Top 10 mistakes committed by importers

by Renaud Anjoran on 12 July 2011

It is good for importers to read about best practices. Many first-time buyers have never heard of letters of credit or quality control plans. They often find it useful to follow a “how-to” guide.

On the other hand, it is much easier (and funnier) to draw a list of the most common mistakes made by purchasers in countries like China or India. Maybe it’s the way my brain is wired. Or is it because “trouble is my business”?

My list of the “top 10″ sourcing mistakes:

1. Looking for the lowest price

If you purchase something below market price, you are taking very high risks. Either quality will not be up to your standard, or you are about to get scammed.

2. Letting the supplier ship without checking product quality

Once a production batch is on a boat, it’s too late . Verify quality yourself, or pay for quality inspection services. And do it systematically, at least for the first 5 shipments (after that, you can do random skip-lot QC).

3. Failing to realize that pre-production samples are selling tools

Many buyers who are surprised that samples are not representative of bulk production. But getting an order and a cash deposit is one thing, and manufacturing the goods is another thing! Your job is to check whether production is up to the P-P samples…

4. Displaying obvious distrust towards one’s suppliers 

One of my clients does this. Her suppliers hate her, and they often get into arguments. You need your suppliers (1) to have a good image of you, and (2) to know that you care about them. If not, nobody will look after your production in the factory.

5. Not keeping two weeks of padding in the shipment schedule

There will be delays, with a certainty comprised between 30% and 90%. So plan for it. Bonus: even worse than failing to plan for delays, is pushing the factory to reduce production time.

6. Paying everything in full while one still needs leverage

Some purchasers get a really good feeling about a supplier, and agree to wire 100% of the order amount in advance. Then the manufacturer has no incentive to hurry up or to produce up to the standard. If quality issues are uncovered (and that’s only if they allow for an inspection), the factory might refuse to rework the goods.

7. Accepting to be left in the dark regarding your own supply chain

Do not rely on a middleman, upon which your whole company’s success rests. Qualify the factory, if possible get to know/approve the sub-suppliers. You will make it up many times in the long run. It is so basic, but so many people get this wrong.

8. Forgetting to describe an essential product attribute, or even the entire packaging

If you don’t specify your expectations in detail, a factory technician will take the decision for you, based (most probably) on cost savings. And you will not even be able to protest when you notice it.

9. Hoping that an unsatisfactory manufacturer will get better over time

Based on a recent unscientific survey, it looks like it is a bad idea to give a second order to a factory that just produced substandard quality. Rather than rolling the dice (when the odds are 90% against you), nurture a backup manufacturer.

10. Not registering one’s trademark when buying from China

Do you want a competitor to force your manufacturer to stop production? Do you want a supplier to sell your goods on the local market? Then register your IP. I am not a specialist, but you can read more here.

Other candidates that nearly made it in the top 10:

Not having a contract

A contract that can be enforced locally is definitely very useful. However, game theory teaches various strategies to adopt in “non cooperative” situations, and you can adopt them. For example: ”take little steps” (i.e. issue small orders), “verify constantly” (i.e. QC) and “use a third-party” (i.e. a letter of credit).

Trying to manufacture small quantities in China

It will usually push you in the arms of small trading firms that deal with small workshops. The result in 90% of cases: quality disasters and/or long delays. But there is a solution, if you can purchase non-customized items: produce them in coordination with a non-competing importer. Hard to pull off, I admit, but worth giving a shot!

  • http://jlmade.blogspot.com Jacob Yount

    Very thorough list Renaud and a good standard checklist for any importer. Point #8 is spot-on. Many times importers don’t describe something, and what they don’t understand is that the factory is a machine that once you get them started, they move forward, full-force – unless you are one of their larger customers, they are not going to stop with every question and play 20 questions with the importer – “What did you want here? What size should this be? What material for this?” They are just going to do it…right or wrong. The importer (especially Western) thinks, “they should ask”….they “should” but I don’t want successes or failures based on something they “should” do. You’ve got to make it up to you. I think you gave me my next blog idea here, man…thank.

  • Renaud Anjoran

    Hi Jacob,
    This is so true: “the factory is a machine that once you get them started, they move forward, full-force”…
    It it the buyer’s responsibility to ensure that they have understood all there was to understand — and then to verify that they follow it!

  • http://www.accu-inspection.com Veronika Hradilikova

    Hello Renaud,

    This is an excellent post..! All your points are exactly spot-on. I’d mention the production samples.. too many buyers fully rely on them!

    Over and over again, we have to show our clients the different thinking and the special practices of the Chinese manufacturers.

    There are too many ways how to create a non-complying product, with not always the manufacturer to be blamed.

  • Renaud Anjoran

    Thanks Veronika…

  • http://www.china-inspections.com/ Nancy

    This is a good and useful artical. The point 2. Letting the supplier ship without checking product quality is very important to importors. If importers want to buy good quality of goods from Asia, it is best to choose a inspecton services company to help checking quality before shipment.

  • Renaud Anjoran

    Nancy,
    Yes, they can either use a third-party QC firm or send someone from their team…

  • http://www.bloomin.ch Thomas

    I found 15 chinese manufacturers on Alibaba. After many emails, setup factory visits with 7 of them and am about to hop on a plane to China to select the one or two that I feel could work best, not necessarily based on price. I plan to inspect all items before shipping.

    Got to say your posts come across as quite daunting. I wonder if its worth the hassle, travel and expense.

  • Renaud Anjoran

    Thomas,
    You are right, it might not be worth the hassle if you place small orders.

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