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Suppliers going back on their word (Part 2)

December 5th, 2011 Leave a comment Go to comments
Give an inch...

Give an inch...

(Have you read Part 1 of this article?)

By this point, the overseas purchaser has been let down dreadfully by the supplier and had to compromise their margins in order to have their goods released. But it got worse. When the CI (Original Paper Commercial Invoice) and COO (Certificate of Origin) were requested from the supplier, they refused to do even this stating that it would cost yet more money to produce these documents and therefore not worth it.

We explained that in order to export the products these documents were required from the manufacturer. This was met this time with abuse and a refusal to have anything else to do with the matter. The aggression showed by the supplier at this point was typical to a kneejerk reaction by a lot of suppliers when their back is at a wall and they have gone so far that even though they are wrong, they don’t want to lose face by admitting it or even compromising.

Luckily my time in China has allowed me to meet some influential individuals in the export and customs world here and we were able to get some documentation to push the order through customs and onto the ship for our client. This documentation was also enough to comply with import, customs and duty purposes when it arrived at its destination port. Doing it this way should of course always be a last resort.

This is a particularly cold example of how some manufacturers feel they can behave to an overseas purchaser who has little power to resolve the situation. It is, of course, incredibly short sighted of the supplier and in the long run will be sure to hurt their business. However it’s a clear sign that purchasers need to be careful and make sure all documentation is understood and in place to avoid this kind of behaviour. Unfortunately, having supporting documentation in China is not always enough, as once a manufacturer has lost interest in a client, they will rely on the fact that very few overseas purchasers would be willing to attempt legal action. Local representation and strategically applied pressure often makes the difference in these cases.

I would recommend even a brief audit of the company you intend on purchasing from for the first time (and one annually if you have large yearly supply contracts) but for some companies this isn’t financially possible. Luckily there are agencies and consultancies like Enter the Panda that utilise their existing trusted networks. Through them you can  purchase your goods, knowing that quality and integrity will be a normal part of business. If suppliers acted anything like the one above, you can be assured that this is not found with the companies we work with. In my experience this is a rare and particularly unreasonable situation, but this type of short sighted thinking and action does exist in a percentage of Chinese suppliers especially when a cheap product  or low order quantity is involved. You need to have all your bases covered to always be in a secure position.

Because we have worked extensively in China in all areas and with all types of suppliers and factories, we feel very confident in what to look out for when finding a trusted, durable and versatile supplier. There are key elements and red flags to look out for in the facility and the people that work there in order to find something sustainable and reliable for your needs. Don’t let your company get into bad situations with Chinese factories. Use an advised and trusted supplier and understand all your agreements in advance.

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