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This document serves as a practical step-by-step guide to manufacturing and importing products in China. However, before you start, you must read and understand the following:
Using the Buyer’s Guide
This document is meant to be used as step-by-step guide. All tasks (i.e., 1.2 and 1.3) are presented in chronological order. Hence, you shall not skip any task or sub-part in this guide, if you wish to get the maximum value out of the process. We advise you to read through the entire Buyer’s Guide before you start the process, and use it as a reference as you go through each task, one by one.
Task Lists
Each part in the Buyer’s Guide includes a task list. This task list is a summary of all steps that must be taken to complete a certain part of the import process.
Table of contents
Source
The process described in this document is largely based on processes applied by our partners (both for Sino-Shiping , and on behalf of other companies). The methods described here apply broadly to many different product categories.
Always contact local authorities
Before you apply the methods described in this document, and import goods from overseas, we strongly recommend you to consult with your local authorities. All countries and markets have their own set of product safety standards, labelling requirements and customs procedures.
Limitation of our liability
This document shall not be considered as legal advice – and we do not offer insurance, or any other form of compensation, in case of loss, IP theft, damage, injury or death resulting, as a result of the information in this document being incorrect, erroneous, misleading, ambiguous, incomplete, outdated or modified. Regulations are subject to change, and it is within the limits of reason to assume that we may have misinterpreted one or more of the regulations, and processes, described in this document.
Part 1 : Create a Product Specification Document
Introduction
A Product Specification is all the information that describes your product. It may, for example, include the following :
- Design drawings
- Material specifications
- Functional descriptions
- Dimensions
- Tolerances
- Labels
- Product safety standards
- Physical reference samples and materials
In this part, your goal is to prepare all relevant product specifications, including datasheets, design files and labels. In Part 2, you will learn how to submit the product specification to various suppliers.
Why do I need a product specification ?
Manufacturers in Asia produce goods entirely according to the buyers specification. They themselves have very little, if any, investments into R&D of their own products.
It is critical that you don’t leave gaps in your specification. If you do (i.e., forget to specify the correct Pantone color), the supplier will fill in the gap for you.
Gaps in the specification is far more often the cause of severe quality issues, as compared to frauds.
The Product specification Document is the foundation of the entire process. Your product can only be as good as it is in the specification files.
Do I need a product specification if I buy private label (ODM) products ?
Yes. The difference, as compared to when you develop a custom (OEM) product, is that you must ‘reverse engineer’ a product.
That said, buying private label (or ODM) is rarely a shortcut, as you must :
- Buy product samples
- Research all relevant product specifications (i.e. list all components and dimensions)
- Confirm all quality options for all product specifications (i.e., all available materials for a certain component)
Even when buying private labeling products, you can never assume that the supplier will adhere to the quality of provided samples (most lack internal quality guidelines, as they are used to rely on the buyer’s specifications).
What is a Bill of Materials ?
A Bill of Materials (BoM) is a summary of all components, materials and the quantity per unit. Below follows a basic example :
- Component A, 2 pcs
- Component B, 2 pcs
- Material A, 0.2 m2
The BoM helps the supplier to calculate units costs.
Research product specifications
First, you must identify the various product specifications, for your product. A product specification is any piece of product data that defines the design, quality and functionality of your item.
However, before you can create a product specification, you need to identify the following :
- Product Specifications (i.e., dimensions, components, materials, dimensions)
- Quality Options (i.e., all available customization options for each specification)
If you have little previous experience with your product, you may review product descriptions found on the following websites, to identify relevant product specifications and quality options :
Draft a product specification sheet
The Product specification document (sometimes called Spec Sheet or Product Documentation) is the core the process. You need to keep an updated Product specification for all SKUs you develop or sell. In Part 2, you will submit the product specification to the suppliers.
Case Study A : GU10 LED Light Bulb Spec Sheet
Note : The table above is non-exhaustive and does not include all product specifications that are relevant for this product category
Case Study B: GU10 LED Bulb Light Quality Option
Note : The table above is non-exhaustive and does not include all quality options that are relevant for this product category.
Template 1A : Product Specification Document
Description : This template is used to list all relevant product specifications, list all components (Bill of Materials) and product compliance requirements (i.e., safety standards), and index all file attachments. Ensure that this document is always kept updated, in case you may need any changes to your product specification. Notice that you may modify this template to ensure that it suits your needs.
Formats
Colors
Most suppliers use the Pantone color system while others use the RAL color system. Withinthese two color systems, there are also series (i.e., Pantone Series C). Different suppliers work with different color series. Never refer to digital color systems, such as RGB.
Dimensions
Normally, all measurements shall be specified using the metric system (i.e.,, mm, cm and m) instead of the Imperial or the United States system of measurements (i.e., inch).
You don’t want your supplier to unknowingly convert inch into centimeters. However, the latter is used for certain products, such as screens.
Weight
Always refer to kilograms when specifying the weight or density of a product or material.
Print and label files
Most suppliers use the following file formats for print or label files :
- eps
- ai
3D / CAD files
Suppliers in China use different CAD file formats. While you need to create your CAD files before you start contacting suppliers (at which point you can confirm which file formats they use), you should, if possible, use a program that enables you to convert format to another.
Below follows an overview of common CAD file formats used by Chinese suppliers :
- dwg (AutoCAD)
- stl (3D Systems)
Note : You are advised to provide 2D design drawings showing the product from different angles, as a complement to the CAD file/s.
Design Drawings
A Design drawing must show the product and/or its components from all possible angles, and with specified dimensions and comments. While not mandatory, you may use any of the following formats for your design drawings:
- ANSI (American)
- ISO (World standard)
Create label files
Label files includes the following :
- Logos
- Prints
- Engravings
- Artwork
Label files must be provided ‘ready made’ to the suppliers. A label file shall include the following data :
- Text / Graphics
- Dimensions
- Color
In addition, you must also provide the following :
- Print / label position
- Font file
Note : Most suppliers use .ai or .eps file formats for labels
Create design files
You need to provide the supplier with all relevant design files. This may include the following :
CAD files
Design drawings
Dimension tables
Photocopies
Before you send the files to your supplier, confirm which formats they accept for each design file.
Note : It is important to list all design files as attachments in the product specification. Ensure that the supplier cannot easily mix up the design files.
Research applicable product regulations
Most products are regulated by a set of safety standards, substance restrictions, document requirements and labeling requirements. In this section, we provide you with a regulatory overview.
However, notice that existing regulations can change, and new can be added. Hence, the information in this section may be outdated and is to be considered as for reference only.
To reduce your risks, you are equipped with both contact details to relevant authorities, which can offer additional guidance on the procedures, and a compliance checklist.
Product regulations are sets of standards and requirements aimed ensuring that a using a product is safe from a consumer, and sometimes environmental, perspective. Product regulations cover everything from safety standards and chemical restrictions, to labeling requirements used to signal compliance, and document requirements.
Refers to a set of safety standards, substance restrictions, document, labeling and testing requirements. As an Importer, it is your responsibility to identify all applicable product regulations, and ensure that the goods are fully compliant.
In the case of Electronics, product regulations can often be grouped into two categories:
- Electrical safety
- Electromagnetic compatibility (EMC)
Restricts chemicals (i.e., phthalates and AZO dyes) and other substances (i.e., lead and cadmium) in raw materials, components and paints. A substance regulation often lists hundreds of restricted substances.
