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The Supply Solutions Network China office is located on the 16th floor of a 30 story office building in the heart of Changzhou in Jiangsu province. It is about 130 miles north and west of Shanghai. I like to consider the corridor the golden highway; starting with Shanghai, then Suzhou, Wuxi, Changzhou and finally Nanjing.
The area is credited with the highest contribution to GDP; more than any other area in China and is connected together by high speed trains and modern six-lane highways. The trains travel at speeds close to 200 mph and are as smooth as your car on a new highway. There are no railroad crossings and the majority of the line is elevated. Stay tuned I’ll be writing about the trains in a future blog article.
Please click on the play button for a quick tour of our office and to meet our staff.
One of our current suppliers just had a situation that is worth sharing with anyone doing business off shore.
Some time in the past someone at the suppliers company received an email with an attachment that they opened which turned out to be a hacker and the program gave the hacker access to the companies emails. The hacker then sat back and monitored emails coming and going from the supplier’s company. A Canadian company was working with the supplier on a big order of a custom product. Finally after some time the order was placed and the down payment was made to the Chinese supplier’s bank and production was initiated. All this was being monitored by the hacker.
When the order was completed and the shipment arranged it was time for the final payment to be made and the supplier sent the final payment information to the Customer. Actually the hacker intercepted that email and replaced it with their own giving different bank information. The Customer noticed the change and emailed back asking just to confirm it. The hacker intercepted that email and responded that they had changed banks. The Customer then sent the final payment to the new account and of course the money soon disappeared. After a few weeks went by the supplier contacted the Customer and asked about the payment and the fraud was discovered. The Canadian police where contacted who said the hacking was on the Chinese side and the Chinese police said it might have been on either side.
Currently the shipment is on the ocean. The Canadian Customer feels they paid for the merchandise and because of the supplier’s lack of email security they are of no fault in the matter and should receive their order. The supplier feels that they have not been paid and thus are not willing to release the BOL to the Customer at this time.
What would you do?
In the age of the internet and the ease to Google your product needs and order online why would you pay extra to use a sourcing service like SSN?
Of course there are lots of reasons but one of the ones SMEs don’t pay close enough attention to is the problems you can find yourself in by importing products into the US. US and Canadian Customs have little patience or understanding for your lack of knowledge in regards to regulations. For the few dollars saved you could find yourself in a business ending predicament down the road. Properly identifying your product and paying the appropriate duties is essential and not something that taking your best shot at will do. The importer or factory that is shipping the items to you have no responsibility at all other than following the export rules of their country. Product identification codes, HTS codes are not the same in a country like China compared to the US or Canada and you can’t rely on your supplier to correctly identify your item. The storage fees and fines alone on a held up shipment while you work out the problems could exceed the value of your goods in quick order. You are required to keep records which can be audited at any time in the future and of course there are quite detailed regulations on exactly how they should be kept and for how long. If your goods arrive on your doorstep via an air shipper from your internet order and you somehow think you are not responsible for any documentation or somehow your shipment is not considered the same as a full container of product then you would be wrong and most likely will regret the oversight in the future. As I’ve said earlier, Customs has no sense of humor at all.
A good agent will act as the Importer of Regard and assume all responsibilities with Customs. From a legal standpoint you are buying the product from them and bear no responsibility at the time of shipment or down the road.
I saw an interview with Mr. Cochrane the other day and now came across this article that describes his success at bringing jobs back to America. There are a few different reasons given as to why he made the decision to do this but the actual reason was talked around in the interview and totally missed in this article. What he said was that while working in several Asian countries as a consultant to other furniture companies he noticed something. He noticed that the consumers in these countries preferred American Made Goods.
Let me say that in another way: HE NOTICED THAT CONSUMERS IN THESE COUNTRIES PREFERRED AMERICAN MADE GOODS.
Why would that be you might ask? Aren’t American Made goods more expensive? The answer is yes they are but items made for American consumers are made to a different standard than the same item made for an Asian or for that matter Middle Eastern country. Actually the perception is it doesn’t matter where they are produced but who they are being produced for.
As an example; the Chinese will pay extra for a American made or imported item. It’s easy for them to tell because the labeling, instructions and packaging is all in English. The exact same item with Chinese labeling is perceived as inferior and perhaps a downright fake that will fall apart in their hands or poison their child.
THEY WANT OUR STUFF – THE STUFF THAT WE BUY – THE STUFF MADE FOR US – THE STUFF WE WEAR AND USE
This is a great opportunity for American companies of all sizes. For God’s sake don’t relabel the products. We Americans get the good stuff, we demand the good stuff and the Chinese and other Asian folks want to grow up just like us. They watch our movies, color their hair brown, learn to speak English, wear T-shirts with English words that often don’t make any sense and spend a fortune on American made cars. Let’s start selling them stuff, the furniture guy understood the opportunity and is exporting his furniture to China where they’ll pay more for it than he can get here in America. The same thing will work for other goods; this guy isn’t so smart he just listens to his potential Customers and gives them what they want!!!
If only I had a dollar for every time I’ve heard that one. There are so many things that can go wrong in a transaction with a factory that’s 7,000 miles away and speaks a different language. For the past 20 years or so Asian factories have been beat up by foreigners who are intent on squeezing every penny of profit out of the deal and on top of all that thinks payment in 90 days is perfectly ok. So going wrong they do, over and over again. I won’t say the Chinese are without fault in all this cause they for certain are just as responsible as the buyer who is throwing all caution to the wind.
My point is without going on and on is the amount of money lost if this was your container full of cargo would pay for the services of an agent representing you in China for many years. An experienced agency would use only good carriers and would also make sure your cargo was insured. Of course you could just leave that to your factory to give you that delivered to your door price. They’ll find the cheapest carrier, no insurance and the shipper normally would pay you a few pennies on the dollar for your loss.
Don’t do it, get your self an agency who you’ve checked out and who is a registered company in a Western Country and speaks you language. If something were to go wrong at least you’d be able to reach them with litigation. Successful litigation with a Chinese shipper or factory would fall under the 80/20 rule. I’m sorry to say that the 80 % are the ones that fail for Westerns that file them.
You can always go it on your own later after a few years of experience so consider it an insurance policy that well worth every penny you invest in it.