The best way to negotiate with China suppliers

Chinese people like negotiating during the business and you can negotiate in most cases during your sourcing in China (in some special cases prices are fixed, say, supermarket ), here are the basic bargaining skills for your reference: 

1.‘Letting the enemy off in order to catch him' - If the price cannot be lowered further, you can pretend to end the negotiation so as to make the suppliers compromise.

2.Keep bargaining - you can adopt some strategies such as conducting a war of words, a honeyed talk, and even a spoiled brat till the suppliers lower the price.

3.Keep nitpicking - to obtain a better price, you had better pick out somthing wrong to make suppliers downhearted.

4.Tempting the suppliers step by step - you can tempt the suppliers by the promise of building a long-term cooperation, big orders, and better payment terms etc so that they can make concessions in pricing.

Above negotiation skills can be used case by case, however, the best way to negotiate during internation trade is to use following two tips:

1.Shopping around
There is a Chinese saying,“You would not suffer losses if you shop another three or more stores to compare”, which means when purchasing any item, you should look for their competitors and the suppliers providing the same quaility items, then compare their price, trade terms, quality etc and select a best one to work with in the future. The premise of comparison is built on the similar product quality, service and price. The compared products should be at the same class.

2.Cost analysis
To be a professional buyer, what you should know well is not only the product itself, but also the costs of major raw material, production, labor and management etc. And the best bargaining strategy is to fully calculate the cost of one product, adding in the appropriate margin of the manufacturer, and knowing yourself and the suppliers well, then the lower price can be finally reached. 

Source: STIN Sourcing Service Team 

What do you have to know while inspecting a supplier in China?

Some clients were scammed and lost lot of time and money even if they had inspected them in person before placing the orders. What do you have to know when you are inspecting a supplier in China? Here are the tips:

1.Take a photo of their Business License, then check out their business scope with local officials in China, by this way you will find out whether they are the real factory or not. On their Business License, you can also find out who the real boss is and what they can do in China legally. 90% of the suppliers you met online might be typical trade companies, if you know nothing about Chinese, any trade company, individual agents or even scammers can take you to a factory that has nothing to do with them in China. On their Business License, you can also find out their company size, business address, business scope and legal representative etc.

2.Take a photo of their factory gate and write down their factory address, then you have to check whether their registered address on their Business License is the same address you inspected in China. This is also very important as when you have to take any legal action against them during any future trade dispute, the first step is to confirm their business address and business scope here in China. If they use a 'fake’ business address, then you cannot sue them in China, please be careful on such cases.

3.Check out the local market price and confirm the right FOB price with them in person, if their price is too low to be true, then you have to forget it.
Also please note that you cannot buy any international brand of items from the factories in China directly. For example, all the Apple iphones are made in China but you cannot buy iphones from their factories directly and you can only buy from their authorized distributors at your end. This is the same case to any other international brands, say, Sumsung, LG, Sony etc.

4.Inspect their equipment and facilities.

The advanced equipment and facilities is a kind of guarantee (prerequisites) for high quality product here in China.

5.Check out their quality control measures in written form
Lots of Chinese suppliers only offer you ‘mouth quality measures’and very few suppliers have quality measures in written forms. Please bear it in mind that any qualified supplier must have a good QC system in China as well.

6.Check out their export experience and export qualifications
No supplier will tell you their customer information but the client can ask them for their Export License, if their Export License was issued 10 years ago, I'm sure they have enough experience in exporting in China. 

7.Check out their after-sale measures
Some clients only focus on lower prices, however, safety, price, quality, and after-sale service play the same role in doing international business in China.

8.Try to meet the "real boss" in person during your inspection
Do not forget to check out their Business License and meet the real boss in person, then all your trade terms, lead time and payment terms etc can be guaranteed.

STIN has rich experience in sourcing and auditing local suppliers from China, any question is welcome.

How to Apply for AQSIQ Registration in China

AQSIQ /GACC registration is a must for any scrap supplier who'd like to enter Chinese market. Most of the applicants have to work local Chinese agents in order to smooth this service in China.

What documents do you have to prepare?

1.Get an Application Form from STIN or online (www.aqsiq.gov.cn), Fill the form, sign and stamp on it.

2.Notarized business registration and tax return document, with their Chinese version (all the notarized documents have to be translated into Chinese.)

3.Office pictures and floor plan;

4.ISO9001 certificate, which should include the product category you want to apply for AQSIQ license.

All other remaining documents shall be prepared by STIN or other agents in China.