A product may contain a restricted substance, if there is a set threshold. Products containing restricted substances in amounts exceeding the specified limits, may be illegal to sell – or must be labeled accordingly.
Labeling Requirements
Mandatory labeling requirements set standards for product unit and packaging labeling. May include country of origin labels, warning labels, product description and compliance marks.
Document Requirements
Certain markets require that the Importer provides a set of documents. This may refer to a self issued product certificate or declaration – or a test report issued by a third party. Such document requirements may or may not be mandatory.
Testing Requirements
For some products, third party testing is mandatory. Hence, you must collect and submit samples to a third party compliance testing company.
However, even if testing is not mandatory, you may still want to consider submitting samples for laboratory testing – as a way to verify compliance.
United States
FCC Part 15 (Intentional Radiators)
An intentional radiator is a device that is intended to emit radio energy. This scope includes any WiFi and Bluetooth Enabled device.
FCC Part 15 (Unintentional Radiators) 5 (Intentional Radiators)
An unintentional radiator is, in 47 CFR 15.3, defined as any electrical device “operating at over 9000 pulses per second (9 kHz) and using digital techniques”.
This definition includes most consumer electronics containing a chip, such as USB enabled devices, even if not equipped with a WiFi or Bluetooth transmitter.
Underwriter Laboratories (UL) Standards
Underwriter Laboratories develops safety standards for electronics and components. While UL compliance is not required by law, most retailers will not buy products that are not UL certified / listed. UL compliance among Chinese manufacturers is very rare in most industries.
California Proposition 65
CA Prop 65 restricts more than 800 substances in consumer products. You must ensure compliance with CAProp 65 if any of the two following conditions are fulfilled :
- Your business is based in the State of California
- You intend to sell your products to consumers in the State of California
CA Prop 65 testing is normally not mandatory, if you attach a warning label. However, if you don’t wish to attach a warning label, you must verify that the product is CA Prop 65 compliant.
Federal Hazardous Substances Act (FHSA) / CPSC Regulated Substances
The FHSA regulates hazardous substances , some of which may be found in certain materials. Such substances include formaldehyde, and may be expanded to cover additional substances in the future.
Warning labelling is required, if the the buyer has reason to believe that the product contains more than 1% formaldehyde (or any other CPSC regulated substance).
FCC Labeling Requirements
FCC regulated products must comply with the applicable labelling requirements.
As with the certification procedure, different labelling requirements apply depending on the product, and whether it’s classified as an intentional or unintentional radiator.
Normally, the FCC label shall be permanently affixed to the product unit (i.e. no stickers or temporary labels).
However, recent changes to this rule will allow businesses to label the items digitally (e.g. in the software),rather than printing the FCC logo, or compliance statement , on the product unit.
On the other hand, items that are not within the FCC scope of regulations may not be labelled with the FCC logo.
FCC Document Requirements
There are various certification procedures. One of the following applies, depending on the type of product and its classification as either an Intentional or Unintentional radiator:
- Certification : Must be submitted to a third party testing company and/or the FCC
- Verification : Self issued certification based on the suppliers in house testing
- Declaration of Conformity : The supplier must perform in house testing and submit a sample for further testing to an accredited third party
Other Document Requirements
You may need to issue a General Certificate of Conformity (GCC)
Testing Requirements
The Importer is, for certain products, allowed to issue an FCC Verification of Compliance based on their own compliance testing.
As said, this is limited to specific products, and not applicable to all items. Many other products must pass an equipment authorization procedure performed by an authorized third party.
General Labeling Requirements
Country of Origin labeling is mandatory (i.e., Made in China)
Contact information
The content provided in this guide is exclusively for an informational purpose, and shall not be relied upon as always accurate or up to date. Product regulations can change at any time. As such, it is critical that you contact the authorities in your market, to confirm all applicable requirements.
Other
- CPSIA applies to infants and children’s electronics
- Additional regulations may apply in your state. Contact your local authorities to confirm if any additional regulations or substance bans are in place
- Beside Part 15, other Parts of FCC 47 CFR may apply to specific electronics devices. For instance, Part 18 covers industrial, scientific, and medical equipment (ISM) that emits electromagnetic energy on frequencies within the radio frequency spectrum in order to prevent harmful interference to authorized radio communication services.
European Union
Low Voltage Directive (LVD)
The LVD applies to electronics, and components, with an input, or output, ranging between 50 to 1000 volts AC, and 75 to 1500 volts DC.
As such, the Low Voltage Directive is not applicable to most handheld devices, but does cover, for example, phone and laptop chargers.
Electromagnetic Compatibility (EMC) Directive
The EMC Directive is applicable to fixed electronic appliances. The purpose is to ensure that electrical equipment don’t interfere with other electronics, and signals, in its proximity.
While the EMC Directive is applicable to a wide range of products, certification may not be mandatory for certain smaller devices, which are very unlikely to interfere with other electronics.
Radio and Telecommunication Terminal Equipment (R&TTE) Directive
The R&TTE directive is applicable to radio and telecommunication equipment. The scope of regulations includes both final products and individual components. Therefore, products with radio, WiFi and Bluetooth transmitters and receivers are required to comply.
Note : that the R&TTE Directive covers both the LVD and EMC Directive.
European Union
Low Voltage Directive (LVD)
The LVD applies to electronics, and components, with an input, or output, ranging between 50 to 1000 volts AC, and 75 to 1500 volts DC.
As such, the Low Voltage Directive is not applicable to most handheld devices, but does cover, for example, phone and laptop chargers.
Electromagnetic Compatibility (EMC) Directive
The EMC Directive is applicable to fixed electronic appliances. The purpose is to ensure that electrical equipment don’t interfere with other electronics, and signals, in its proximity.
While the EMC Directive is applicable to a wide range of products, certification may not be mandatory for certain smaller devices, which are very unlikely to interfere with other electronics.
Radio and Telecommunication Terminal Equipment (R&TTE) Directive
The R&TTE directive is applicable to radio and telecommunication equipment. The scope of regulations includes both final products and individual components. Therefore, products with radio, WiFi and Bluetooth transmitters and receivers are required to comply.
Also note that the GPSD is not a CE marking Directive.
Electronics Testing Requirements
Whether or not third party testing is mandatory depends on the product. However, as third party testing is the only way to verify product compliance, you are advised to submit samples for third party testing – even if the applicable regulations don’t require that.
Contact information
The content provided in this guide is exclusively for an informational purpose, and shall not be relied upon as always accurate or up to date. Product regulations can change at any time. As such, it is critical that you contact the authorities in your market, to confirm all applicable requirements.
Other
- You can buy a complete compliance requirements list, and create the CE Technical file, for your product on ProductIP.com
- EN 71 is applicable to electrical toys and other children’s products.
- Additional regulations may apply in your country. Always consult your local consumer goods surveillance authority, to confirm all applicable regulations and substance restrictions.
- There are more than 20 ‘CE Marking Directives’, many of which also cover specific categories of products that are classified as electronics.
For example, medical devices must also comply with the Medical Devices Directive and machinery must also comply with the Machinery Directive.
Thus, if your product contains electronics components and is intended for a specific use, you shall confirm if it must be compliant with one or more ‘CE Marking Directives’. Such directives often apply “on top” of the standard Electronics directives.
