5 Ways to Avoid Early Supplier Issues
It is every compliance and supply chain manager’s nightmare: you think you’ve done your due diligence, you’re in contract with a supplier - and then you realize you’ve been tricked. This list of the most common deceptions buyers face in China may help you as you navigate new relationships - or perform deeper due diligence on existing ones.
- Take the deposit and run
You’ve found a company that has an incredible offer that you just can’t resist. They’ve provided an address and a company name in English, and perhaps even some certificates in Chinese. You place an initial order and send the deposit. Then … nothing. No email replies, no answers on WhatsApp, nothing.
- Bait and switch
The quote sounds great, the company has reviews and looks legitimate. You send your deposit money and suddenly the price goes up. Maybe they ask for additional specs, such as building material or production process. Maybe they don’t even come up with a reason. Now you are out half the cost and likely going to pay more than expected just to get it done.
- Re-order rate hike
Your first order is a success, but when it comes time to re-order the price has gone up. There may be legitimate reasons for this: cost of components or raw materials do fluctuate. But sometimes, the vendor simply knows they have you on the hook with sales and distribution commitments abroad, and they raise prices on you accordingly. You may be forced to find a new vendor, but not until you’ve made one or more expensive re-orders from the unscrupulous seller.
- Open-source hustle
You have a vendor producing your product to proprietary specifications - the shape, assembly, SOP and even special component integrations are all the result of your company’s labor. With this scam, the supplier then provides a “blank” version of your product in their catalog to buyers worldwide. They might even go so far as to get trademark rights for your product in China. Suddenly, your product appears on Amazon - for cheaper than you sell it for.
- SOP changes
You’ve locked your product specifications down to the last detail - or maybe you didn’t take this step. Either way, a few orders in, you find that your product is being made with slightly different components or raw materials. Not surprisingly, these swaps have been made to save money on the part of the supplier, and now you have an inferior product shipping to your customers.
Need help properly vetting your suppliers? Nuna Network is here to help. We’re the partner of choice and go-to resource for businesses or individuals seeking guidance in researching, developing, and establishing relationships with companies in China.
Nuna Network offers more than a one-time report, but a range of validation, verification, and diligence services that help you determine the authenticity of a Chinese company. Check out our valuable guides, helpful tips, and other practical information to help you navigate the complex landscape of Chinese Businesses.