be sold locally at the expense of the buyer's reputation. 4.Check the quality of packaging, mandatory tags, etc. 5.In case of separate production processes, such as manufacturing and assembly or manufacturing and packaging, it is of vital importance to correctly coordinate both partners on each step of the entire process.
We recommend negotiating a framework agreement within the contract when regularly dealing with the same manufacturers. This presents the advantage of providing an upper price limit on a period of time. One time contracts require both partners to agree every time on all conditions.
In practice, Chinese companies rarely propose to provide contracts, it is often the foreign company that decides to develop a written contractual relationship between both parties.
Contract intent Accurately describe the nature of the products and the quantities with all technical and packaging specifications, while also specifying the type of service provided by the Chinese partner. It is especially important to describe what means, procedures and tools are used. The expected quality should also be explicitly stated, with the exact margins of error tolerated. Technical specifications can appear in annex of a contract, together with the specifications. Shipping conditions and transportation should also be explicitly written, and the property transfer processes as well. Finally, do state the price of the products and the payment procedures. Delay penalties clauses Confidentiality and secrecy clauses Intellectual and industrial property clauses Non-compete clauses Dispute resolution and applicable law clauses
-Individually check on-site regularly, as checking the first delivery is never enough to insure that the entirety will be finished on time. -Mandate a specialized Chinese company: their services are complete and tailor-made: technical audit of the subsidiary, follow-up of prototyping, first samples check, on-the-go checks, finalized goods check, quality management, consulting, training, CE norms certification, social audit, etc. -Establish an on-site representation office to manage and follow up on orders. In practice, these representatives will also be able to coordinate a network of agents or distributors, analyze the market and networking, commercial prospection, quality assurance, etc. -Coordinate the buying process with an intermediary, who will buy and check the production directly. Business as usual suggests a quality check on either the entirety of the production and on minimum 10% of it, or on a representative sample, or on a randomly selected sample, or even after certain critical manufacturing processes. It is always important to explain to its subsidiaries seemingly unimportant things, as nothing is obvious in China! Regularly check your production, as standing behind your subsidiaries is key to stand behind the quality of your "Made in China" goods afterwards.
The first visa will usually be limited to 2 to 3 months of validity for an SME, which may be higher for multinationals.
After multiple successful M visa requests you ask for a multi-entry, the max staying period between each stay will be reduced to 30, 60 or 90 days depending on the administration. The total period of validity of your visa depends on the number of M visas successfully applied for in your passport. If there are 3, the applicant will may receive 3 years of M visa, if there are 5 the applicant may be granted 5 years of validity.
Please feel free to contact us for more.
Please feel free to contact us for more.