Ensuring compliance when importing from Asia
Most suppliers in China cannot ensure compliance with European Union and United States product regulations. In fact, many of them are not even aware of their existence.
Always verify the supplier’s ‘compliance track record’e Directive (LVD)
As such, a suppliers compliance track record is a critical factor when sourcing suppliers. For many products, previous compliance is the main supplier qualification factor.
You can judge a suppliers compliance track record based on existing test reports and product certificates. Indeed, these are not valid for your specific product, but serve as an indication that the supplier did at some point produce a compliant product.
There is no such thing as a ‘compliant supplier’
A previous test report is, as mentioned, only an indication of the supplier’s capability to ensure compliance.
It is not a guarantee for future compliance, but it helps to weed out suppliers that cannot manufacture compliant goods.
Ensuring product compliance is the Importers responsibility
Compliance is a lot more than just manufacturing a compliant product. There are also labeling requirements, document requirements and testing requirements to consider.
As an importer, it is your responsibility to create all labels and documents that are required in your country or market.
The supplier will not assist with these procedures, nor shall you expect them to provide you with legal advice.
Non-compliant products may be seized by the customs or subject to a forced recall
Ensuring product compliance is a core objective for every business Importing products from China, or other Asian countries. Unless all compliance requirements (see the Checklist below) are fulfilled, your product may be seized by the customs authorities upon arrival.
Due to limited resources, the customs cannot check every incoming shipment. However, products that successfully pass through customs may still be subject to forced recalls, if found to be non-compliant after they have entered the marketplace.
In such a scenario, you are required to recall all your non-compliant products, and refund all affected customers.
However, you are strongly advised to contact your local authorities before contacting suppliers.
Compliance Checklist
Compliance Process
Ensuring product compliance begins at the design stage, and is part of every step of the process. As such, it is important that you understand how product compliance procedures are managed throughout the process :
Part 1 : Create Product Specification
- Assess potential product hazards (design, functional or other) to adults, children and infants
- Research all mandatory Product regulations / safety standards
- Research all mandatory Substance Restrictions
- Research all mandatory Labeling Requirements
- Research all mandatory Document Requirements
- Research all mandatory Testing Requirements
- Create all label files (must comply with the applicable regulations)
Part 2 : Supplier Research
- Submit RFQ file to suppliers (to inform the suppliers of your compliance requirements)
- Verify all product certificates and company certificates (to assess the supplier’s capability to manufacture compliant goods)
Part 3 : Product Development
- Draft Sample order sheet (to inform the supplier of your compliance requirements=
- Optional : Submit pre-production sample for compliance testing
Part 4 : Production
- Draft all compliance documents
- Execute quality inspection (to verify that all labels are correct)
- Submit batch samples for compliance testing
Note : The process is for reference only, and may differ depending on the product and the applicableregulations.
Task List
Research product specifications
- Review external resources: Alibaba.com, Globalsources.com, Amazon.com, Ebay.com
- Identify and list all relevant product specifications
- Identify and list all relevant quality options (for each product specification)
Draft product specification sheet
- Review Case Study A
- Review Case Study B
- Download Template 1A : Product Specification
- Draft Product Data
- Draft Bill of Materials (BoM)
- List all File attachments
Create label files
- Create logo file
- Create product labels
- Create product packaging artwork
Create design files
- Create design drawings
Research applicable product regulations
- Assess potential product hazards (design, functional or other) to adults, children and infants
- Research all mandatory Product regulations / safety standards
- Research all mandatory Substance Restrictions
- Research all mandatory Labeling Requirements
- Research all mandatory Document Requirements
- Research all mandatory Testing Requirements
Part 2 : Supplier Research
Introduction
In this part, you shall identify suppliers and gather enough data to make an informed supplier selection. At the end of this part, you shall have at least a handful of supplier candidates available, from which you can order product samples (as described in Part 3).
Create Supplier RFQ (Request for Quotation) File
At this stage, you shall have already completed your product specification. Later, in this part, you will contact suppliers and submit your files to them. However, before you can do that, you must create a template for the suppliers to use.
The objective with contacting the suppliers can be summarized as following:
- Confirm that the suppliers can conform to your product specifications
- Obtain unit pricing, lead times, payment terms and MOQ requirements
- Confirm whether or not the supplier can ensure compliance with applicable product standards
- Obtain relevant documents
Why do I need a Supplier RFQ File ?
Chinese suppliers only provide the information you specifically ask for, which is why you must send a Supplier RFQ Template, together with your specifications.
The supplier is supposed to fill in the blanks in the RFQ File (Excel format), and return it to you by email.
How shall I keep track of all Supplier RFQ Files once returned ?
When communicating with a large number of suppliers, it is crucial to standardise communication. This is the very reason you send an RFQ file, instead of trying to keep track of hundreds of emails.
Hence, the Supplier RFQ file provides you with a micro perspective – one file for each supplier.
However, you must also keep track on a macro perspective, as you will communicate with a larger number of suppliers – all at the same time.
For this reason, you are equipped with an RFQ Overview Template.
How shall I modify the RFQ template ?
You must ensure that all suppliers reply on the same format. Hence, the Supplier RFQ file must be modified to ensure that they provide the data you need.
You may also add questions to the RFQ template, or request feedback on your product specifications.
Template : Supplier RFQ
Description : This template is sent out to all suppliers. It contains all your product specifications, and include fields for the supplier to specify the following information :
- Counter Specification : To reconfirm your product specifications or highlight differences
- Product Compliance : To confirm whether or not they can match your compliance requirements
- Order Terms : Unit price, Sample costs, Lead times, MOQ and payment terms
- Documents : The supplier shall provide the listed attachments (to the extent they can)
Notice that you may modify this template to ensure that it suits your needs.
Template : RFQ Overview
Description : This template is used to store supplier information, and keep track of the progress. In this part, you will need to process a lot of information, and manage communication between you and your suppliers. Notice that you may modify this template to ensure that it suits your needs.
Create a Supplier Shortlist
Alibaba.com and Globalsources.com (from now on referred to as Supplier directories) are the most comprehensive supplier databanks available on the internet. Unlike what many buyers think, there are no ‘hidden’ supplier networks or databanks.
The Supplier directories contain critical information about the suppliers, that you can use to create a shortlist.
1.Why do I need a supplier shortlist ?
In each industry, you can find hundreds (sometimes thousands) of suppliers. It is impossible to contact them all. Hence, you need to reduce the number that you actively engage with to something more manageable.
We advise you to identify at least 10 to 15 suppliers for the shortlist.
How many suppliers should I review ?
As many as possible. The actual number depends on how many suppliers there are in a given industry. You are advised to review at least 50 to 70 suppliers, from which you select 10 to 15 suppliers – based on the factors described below.
How shall I select suppliers for the shortlist ?
Indeed, you shall not randomly pick suppliers for your shortlist. Instead, you need to review the suppliers based on the data that is available in the Supplier directory. Below follows an overview:
Company Overview: First Step of the Supplier Vetting Process
- Company Name : Virtually all company names in China includes a location identifier. Companies with province names are larger, and more well capitalised, than those with city names. As such, a province based company name is therefore one such factor. Below follows an example :
– Shenzhen Company Co., Limited (Smaller)
– Guangdong Company Co., Limited (Larger)
- Product Scope : This lists the suppliers ‘main products’. For clear reasons, you want your product to be mentioned here. Suppliers listing a very diverse range of products are mostly buying agents or trading companies, as manufacturers have far more narrow product scopes.
