HOW TO CHOOSE YOUR CHINESE PARTNERS
Above all, beware of the partners found on the internet. If you want to make online purchases in China, you must go through sites known, referenced and having a solid reputation. We must then be wary of very attractive offers and particularly attractive prices. Unscrupulous people are luring foreign companies like this. Once the deposit is cashed, their business disappears and you can not get in touch again. This is of course in most cases fictitious companies.
HOW TO PROTECT YOUR INTELLECTUAL PROPERTY IN CHINA
French companies are often confronted in China with the particular case of counterfeiting. You have to systematically register your marks and file your patents before you even arrive in China. If the trademark or patent has not been filed, it is very difficult to protect yourself. Thus, in the case of trademarks, if a Chinese entity files in China a trademark registered in France but not yet registered in China, it may use it legally and prohibit its use in China by the French owner. Such a situation is often very hard to accept for the French owner of a trademark that has been in France for a very long time. Legal possibilities exist – lapse for non-use of mark, proof of bad faith …, but their outcome is uncertain. The simplest is often to negotiate with the person who filed the Chinese territory to try to buy the brand but it can be very expensive.
THE DIFFERENCE OF CULTURE REPRESENTS A RISK FOR Foreign COMPANIES
The cultural difference exists but it should not be exaggerated. When it comes to finding a partner, it is essential to really find factories you really want to work with, meet your managers and create a relationship of trust with them. It is then necessary that the company is well advised and assisted in its efforts. If necessary, a law firm can carry out all the checks on the Chinese partner to confirm its existence, to go there and to discuss with it. The firm can also negotiate contracts directly with the partner, for example by having the customer live on the phone if he can not travel to China.
TIPS TO AVOID THE RISK OF SOURCING IN CHINA
PAY THE RIGHT PRICE
To come to China simply to find the lowest prices is a mistake. Because from a TCO (Total Cost of Ownership) point of view, it may be more interesting to do your sourcing in Tunisia, Turkey or Romania; transport, customs and quality control costs are lower. Today, if one settles in China, it is first to penetrate the local market.
Then you have to agree to pay the quality and not put too much pressure on the supplier. The supplier always wants to make a good profit. If the price that is demanded of him is too low, he will not hesitate to lower the quality of the raw materials and to stop following the processes because the only invariable factor in China is the profit that the subcontractor will want. achieve. It is often too much pressure on prices that quality problems arise. We take the example of Apple, which has all its products manufactured in China. If their quality is excellent, the prices paid by Apple to its suppliers are well beyond Chinese standards.
ENSURE THE HONESTY OF THE SUPPLIER
First of all, you have to investigate with the supplier. The first element to check is of course the “Business License”. With regard to technological and environmental standards, we can not rely on certifications presented by suppliers; they are rarely authentic. Everything must be verified. It may happen that an unscrupulous supplier visits you to another factory than the one where the product development will actually be made.
PRESENT A PERFECTLY CLEAR SPECIFICATION
To make produce in China, you have to be very clear about all the parameters and present upstream specifications perfectly written and preferably in English. The interlocutor will benefit from the slightest forgetting. You have to say everything and specify everything. Moreover, it is often because some parameters are changed along the way or when these parameters are confused that production is delayed and costs are slipping.
This is a crucial point. It is essential to have a very close monitoring of the suppliers and to constantly and randomly control the quality and respect of the processes.
MINIMIZING QUALITY RISKS IN CHINA
WHAT ARE THE PROBLEMS THAT ARE THE MOST FREQUENTLY ENCOUNTERED IN QUALITY CHECKS ?
One of the most common problems is the lack of understanding by Chinese suppliers of customer specifications and European and French quality standards. Understanding work is very important when working with a Chinese partner, including at the cultural level. It is difficult to translate the technical points of the specifications. It is also worth mentioning the “cha bu duo” culture (= almost) of Chinese people who sometimes tend to “interpret” the standards.