The time needed for AQSIQ new application:

It usually takes around 2-3 months to release the license after all necessary documents being submitted. So the sooner we submit the application documents, the quicker we can obtain the AQSIQ license.

The application process:

1.Sign a contract with the agent (STIN or others in China), 60% first payment for AQSIQ license together with the 100% payment for ISO9001;

2.Preparing necessary documents, STIN will prepare and make the necessary documents, and register the application in AQSIQ on-line system; We will submit all necessary documents to AQSIQ/ GACC bureau.

3.The AQSIQ will publish the notice if they agree to accept your application upon that if all documents match the requirement, after the preliminary examination get passed, the rest 40% second payment is required.

4.The final result will be updated in AQSIQ on-line system.

5.The AQSIQ bureau will send out the original AQSIQ license and USB-KEY, once you get the original license, you need to notify us for record, and we will help you to install and teach you how to use it.

Please feel free to ask us any question related.

AQSIQ (GACC) - Registration for the Export of Recycling Material to China

AQSIQ /GACC registration is the“License of Registration for Overseas Supplier Enterprise of Imported Solid Wastes as Raw Materials“. This registration is required for all companies that export recycling materials to the P.R. China.

The registration is to ensure that the scrap material is harmless and comply with the Chinese environmental safety standards. Shipments from exporters that are not registered with AQSIQ will not be allowed customs clearance in China. All shipments must be declared and inspected by CCIC (China Certification & Inspection Group) prior to shipping to China.

The AQSIQ registration for recycling material is governed by the “General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).”

Requirements:

Companies wishing to apply for AQSIQ registration must meet the following requirements:

The company must be a legitimate enterprise in the country of registration.

The company must have a permanent office and processing capacities and have a considerable operating scale.

The company must have a good understanding regarding China's environmental protection regulations and shall possess the corresponding infrastructure and testing capacity such as radiation detector.

The company must have an established quality management system and have obtained the respective certifications required.

The company must have a stable sources of supply, and have environmental protection control measures for the purchased material.

The company must have no record of any major quality problems related to safety, hygiene, and/or environmental protection in the past three years.

AQSIQ – Product Groups

The following scrap materials need an AQSIQ Registration to be shipped to China:

Scrap Metals (ferrous and non-ferrous)

Scrap Plastics

Scrap Paper

Scrap Electronics

Scrap Textiles

We will check free of charge if your product requires an AQSIQ registration. Simply send us the exact material name and HS Code (customs code) by email.

AQSIQ-Registration Service Package.

We consult you with our complete service package for a successful AQSIQ registration during every step of the application process.

AQSIQ accepts application documents only in the Chinese language.

Application documents can easily be more than one hundred pages in length,making preparation and translation tedious and time consuming. Our company has many years of experience preparing application documents as well as skilled in-house translators who are industry specific.

If your company plans to export scrap material to China and you need an AQSIQ registration please contact us for a non-binding quote.

The AQSIQ registration is a complex and lengthy process which requires extensive preparation and knowledge. The proper preparation of the application documents is the key for a successful registration.

We will fully consult you during the process of preparing the application documents, including providing sample documents for reference in most cases. After all of the application documents are completed we will translate into Chinese as required by the AQSIQ.

We also handle the extension and renewals of existing AQSIQ registrations.

Of course we will support you with any questions during the registration process and will handle all communication with the AQSIQ in China.

Please feel free to contact us for any question related.Our mission is to save you more and reduce the risks in your business in China.

Cautions on dealing with offshore companies from Mainland China

         Recently one of our UAE clients lost more than 52000 USD in China due to the disappear of his supplier, which is checked out to be a very small offshore trade company from HK. This is the fifth case we have handled this year. In this case, the scammer is from a city in Anhui, he used an offshore trade company to receive money from the client, then use a 'created' fake factory in Shandong to do business. We checked out that their factory did not exist in China and they disappeared after they received the money from the clients worldwide. 

Why should we be careful when dealing with offshore trade companies in China? 

1.It's easy to register a HK offshore company in China. 

You only need several hundred of USD to register a smallest offshore trade company in Hongkong at present. 

It is reported that there are more than 200000 offshore trade companies in Mainland China at present. Most of the offshore companies are registered in Hongkong, BVI, Cayman Islands, MIUE, Bahamas, Seychelles, Panama, Mauritius etc.  

2.It's difficult to trace and take legal action against them when come to a trade dispute. 