- Product Compliance : Suppliers listing overseas product standards and certificates (i.e., REACH, Low Voltage Directive and CPSIA) are more likely to be experience manufacturing goods in compliance with EU and US product regulations.
- Quality Management System & CSR / Social Compliance : Specifies whether the supplier is certified according to a Quality Management System (i.e., ISO 9001:2015) or complies with a Social Compliance Protocol (i.e., BSCI).
Notice : The suppliers are free to edit their Company introduction as they wish, and compliance and QMS documents must, for obvious reasons, be verified.
Verified Company Information :
- Registered Capital : The Registered Capital indicates the suppliers scale of operations. A supplier with a very low capital (i.e., RMB 100,000) is most likely a trading company, while a supplier with, say, RMB 20,000,000, is likely a manufacturer.
- Year of Registration : Albeit not the most important criteria, a supplier’s history has some significance.
- Registered Address : The suppliers, registered, operational address. However, these often tend to be outdated.
- Supplier Check Tool : Shortlist Assessment
To help you assess whether a supplier is qualified enough to be added to your supplier shortlist. The supplier assessment is based on the following factors (all of which can be found online, see points e. and f. below ) :
- Registered Capital (RMB)
- Year of Registration
- Company Name
- Product Scope
- Product Compliance
- Quality Management System
- Social Compliance / CSR
Based on the input above, the system will give each supplier one of the following ratings :
- Excellent (Add to shortlist)
- Qualified (Add to shortlist)
- Average (Do not add to shortlist, if better supplier options are available)
- Not Qualified (Do not add to shortlist)
After you have filled in and submitted the form, an automatically generated Supplier Check Report (PDF) will be generated and delivered by email.
How can I find supplier data on Alibaba.com ?
- General information : Supplier page > Company Profile > Company Overview
- Verified company information : Supplier page > Company Profile > Company Overview > TrustPass Profile
- Contact Details : Supplier page > Contacts
How can I find supplier data on Globalsources.com ?
- General information : Supplier page > Company Information
- Verified company information : Supplier page > Company Information > Verified Business Profile
- Contact Details : Supplier page > Contact Us
Contact Suppliers and send RFQ File
At this stage you have drafted a supplier shortlist, consisting of 10 to 15 options. You will now contact the suppliers, and submit the necessary files.
Contact suppliers and send product spécifications
It is critical to present yourself as a serious buyer. Manufacturers are flooded with enquiries, and the vast majority of inquiries are not serious requests. In addition, a supplier must invest considerable resources to calculate pricing data and provide feedback on buyer specifications.
In short, a supplier must be selective. Many suppliers reply to less than 5% of the enquiries they receive on a daily basis. Simply sending an email, and expecting a supplier to spend hours, calling their subcontractors for material quotes, is not realistic.
Instead, you must establish a more personal connection with the supplier from the start. With this in mind, we advise you to follow this sequence when establishing contact with the supplier :
– Step 1 : Use the chat function in all the major supplier directories to obtain the supplier’s email address, Wechat, Skype and phone number
– Step 2 : Schedule an introductory call, to present your company, your position and the product
– Step 3 : Send an email containing supplier RFQ file and all product documentation.
Communication tools
Most suppliers in China use the following communication tools :
– Wechat : The largest chat application in China. Wechat is used by essentially everyone in the country, and the best way to follow up on your suppliers. This is the application that gets the most attention by suppliers. Wechat can be downloaded for free from Google Play or the Apple App Store.
– Email : Chinese sales representatives tend to use their personal email accounts. Hence, it is not unusual to receive emails from sales reps using @hotmail.com or @163.com domains. For various reasons, English language emails sent to Chinese email accounts often gets filtered out as spam. Hence, an ‘email only’ communication approach is impossible (or at least extremely difficult to succeed with). Contact your supplier by Wechat or by phone, after sending an email, to ensure that it’s received. Also, avoid sending emails that contains web links or large files.
– Phone : You can expect your contact person to be available by phone during local (Chinese) office hours, evenings and even weekends. Hence, you should request their cellphone number, when establishing contact. You can use Skype, and other VOIP applications, to make calls abroad. You must add the Chinese prefix +86 to the phone number, before making the call.
– Skype : Many suppliers use Skype to communicate with clients. Hence, you should request the suppliers Skype account ID when establishing contact.
– QQ : A desktop chat application used by suppliers for day to day communication and file transfers
Sending large files
Manufacturers in China, and many other developing countries in Asia, are limited by very slow internet connections. Avoid sending large files by email, as this can either result in the email being classified as spam – or being impossible for the supplier to open.
For large file transfers, you should use a file transfer service or QQ, a Chinese desktop chat application.
Work hours
China has established the same time zone over the entire country, GMT+8. Most companies operate between 9 AM to 5 PM. You may, however, request permission to call your contact person until 8 PM (local time) and on weekends.
Email Template #1 : RFQ
Hello,
I am the Purchasing Manager of ( INSERT COMPANY) in ( CITY, COUNTRY). We are interested in your products and would like to receive a quotation.
Please see the attached file and follow these steps:
- Download the file attachment and fill in the colored fields (product specs, pricing and order terms)
- Provide your contact details so we can follow up with you in the future :
- Wechat ID
- Cell Phone (China)
- Skype ID (If any)
- Reply the questions in this email
Question : Are your products manufactured in compliance with ( INSERT CERTIFICATION STANDARD)?
– Please reply here
Question : If your products are compliant with (INSERT CERTIFICATION STANDARD), could you please provide us with a previous product test report?
– Please reply here
Question : Are you manufacturing this product yourself or purchasing it from another factory?
– Please reply here
We would prefer if you reply with a quotation within 7 working days.
Feel free to ask further questions about our company, in case you have any. This is a serious enquiry and we are keen to start working with you.
If you have further questions, I suggest we arrange a Phone call or Skype call.
Best Regards, ( INSERT NAME), Purchasing Manager of ( INSERT COMPANY)
Description : This email template is used when contacting the suppliers for the first time by email. Its purpose is to present you as a serious buyer – and explain how the supplier is expected to participate in the RFQ procedure.
Follow up on suppliers
Completing the RFQ process can take 1 to 4 weeks . The time it takes depend largely on the number of calculations the supplier, and its subcontractors, must make.
Hence, a simple product can be quoted rapidly, while a customized product can involve multiple contractors that all must calculate their price.
The supplier expects you to follow up during this process. We advise you to contact the supplier by Wechat and Skype every second day, until they have filled in and returned the Supplier RFQ file (and provided the necessary documentation).
As mentioned, never use email for follow ups. Most suppliers consider their email as a secondary communication tool.
Process Suppliers & Product Information
You can expect 30 to 50% of the candidate suppliers to fully respond to your RFQ. In most cases, this means that you will process information from 3 to 7 supplier
Required files
Each supplier must submit the following :
- Supplier RFQ file (Mandatory) : Must be filled in according to the pre-defined format in the template. You may need to request multiple resubmissions and clarifications.
- Product Compliance Documentation (Recommended) : This includes test reports, product certificates and other documents that can help you assess a supplier’s capability to ensure compliance with relevant safety standards.
Note : A previously issued test report or product certificate cannot be reused for new products, as such documents are only valid for the specific batch of products. In many cases, such compliance documents are tied to the buyer, and can only be issued and held by the buyer.