It is necessary to control the Chinese subcontractors because they do not always respect the specifications and sometimes do not hesitate to subcontract the work to companies that may be less scrupulous about quality.
In China, even if the first order is successful, it is recommended to make a systematic and regular check of the following orders because the quality can fall at any time.
ARE INTERNATIONAL STANDARDS AND CERTIFICATES WELL APPLIED IN CHINA ?
A first recommendation is to verify that suppliers have a quality management system, ideally certified ISO 9001. Even in the case where the supplier presents a certificate, we recommend that buyers conduct an independent audit to ensure that the certificate is not a certificate of convenience. At a minimum, it is recommended to check the certificate with the certifying body. In China, Bureau Veritas can deliver both ISO certifications, product conformity certifications to European standards (“CE marking”), and conduct independent audits as a “representative” of the buyer.
Even though the plant has certificates and an adequate quality management system, it is still recommended to control the production as it unfolds. In China, when signing a contract with a Chinese partner, it is the beginning of a long business relationship and you have to be very flexible because amendments and renegotiations are current currencies.
WHAT ADVICE FOR FOREIGN COMPANIES WHICH WANT TO BUY OR SELL IN CHINA ?
To buy in China, one must first prepare well: do market research, find the necessary information on the Chinese market, send resources on the spot to start relations and check the situation. It is important to be accompanied by a specialized body on the legal and legal aspects and by a quality control body on the technical aspects:
It should not be thought that buying in China is synonymous with “cheap” because quality at a price, even in China: companies must be willing to pay reasonable prices depending on the market and the type of products to buy.
In France, when a contract is signed, we know that the supplier is likely to respect its part of the contract but in China, even if we signed the contract, it is essential to set up monitoring and systematic controls. Professionals must be used to properly control and train suppliers. Here too, companies must be prepared to pay additional costs.
To sell in China, it is necessary to obtain local licenses, as well as the CCC certificate for a large number of products. Again, it is recommended to be accompanied by professionals to avoid any unpleasant surprises.
HOW TO CHOOSE A SOURCING COMPANY IN CHINA ?
Prelude: it exists (as in all sectors), reliable companies and then companies a little less.
A GOOD SOURCING COMPANY IS LOCATED IN THE COUNTRY WHERE YOU BUY
For example in China, it is located in China, it allows him to go there to audit suppliers. So you have to check that the sourcing company is well registered and operates legally in its country. Do not hesitate to ask for official documents. It is best to work with a company that has experience, especially in this area. Ask to see his references and then write a small email to customers to find out what they think of their sourcing partner. A good doctor is someone who knows the Chinese, their weak points and the opportunities offered by China. Nothing is innate, everything is acquired with experience. Quickly inquire about the profile of your interlocutor. He spent 10 years in China or has he just arrived ?
A GOOD SOURCING COMPANY OFFERS ALTERNATIVE SUPPLIERS
I want to import a range of X products, I identified on the Internet or on Alibaba a potential supplier, the sourcing company must of course control the supplier but can offer you other suppliers so that you can compare.
MANAGEMENT OF CHINESE SUPPLIERS AND COMPLIANCE WITH QUALITY STANDARDS
A good sourcing company is a clever mix between local and foreign employees. Foreigners know the European quality standards and the premises allow to negotiate and manage the good communication with the Chinese supplier.
Local means local, a supplier in Canton requires Cantonese locals speaking Cantonese, while in Shanghai, a Shanghai will be more suitable for this mission.
A GOOD SOURCING COMPANY NEGOTIATES FOR YOU
Do not pay the total amount of the order before the start of production, a sourcing company will negotiate for you the best terms of payment. In general, it is 30 to 50% at the order and 50 to 70% at the end of production, before transport.
If the company asks you to pay in full, there is usually something going on
COMPLIANCE WITH PRODUCTION PROCEDURES
Always ask for samples before starting production, to ensure that the quality of the product meets your expectations. A good sourcing company will ask for your approval. Each quality report must also be accompanied by photos and documents certifying the various quality controls.