As you know, China is far away from most of the offshore registration areas, the more important thing is that their laws and regulations for the same crime might be different. It is quite for the lawyers to collect business proof and take actions against them in such cases in China. 

3.Most of the offshore trade companies pretend to be a big factory online but actually not. 

As far as we know, at least 75% of the offshore company bosses in Mainland China are individuals and they are working alone but they normally created an impressive website and pretended to be a real big factory or a group company online in China. They will take the client to a factory that has nothing to do with them in China (partners only). It is very difficult for the foreign clients to verify their real export license and business license if they know nothing about Chinese. 

    The best way to stop you from future trouble is simply to book a local professional Company Verification or Factory Inspection service in China. You are free to ask us any question concerning safe and smooth business in China ! 

The Top 10 China Sourcing Websites or Platforms

         According to STIN sourcing experience, here is the top 10 sourcing platforms or websites for foreign clients in China.

1.Alibaba 
Website: www.alibaba.com
Headquarter: Hangzhou, China
 
If you know Chinese, you can find more real factories on their Chinese version: www.1688.com

2.Made-in-China
Website: www.made-in-china.com
Headquarter: Nanjing, China

3.Global Sources
Website: globalsources.com
Headquarter: Hong Kong

4.DHgate
Website: www.dhgate.com
Headquarter: Beijing, China

5.HC360
Website: www.hc360.com
Headquarter: Beijing, China

6.GongChang
Website: www.gongchang.com
Headquarter: Zhengzhou, China

7.China Suppliers
Website: www.en.china.cn
Headquarter: Beijing, China

8.HKTDC
Website: www.hktdc.com
Headquarter: Hong Kong
 
9.DIYTrade
Website: www.diytrade.com
Headquarter: Hong Kong
10.ECVV
Website: www.ecvv.com
Headquarter: Shenzhen, China

STIN is striving to be the largest sourcing service company and her mission is to save you more time, cost and energy, reducing the risks in your business in China !

Tips for drafting a formal contract in China

We just received a report from a potential Brazilian client this weekend, complaining that they were cheated by a Chinese company below and lost more than 150000 USD:
Inner Mongolia Topstar Chemical Co., Ltd

We found that the key business proof -- the formal purchase contract signed between the client and the Chinese supplier was a fake one. It is almost impossible for the client to take any legal action against this supplier with such a fake contract in China.

How to identify and sign a formal contract with your Chinese partners ? Here are the tips for your reference:
 
1. Verification of the contracting parties.
We found that the supplier address on their contract signed was NOT specific and it does not exist in China. It’s very important to verify whom you’re going to deal with in China before the signature of any formal contract. The full company name and address on the contract should be the same from their Business License in China. Here is one of the typical Business License issued by local government authorities in China:

Their registered full name, address, business scope and legal representative etc can be checked out on the Business License in China.
 
2. Paging seal
All the important formal contracts have paging seals to prevent the change of pages. Here is the example of paging seal:  

Paging seal (cross-page seal), also referring to the seal on the perforation, is an official seal spanning across the contract pages, the purpose of cross-page seal is to prevent the unilateral change of the contract.
 
3. Verification of the signatory
In China, the right signatory of any legal contract must be the legal representative of the company, if it’s not signed by the legal representative, then the authorization of the signatory must be verified first. The legal representative name can be checked out on their Business License as well.
 
We noted that lots of clients signed the contract with some ‘none-exist’ guys here in China as some Chinese suppliers normally use ‘fake names’ to sign the contract and then they will have trouble when come to any trade dispute later. For example, over 60% of the small exporters used the created English names to sign a contract in China when they sign a contract with their clients, say, Lucy, Simon, John, Lily, Leo etc, please note that only Chinese names can be regarded as legal in China when come to lawsuit.
 
4. Verification of Company Seal
In China, all the legal contract must be stamped with a formal Company Seal.
All the legal company seal is in round shape and red, here is the example:

But some professional scammers normally use a created company seal to sign the contract, say, this one:

5. Verification of contract terms
All the terms, covering payment, quality control, order details, lead time, package, shipping terms, after-sale terms etc must be well stipulated before the signature of the contract.
 
6. Language issue
China is NOT an English speaking country, if you are going to take any legal action against your supplier in China, you’d better consult a local consultant here in China and sign a bi-lingual contract if your order is very big.
 
If you have any question regarding doing safe and smooth business in China, please feel free to ask us any question related. Our mission is to save you more and reduce the risks in your business in China !