Hence, previously issued test reports and product certificates are used to assess the supplier’s capability to manufacture products in compliance with a certain standard or regulation.
- Company Documents (Optional) : Quality Management System (i.e., ISO 9001:2015) and Social compliance Audit Reports (i.e., BSCI) that can help you assess a supplier’s qualifications.
Verify the supplier documentation
Company Details (Business License Data)
Company details are verified by Alibaba.com and Globalsources.com. Hence, you may not need to verify the supplier’s business license (even though it is recommended).
You can obtain additional company information (and in same cases a more updated overview of the business license) on the official company registry.
Compliance Documents
You must contact the issuing company (as specified on the document, such as SGS or Bureau Veritas) to request verification. The website and/or contact details can always be found on the document.
While a product certificate may be verified as authentic, you must also assess whether it’s relevant for your manufacturer, and product. Review the following:
- Owner / Applicant / Held by : The certificate should be issued in the name of the same supplier company. If not, you cannot assess if the supplier has the capability to manufacture products in compliance with the relevant standard or regulation.
- Product name / Article ID / SKU : The product certificate should be valid for a product within the same category as yours. Otherwise you cannot assess the supplier’s ability to manufacture products in compliance with the relevant standard or regulation.
Company Documents (QMS / CSR)
You must contact the issuing company (as specified on the document) to request verification. The website and/or contact details can always be found on the document.
Even if the document pass verification, you must check the following:
- Owner / Applicant / Held by : The certificate must be issued in the same of the same company, as specified on the supplier directory. Otherwise, they may have submitted a document owned by another company
- Scope : The product scope must be relevant for the products you intend to buy
Final Supplier Selection
At this stage, you have at least a handful of supplier candidates. But, you may still not fully understand how to interpret all the data you have gathered via the Supplier RFQ document. This part explains how you can better understand whether a supplier is not qualified.
Electronics Industry Overview Table
Description: The table above is used to manage expectations on the suppliers. If you set the requirements too high (i.e., expect every supplier to hold compliance documents and be CSR certified) you may not be able to find a single manufacturer. On the other hand, it is critical that you don’t settle for subpar suppliers.
What is a qualified supplier ?
The key characteristics of a ‘qualified supplier’ is largely the same in all industries. You want to work with the top 5% of the suppliers, that are exclusively focused on your category, and with major export volumes to developed markets (i.e., the United States and the European Union).
The top suppliers must not be the largest in terms of production capacity, nor do they necessary quote the highest prices – or demand the highest MOQ.
What is an unqualified supplier ?
An unqualified supplier can normally be placed in the following two categories:
– Domestic manufacturers: Factories that mainly produce goods for the local Chinese market. These suppliers tend to lack experience working with overseas customers, or ability to ensure compliance with applicable product regulations.
However, these suppliers can be large and well established companies. This is why we cannot only look at the amount of registered capital, the year of registration of product scope when we select suppliers – but also product compliance documents.
– Agents and Trading Companies: There is normally no benefit to buying via an agent or trader. Instead, it’s a major liability. If you buy from a middleman, you are not only paying more than you should. You don’t know anything about the actual manufacturer and its capabilities.
This category of suppliers is often ‘given away’ by their low amount of registered capital.
Case Study A : Supplier Comparison Table
You can use the 2nd Supplier Check Tool to assess whether a supplier is qualified for the next part of the process (Part 3: Sample Order). The assessment is based on the following factors :
- Supplier RFQ File Returned
- Product Compliance
- Quality Management System
- Social Compliance / CSR
- Design Capability
- Minimum Order Quantity
- Payment Terms
- Production Time
Based on the input above, the system will give the supplier one of the following ratings :
- Excellent (You may order product samples)
- Qualified (You may order product samples)
- Average (Do not order product samples, if better supplier options are available)
- Not Qualified (Do not order product samples)
After you have filled in and submitted the form, an automatically generated Supplier Check Report (PDF) will be generated and delivered by email.
Task List
Create Supplier RFQ File
- Update Template : Supplier RFQ
Create Supplier Shortlist
- Reserach suppliers on Alibaba.com
- Research suppliers on Globalsources.com
- Use the Supplier Check Tool: Shortlist Assessment to filter suppliers
- Add suppliers to Template 2B: RFQ Overview
Contact Suppliers & Send RFQ File
- Contact all suppliers and send Supplier RFQ files (Use Email Template 1)
- Follow up every 2 – 3 days until you have received all files
Process Suppliers & Product Information
- Review Supplier RFQ files
- Verify all product certificates and company certificates
- Verify company details (business license data)
Final Supplier Selection
- Use the Supplier Check Tool: Final Assessment to filter suppliers
- Make your final supplier selection based on the result
Attachment : Electronics Trade Shows
Prefer to meet suppliers face to face than sourcing online ? If that is the case, you might want to consider visiting one or more of the following trade shows.
Overview
FAQ
Mainland China
How do I get to the Canton fair ?
The Canton fair is held in Guangzhou, in Guangdong province. You can fly directly to Guangzhou – or to Hong Kong, from where you can travel to Guangzhou by train or bus.
Do I need a visa to enter Mainland China ?
Yes, most nationalities are required to obtain visas before entering Mainland China. You can secure a business visa by requesting an invitation letter.
Do I need an invitation letter ?
Invitation letters are generally not mandatory for trade show visitors. However, they can help you obtain a visa (if you cannot obtain a visa any other way). Hence, you are advised to pre-register on the trade show website, and request an invitation letter.
Before doing so, you must contact your local Chinese embassy to confirm which documents they require, in addition to the Invitation let
FAQ
Hong Kong S.A.R
Do I need a visa to enter Hong Kong S.A.R ?
No, most nationalities can remain in Hong Kong S.A.R for 30 to 90 days per entry. British citizens can stay for 180 days per entry. However, some nationalities need to obtain a visa, so confirm before booking your ticket.
Do I need an invitation letter to attend a trade show ?
No, you are not required to obtain an invitation letter when attending trade shows in Hong Kong.
Do I need to pre-register before arriving in Hong Kong ?
No, pre-registration is normally not mandatory. While you can normally register at the trade fair venue, you are guaranteed admission to the trade show if you are pre-registered. In addition, it also tends to guarantee free admission.
Attachment : Guide to Communicating With Chinese Suppliers
Communicating with suppliers in China is one of the biggest challenges for importers. Especially those who don’t have previous business experience dealing with the Chinese. In this attachment, you will learn what you must know about communicating with your suppliers.
Be overly clear and brief in your communication
Do not send long paragraphs or use slang, when providing the supplier with information. Always keep your writing short and on point. For example, product information and quality requirements must only be provided as brief bullet points – not as paragraphs.
When you ask questions to your supplier, you must provide them with a fixed format for their reply. Instead of asking your supplier an open ended question, you shall give them a multiple choice question – therefore framing their reply.
Focus on your business only
Do not get personal with your supplier, and do not give praise unless necessary. Keep your focus strictly on the business, and to not stray into irrelevant topics.
Never use moral or emotional arguments
Try to keep your cool as much as possible. Trying to convince a supplier that they have done something wrong, by using moral or emotional arguments, is pointless when dealing with Chinese (and largely, other Asian) suppliers.
Always require the supplier to confirm details
The Chinese are generally not proactive in their communication. They will not take the time to explain that your specification is missing important details.
