How to Avoid Scams in China Sourcing

Date: August 4, 2014

How to Avoid Scams in China Sourcing

Best China Sourcing Strategy to Avoid Scams

Back in the 1800s, the American founder and editor of the New York Tribune, Horace Greeley, advised young entrepreneurs seeking their fortune to “Go west, young man!”  However, the 21st-century business formula has been reversed to “Go east, young man!” But how far can this new concept go? To go east, to China, and do business there requires a new mindset and diligent research.

China sourcing as part of your strategic sourcing strategy

China sourcing can be very challenging. However, in terms of cost, international buyers simply cannot ignore the benefits of sourcing from China for products, suppliers, and raw materials.  But the fact that China is a developing country means scams are inevitable; the lack of understanding and knowledge of business ethics and culture can further increase the risks. Doing direct sourcing from China well does require entrepreneurs to conduct diligent research on how to avoid scams and find reliable China factories.

How do you avoid scams and stay clean?

There are different ways and means of doing this and, as the decision maker, you have to keep your eyes and ears wide open before you commit your capital.

Here are some ways to avoid becoming a victim:

Verify the suppliers – One of the most cost-effective routes toward how to source suppliers from China is diligent research, either using major search engines or leveraging sourcing platforms. From the thousands of suppliers listed, you can filter the results and streamline the process of finding valid suppliers. You should look for a sourcing platform with a good reputation providing genuinely reliable information. 

Conduct site visits –While this can be quite costly, seeing how the factory operates firsthand before sealing the orders is always a safe play. To maximize cost-effectiveness, you can draw up a list of pre-screened suppliers and then arrange multiple visits for one single trip. Local intelligence and knowledge from some sourcing services can always be useful.

Adopt an official payment gateway –Avoid using unofficial payment gateways like Western Union or individual accounts. Legitimate suppliers should have official bank accounts and follow the proper payment procedures and taxation requirements laid down by law.

Implement strict quality control – It is also important to examine your orders during and after production. Sending a QC representative from your company to the factory is the best way of executing this essential mission. Alternatively, hire someone you trust or any third party with the expertise to act on your company’s behalf.

Join China sourcing events –There are many events or services that facilitate buyers and sellers meeting. These give you a chance to get to know more suppliers at one time and compare their backgrounds for further investigation. Starting the dialogue face to face also gives you a better idea of a supplier’s track record.

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