Instead, they may rather take advantage of such gaps. It is therefore extremely important that you always get confirmations from the supplier – in writing – on everything from technical details to the production time of a certain product.
Keep your supplier informed
Don’t stop replying your supplier, or put the project on halt for several months. Just as you don’t like to be ignored by your supplier, neither do they. If you decide to disqualify a supplier, you must also inform them of your decision.
Expect fierce resistance at times
The Chinese will always try to get extreme benefits for themselves. They are tough negotiators, and will often make a fuss over small things to make their customers think twice before asking for some sort of benefit.
For example, a supplier may pretend to be upset about a customer’s demand to sign a Sales Agreement – before an order.
Never give in to a suppliers demands, and never let them dictate the terms for your business relationship. You must be fair, but hard.
Refer to a ‘superior’ whenever you meet resistance
The Chinese are familiar with strict hierarchy. If a supplier attempts to reduce your leverage (i.e., refuse to sign a contract before an order) you shall refer to ‘company policy’ or ‘instructions from the CEO’ – as this can quickly deflect their demands. This kind of argumentation also is often used by the suppliers themselves.
Your are the project manager
The supplier will not drive your project forward. Their role (and mentality) is to only respond to their buyers instructions. Such is the nature of contract manufacturing.
They will not actively inform you of how the process works, from sourcing to production. Neither will they have standardised procedures to follow, but adapt to the processes of their customers.
Never show yourself as small or weak
Always pretend that you are bigger and more experienced than you actually are. Even If you are a small startup with limited funds, you should make them believe that you are an established player.
Attachment: Guide to Price Negotiation
Price negotiation is extremely risky if you are not a product expert. A supplier can quote you basically any price. The question is not low they can go in terms of pricing, but rather in terms of product quality.
Keep track of your product spécifications
It’s typical that inexperienced buyers put immense pressure on the suppliers to offer a rock bottom price.
Eventually, the supplier may give in and offer a lower price. But, what the buyer is not aware of, is that the new price is due to a reduction in product quality.
As the Chinese are rarely proactive in their communication, they will not bother to explain to you that they will use inferior materials and components. This will only be revealed much later, when it is already too late.
Never attempt to negotiate the price, unless you have a broad understanding for the product specifications and quality options for a certain product. In addition, the product specifications must always be reconfirmed by the supplier, if they agree to lower the price.
Refer to company policy or instructions from a Superior
You can deflect a suppliers attempt to refuse price reductions by referring to factors that are outside of your control. This can be done, even if you actually are the most senior officer of your company.
Always get quote from many suppliers
You cannot tell if a price is accurate, unless you have samples from multiple suppliers. Hence, we involve 10 to 15 suppliers in the RFQ process. Again, it is also of extreme importance that each supplier provides a product specification as part of the quotation. If not, you don’t know what you’ve been quoted.
Don’t expect extreme price reductions
Contract manufacturers have low profit margins, and they are not operating as charities. If you want your supplier to get something out of doing business with you (especially as a startup client) they must make money too. Don’t try to price them below the market price. If you can get a reduction of 5%, you have succeeded. Do not expect huge discounts.
Part 3 : Product Development
Introduction
At this stage, you shall have selected at least one supplier to be put through the first practical test of the process: making a pre-production sample. In this part, you will learn how to prepare your sample order, and manage revisions.
The goal of this part is to obtain a fully approved pre-production sample, thereby assessing the supplier’s ability to manufacture the product according to your product spec sheet.
Why do we need product samples ?
Producing a product samples achieves two things :
- It tests the suppliers ability to manufacture your product, while they also go through a learning process
- It enables you to test the design and functions of your product
You are advised to order pre-production product samples, regardless of whether you intend to buy custom designed (OEM) products or private label (ODM) products.
How much should we expect to pay for a product sample ?
The cost depends on the type of sample, and whether new tooling (i.e., injection molds) are required to produce its components.
When ordering a factory sample, for example, you normally only need to pay for shipping.
However, when ordering customized product samples, you may end up paying anything from US$10 to tens of thousands of Dollars – all depending on the cost of tooling (if any).
How can we keep costs down when developing a new sample ?
Additional tooling is the main cost, when developing new samples. As such, reducing the need for new tooling can help to keep costs down.
However, this requires that you choose existing components, rather than customizing parts according to your own design and functional requirements.
This approach also requires that the supplier owns such tooling, which is not always the case.
While many suppliers tend to showcase a large number of “catalog products” (i.e., on their company website), they are rarely willing to let importers use tooling owned by other buyers.
Thus, it is not always possible to “reuse” existing tooling.
Cet incoterm peut s’apparenter à des prestations dites de « porte à porte », où votre expédition sera prise en charge de bout en bout.
How do I communicate my product specifications prior to buying a product sample ?
The main document is the Product specification document (sometimes called Techpack), which may include the following information :
- Design drawings
- Material specification
- Bill of materials
- Photocopies
- This is the document that the supplier will use, during sample production.
As this document will be passed between engineers and subcontractors (i.e., material suppliers), it is crucial that the product specification is extremely clear and simple to understand.
Do not leave anything open to interpretation, as this can easily result in misunderstandings.
What if a supplier refuses to send a sample ?
While you cannot expect a supplier to give away or produce samples free of charge, you should always be able to get samples as long as you pay for them.
Suppliers that come up with excuses for providing samples normally have something to hide. You shall not consider doing business with such suppliers.
What if the manufacturer fails to produce a sample according to our specification ?
As mentioned, a pre-production sample is made to test the suppliers’ ability to manufacture your product.
It is to be expected that many suppliers are unable to comply with your requirements, and deliver a non-satisfactory pre-production sample.
If a supplier keeps failing, after two or three sample revisions, you shall not waste your (or theirs) time. Simply move on when a supplier can’t manufacture a product the way you want it.
Can the final (mass produced) product differ from the pre-production sample ?
Yes. It can go both ways.
Making product samples enables the supplier to invest considerably more time per produced unit, than for a mass produced unit.
In addition, the higher pace of mass production can give rise to previously unforeseen quality issues.
When placing the order for very first batch of a new product design, you should consider minimizing the order quantity as much as possible.
You are also recommended to have the products inspected, prior to shipment. However, that is not limited to the first batch, but all orders.
How can we get the product sample delivered ?
Product samples are normally delivered by airmail.
Basically, all manufacturers can ship samples via their freight forwarders. However, you can also arrange your own forwarder to collect and ship product samples.
Do we need to pay import duties and other taxes when importing product samples ?
It does depend on the order value.
In many markets, there are minimum thresholds. If the sample is valued at below the threshold, you do not need to pay import duties or other taxes.
However, if the customs value of the sample is above the threshold, you must pay import duties (and possibly other taxes), according to the applicable duty rate.
Notice that this can result in significant amounts, as tooling is considered as part of the customs value.
Thus, you cannot decide to only declare the value of the product sample, and leaving out the cost of the tooling. The latter can cost several thousands of dollars
Product Sample Spec Sheet
The Sample Order Sheet communicates the product specifications and sample order terms to your supplier. This document must be confirmed (with the company stamp) by the supplier, before you pay them.
Note : You may skip this procedure if you buy very simple product samples, such as ready made components or basic materials.
Sample Order Sheet Template Overview
The Spec Sheet, including its attachments, is the most essential part of the Sample Order Sheet. The product sample is manufactured entirely according to the specifications. Hence, you must ensure the following:
- The specifications and quality options must be tweaked according to the supplier’s capability
- All attachments (i.e., design drawings and logo files) must be final.
Containers
Types and volumes
If you intend to submit the sample for compliance testing, you must specify this, to prevent the supplier from using materials and components which renders the product non-compliant.
Many suppliers considers pre-production samples as for reference only.
Hence, they may not consider your compliance requirements for the samples, unless explicitly instructed to do so.
List all product label and other graphical files that are affixed on the sample, including the file attachment name and the position of the print.
Packaging Spécifications
- Design file
- Material
- Add additional specifications here
Packaging Labelling
If you buy product packaging from tour supplier, you must add all relevant packaging specifications. Including logos, labals and artwork.
Order Terms
Samples seldom come out perfectly on the first try. Depending on the product and its complexity, you should expect two to three sample revisions.
However, you don’t want to end up in a situation where the supplier is asking you for additional payments, because they failed to get your approval on the pre-production samples. For this reason, include the following terms:
General
- supplier must produce an unlimited number of sample revisions (in case the previous sample batches don’t comply with the product specifications and quality requirements in this document).
- The seller may not request additional payments from the buyer, unless the buyer makes changes to the product designs, materials, quality requirements or compliance requirements.
- Pre-Production Sample Revision Time
- 1st Sample: XX days
- 2nd Sample: XX days
- Nth Sample: XX days
- If the supplier fails to produce an acceptable sample after X revisions, the buyer may request a full refund ($XXX) from the supplier
- If the supplier fails to produce samples within the time limits set under ‘Pre-Production Sample Revision Time’, the buyer may request a full refund ($XXX) from the supplier.
As you may already understand, the main purpose of these terms are to put pressure on the supplier to :
- Comply with all design requirements and product specifications
- Limit the number of revisions needed (as they end up on the losing side by neglecting your requirements), and thereby speed up the development process.
- Limit the time spent to produce each sample revision
Note : These terms are void if you change the specification, after the supplier starts working on the pre-production samples. Again, get your spec sheet right before you move forward.
When buying custom designed products, injection molds and other tooling are generally required. Tooling is always paid for by the buyer, and can make up a large share of the product development cost. As such, you want to avoid any of the following situations :
- The supplier is using your tooling for other buyers
- The supplier is refusing to transfer the tooling to you or your new supplier
The first scenario requires more than just a written clause. As for the second scenario, add the following two clauses to your Sample Order Terms:
- All tooling (as listed below) is the property of the buyer, and may not be used in production, for the seller (supplier) itself or its other customers (domestic or international) without the buyer’s written approval.
- The tooling may be transferred from to the buyer, or its representative in China, at any time. Upon such a request, the seller must send the tooling to the buyer within 3 working days. The buyer must pay for all transportation costs (Maximum $XXX).
Subcontracting
The whole point of buying pre-production samples is to test the manufacturer’s capability to produce your design. What if the manufacturer contracts sample production to another factory?
That is a major issue, as you have no indication of the supplier capability to actually make your products.
Thus, new quality issues, that you thought were already corrected during the sample development phase, may arise.
- The seller may not subcontract the sample production to any other party or company, entity (excluding procurement of components and materials).
- The pre-production sample must be made in the supplier’s production facility at the following address: [Insert Address]
- The buyer, or its representative in China, may inspect the seller’s facilities without prior notice, to verify that sample production is made at the specified address.
- Failure to comply with the subcontracting terms shall result in an immediate refund ($XXX).
Payment Terms
If the sample costs are counted in the hundreds of dollars, product samples are usually paid for 100% upfront.
However, more complex developments, for example OEM electronics and custom plastic parts requiring injection molds, can result in costs counted in the thousands – sometimes tens of thousands – of dollars.
When the stakes are higher, risks must be managed accordingly. For these situations, we advise you apply the following terms:
Deposit before production of tooling and pre-production samples.
- 60% Balance after the buyer’s written approval of tooling and pre-production sample.
Compliance Requirements
If you intend to submit the sample for compliance testing, you must specify this, to prevent the supplier from using materials and components which renders the product non-compliant.
Many suppliers considers pre-production samples as for reference only.
Hence, they may not consider your compliance requirements for the samples, unless explicitly instructed to do so.
Template 3A: Sample Order Sheet
Description : Add all relevant sample product specifications and attachments to this document template. You may also modify the order terms as you request.
IP Protection
You must share product information, such as logos and design files, with the suppliers before they can make a sample.
Many importers are worried that the supplier will steal their designs.
You may require the supplier to sign an NDA, before you share any product information. Still, such agreements are hard to enforce. At least without professional legal assistance, that is out of reach of most startups and small businesses.
And, even if you succeed in enforcing an NDA, you may not be able to secure proper compensation from the supplier.
In addition, it’s also possible to circumvent NDAs by passing on the product design to a new company, that is not bound by the contract
The only way to be “safe” is to patent the products design and functions in all major markets, including within China. All trademarks should also be registered, in your target markets (i.e., the USA and the EU) and the manufacturing country (i.e., China or Vietnam).
Then again, this is expensive and time consuming, and not a viable approach for most startups and SMEs.
Unfortunately, there are no quick, cheap and simple ways to protect your IP when buying product samples from China, or other countries in Asia for that matter.
Note: An NDA template is provided as part of the Buyer’s Guide. While it shall not be relied upon as a long term IP protection, it may make the supplier reconsider (or delay) the manufacture of replicas.
Also notice that this is only a serious risk if you hand over new designs to a supplier. They are rarely interested in using unknown brand names or logos.
Template 3B: Non-Disclosure Agreement
Description : This NDA template stipulates penalties for using your Intellectual Property, such as design drawings, artwork and logos.
Email Template #2: Sample Order Sheet
Hello,
We are satisfied with your quotation.
Therefore we would like you to provide us with product samples. It’s very important that the samples you send us match our product specifications.
As such, we have prepared a simple sample order term sheet. Please see the attachment and follow these instructions :
- Download the file attachment and read the terms
- Confirm if any changes must be made to the product specifications
- Confirm if you approve the order terms
- Print the document and stamp each page (using your chinese company stamp)
- Scan the document and send to us for approval (via email)
When this is done, you can issue the Proforma Invoice, and we will pay you for the sample.
If you have further questions, I suggest we arrange a Phone call or Skype call.
Best Regards, ( INSERT NAME), Purchasing Manager of ( INSERT COMPANY)
Description : Use this email template when you submit the Sample Order Sheet to the supplier. It explains why you require that they sign this document.
Sample Production
A product sample normally takes 30 to 90 days to manufacture, depending on whether or not new molds or other tooling are needed. However, sample production can be delayed indefinitely, as additional sample revisions are often required – especially for more complex products.
As such, it is critical that you follow up on a regular basis with the supplier, to verify that they have fully understood your product specification.
Sample reporting
By the time you have paid the supplier for the sample, you should already know the estimated completion date. Follow up with the supplier on a regular basis, via Wechat and phone calls – to remind them of this deadline – and for them to report any delays.
Notice that delays are to be expected, as many subcontractors tend to be involved in the sample production.
Reporting defects and quality issues
You need to expect design and quality issues, especially on the first and second samples. This is part of the learning process for the supplier.
To ensure that sample issues are resolved efficiently, you must identify and keep track each defective unit, and suggest a corrective measure. For this purpose, you are equipped with Template 3C: Sample Revision Overview.
Sample approval process
The sample must match the final (mass produced) product to the extent of what is possible. You shall not agree to abort the sample development process, as is often suggested by unreliable suppliers.
Before the final sample is delivered to your address, you should request sample photos from the supplier (preferable according to a photo checklist provided by you).
This way you can verify the sample before it is sent by air to your address, which can help you to avoid unnecessary return shipments (in case the sample turns out to be defective).
Task List
Product Sample Spec Sheet
Update Template 3A : Sample Order Sheet
Submit Sample Order Sheet to the supplier for confirmation (Use Email Template 2)
Obtain stamped scan copy from the supplier (Sample Order Sheet and all Attachments)
Pay for the product samples
Sample Production
Request regular updates
Obtain sample images after reported completion
Approve or reject sample revision
Approve product sample image and request delivery
Final sample approval*
Part 4 : Production
product electronics , specifaction suppliers
Introduction
At this stage, you shall have approved the pre-production sample. As such, you can now move forward and place a test order. This is a critical moment, as you must know wire your first payment – and ensure that the supplier manufactures your product according to specification.
If you fail to manage this process well, you might end up losing your entire investment.
Sales Agreement
Misunderstandings between the supplier and the buyer are the main cause of quality issues. Imagine receiving products of the wrong color, or with the wrong labeling. The latter could, for example, make your products worthless, as selling items that are non-compliant (with local labeling requirements) is illegal.
To reduce the risk of such disastrous misunderstandings, you need to sign a Sales Agreement with the supplier, before wiring the money.
There is also another, almost as important reason, to sign a Sales Agreement. There are many things to consider when importing goods. This includes, for example, payment terms and shipping terms. You don’t want to negotiate the basic order terms for every order. Instead you want one agreement that is valid for many years.
Finally, you want to communicate to your supplier that you have the means to :
Verify that they manufacture the products according to specification : The supplier is made aware of the fact that you intend to send a quality inspector before making the balance payment and/or submit samples for compliance testing.
Let the supplier understand that you will withhold the balance payment if they fail to comply with the agreement : A contract is useless without a method to enforce its terms. Hence, the agreement must state that you will not settle the balance payment until the quality and compliance of the goods is verified.
Template 4A : Sales Agreement
Description : The Sales Agreement template must first be modified by you, and then submitted to the supplier for review. Notice that you may also need to add additional terms.
Email Template #3: Order Confirmation
Hello,
We would like to place a test order of XXX pieces. However, before we place the order we need to sign a Sales Agreement with your company. Please see the attached file.
This is why we need a Sales Agreement prior to placing an order:
- Our company has certain rules regarding product quality, product certification compliance, payment terms and freight terms. It’s very important that we avoid misunderstandings.
- The Sales Agreement must be signed by your company’s Legal Representative and stamped with your official company stamp.
- Notice that we cannot accept any sudden price increase. Our company expects the previous quotation to still be valid.
- (INSERT CERTIFICATION STANDARD) compliance is required in our country. We are likely to visit your factory (after the production) and collect at least one product sample that will be sent for compliance testing.
- We may also conduct an unannounced Quality Inspection, during or after, the production. Of course, we will only verify that the products are produced in compliance with our product specifications.
We don’t keep any product specifications or quality requirements secret. Everything is clearly specified in the Sales Agreement.
Please sign, stamp and send the Sales Agreement to the following address:
Company : INSERT
Address : INSERT
Zip Code : INSERT
City : INSERT
Country : INSERT
Phone : INSERT
If you have further questions, I suggest we arrange a Phone call or Skype call.
Best Regards, ( INSERT NAME), Purchasing Manager of ( INSERT COMPANY)
Description: This email template is used when sending the Agreement draft to the supplier, for initial review and approval. It explains why you require them to sign a contract, before placing your order.
Agreement Terms Overview
Important notice : It’s recommended to write a Chinese language Sales Agreement, with help from a lawyer, trained Chinese commercial legislation. However, if that is not an option, due to budget constraints, an English language contract is still highly recommended for the following reasons:
- The contract communicates all your product specifications, quality and compliance requirements. This is reducing the risk for misunderstandings , which is the most common cause of quality and compliance related issues.
- The contract communicates that you will verify the quality and compliance of the products, prior to making the balance payment. This is reducing the supplier’s incentive to use cheap and substandard materials and components.
Payment Fraud Prevention Checklist
Below follows an overview of various types of bank accounts, and their respective risk level. We advise you to request a review of the bank account details via the Online Advisor system before paying your supplier.
Deposit Payment Checklist
The beneficiary details must be correct, as the receiving bank in China will otherwise return the money. To avoid such waste of time, you need to know the following:
Beneficiary Name : It shall be as specified by the supplier. Chinese company names are often quite long, and you cannot cut it in half, even if your bank doesn’t allow you to enter the full name. If that is the case, enter the remaining characters in the message field.
Beneficiary Address : Same goes for the beneficiary address. Don’t leave anything out, or the payment may be returned by the Chinese bank. If the address is too long, try to shorten it a bit (i.e., 333 Hao Zhang Yang Road can be shortened to 333 Zhangyang Rd).
Bank Account Number : Same as specified by the supplier. Chinese bank accounts just have one account number, for both international and domestic use (unlike, for example, the EU which use IBAN for international transactions).
Beneficiary Bank Account : You may either input the SWIFT code or Bank name combined with branch and bank address.
Production
The mass production phase begins at the very moment the supplier confirms the arrival of the deposit payment. The supplier is now to execute the steps outlined in its production plan.
The process varies depending on the product, but this is what it might look like :
Purchase Components & Material : 10 – 20 days (from subcontractors)
Process Components & Materials : 10 – 15 days (in house)
Batch Sample Completed : 1 – 3 days (recommended for the 1st batch)
Assembly : 5 – 8 days
Packing : 1 – 2 days
While you should have received prototypes before you decided to go forward and place an order with the supplier, it’s still highly recommended, at least for the first batch, to require the supplier to first produce a number of batch samples, for your approval – before mass production proceeds.
Indeed, this may put production to a halt, especially if such samples are to be delivered to your office (rather than approved on site by an inspector). Yet, misunderstandings and neglect are common, and this is your last chance to prevent quality issues from spreading further.
You may also request general status updates, and photos, on a weekly basis. When the batch is nearing completion, you need to get a confirmation on the inspection date.
Such dates are prone to change, but notify your quality inspection well in advance, and start working on inspection checklists as early as possible.
Note : The production plan assumes that all tooling (i.e., Injection molds) is already completed prior to mass production, as this is required to make pre-production samples.
Quality Control
The purpose of a quality control is to verify that the products are manufactured according to specification, before you make the final balance payment. It is critical that you do not pay the supplier until the quality inspection is preformed, as you will have very little leverage once the supplier is paid in full.
In manufacturing, there are always quality issues. Hence, you should expect the inspection company to find quality issues. What matters though, is that the number of defectives are below the accepted defect rate.
A Quality inspection can be booked online, and is normally executed in the factory once the products are ready for shipment.
The agent can, for example, do the following :
Note : Make your supplier aware of the coming quality inspection as early as possible. This way you put pressure on them to ensure that your products match your specifications and quality requirements.
The agent can, for example, do the following :
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