Home – New Forums Starting your journey Insurance when ordering from China?

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  • #994059
    Lee333
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    Hi. I started to create a product last year, but took three months off after breaking my femur in late November and having subsequent surgery. Am back in there full blast and nearly ready to produce the goods.

    I did get an excellent quote last year from an Australian company which uses printers in China, but despite repeated requests, they haven’t sent me a paper sample which is important to my product.

    I am now getting a quote directly from a printing company in Shanghai. The company displays awards on its website but I have been unable to find any reviews, either positive or negative. It does appear to be a well-established company and I have found products online that they’ve printed.

    I am wondering if there is some way I can insure myself in case of being ripped off. They require 50 per cent upfront and the remainder before shipping.

    #1194880
    Johny
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    “I am wondering if there is some way I can insure myself in case of being ripped off. They require 50 per cent upfront and the remainder before shipping.”

    If you mean actual insurance I would think not.

    The best insurance is to get sampling done prior to mass production and again prior to shipping the goods and before making the final payment. There is also an option to have an inspection completed by a third party before making the final payment.

    Getting reviews isn’t as commonplace as many would like to suggest. In fact a lack of comment online can actually be a good thing as most people only comment when they have something bad to say.

    Perhaps I’d also be getting the deposit down to 30%, but that may depend on the size of the order.

    The problem many people have is based on the perceptions they have, as you have shown with the thought of being ripped off. There are thousands of successful transactions being completed every day. If you have done some assessment of the supplier and done some sampling you have reduced your risk considerably. But there is always going to be some risk.

    #1194881
    Lee333
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    Johny, post: 229265, member: 34822 wrote:
    “I am wondering if there is some way I can insure myself in case of being ripped off. They require 50 per cent upfront and the remainder before shipping.”

    If you mean actual insurance I would think not.

    The best insurance is to get sampling done prior to mass production and again prior to shipping the goods and before making the final payment. There is also an option to have an inspection completed by a third party before making the final payment.

    Getting reviews isn’t as commonplace as many would like to suggest. In fact a lack of comment online can actually be a good thing as most people only comment when they have something bad to say.

    Perhaps I’d also be getting the deposit down to 30%, but that may depend on the size of the order.

    The problem many people have is based on the perceptions they have, as you have shown with the thought of being ripped off. There are thousands of successful transactions being completed every day. If you have done some assessment of the supplier and done some sampling you have reduced your risk considerably. But there is always going to be some risk.

    Thanks. I’m planning to do an initial run of 2500, so it won’t be too bad. I have also lived and worked in Asia in the past, so I also know that rip-offs are not as common as we’re sometimes led to believe. There is still that niggling doubt, probably because I’m almost completely broke at the moment. I can afford to fund this print run, but if it goes wrong I will sorely miss that money.

    #1194882
    Johny
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    If I am to be honest I would say that most of the people that complain about being ripped off are people who didn’t take the time to assess their supplier properly.

    I would suggest a far larger problem is in making sure the quality of products being made is consistent and in line with what is expected. Getting inferior product may mean being ripped off to some, but for me it is a different thing.

    Often quality issues are the result of bad communication, poor planning, expecting too much from the price being paid etc. So it is something that needs to be constantly kept in mind.

    Hope it goes well.

    #1194883
    Lee333
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    Johny, post: 229271, member: 34822 wrote:
    I would suggest a far larger problem is in making sure the quality of products being made is consistent and in line with what is expected. Getting inferior product may mean being ripped off to some, but for me it is a different thing.

    Exactly why I have been looking beyond the Aussie company which won’t provide me with a paper sample. Sheesh. A single sheet of paper would make the difference between me going with these guys or not and I’d even pay postage, but they’re not playing…

    #1194884
    enix
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    Welcome to the Chinese market game, Lee!

    Personally, I can’t leave my FT work to gallavant around China so I rely on making connections through Alibaba and establishing relationships with sales reps online, even going so far as to add trusted reps to Facebook.

    Dealing with Chinese companies and sales reps (in my market) can be quite difficult. Some insist on making a purchase through one of their clients when seeking a sample, others are happy to supply.

    The one thing I have learned is that pictures of factories and certificates don’t mean anything – I have spoken to heaps of ‘reputable’ alibaba-based suppliers and majority of them haven’t even made it past the email screening process. I would not be relying on easily doctored certificates or photos.

    If you can make the trip to China, I would recommend that as being a first step. A lot of people I know do make the trip out to touch base with their sales reps in person. I’m sure there are trade shows you can attend, and failing that you could catch cabs to the factories to inspect them for yourself.

    If travelling oversea’s isn’t something that you can do, I would recommend pushing the issue that you need a sample. Tell them that you want a small test batch printed off and sent – all expenses to you – with the promise of future business if you’re happy with the quality. Don’t get needy and stand your ground – if they refuse to do a sample, tell them that the offer is still on the table and if they change their mind, they can get in contact with you.
    Then start shopping around some more.

    That said, have you sampled the Australian market? There are heaps of printing shops around Sydney (if you’re from around our *cough* lovely city) that would offer pretty comparable prices to their Chinese equivalents.

    Edit: To address your question in particular; your insurance is called tax. AFAIK that’s the best that can be offered.
    Include the cost of your initial batch in your tax statement as an expense to the business. I’ve done that in the past as a sole trader and knocked my tax down significantly.

    When ordering from China, it’s russian roulette. The best you can do is peek at the chamber before pulling the trigger.

    #1194885
    Johny
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    “When ordering from China, it’s russian roulette. The best you can do is peek at the chamber before pulling the trigger.”

    Sorry, but this is nonsense.

    Anything you do in business, regardless of the type, involves some risk. The idea is to reduce the risk to a level that is acceptable or walk away. It’s a simple concept.

    Reducing that risk when buying stuff from China involves going through a process of checks and assessments to become comfortable.

    Anyone can log onto Alibaba and buy something. That takes absolutely no effort or real investment in assessing suppliers and is quite often based on seeing the cheapest crap one can find. And it is that lack of effort and investment that is the common cause of people having problems.

    If you don’t know how to reduce the risk then either don’t do it or find someone that can. Throw away lines like that don’t help.

    #1194886
    enix
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    Johny, post: 229316, member: 34822 wrote:
    “When ordering from China, it’s russian roulette. The best you can do is peek at the chamber before pulling the trigger.”

    Sorry, but this is nonsense.

    Anything you do in business, regardless of the type, involves some risk. The idea is to reduce the risk to a level that is acceptable or walk away. It’s a simple concept.

    Reducing that risk when buying stuff from China involves going through a process of checks and assessments to become comfortable.

    Anyone can log onto Alibaba and buy something. That takes absolutely no effort or real investment in assessing suppliers and is quite often based on seeing the cheapest crap one can find. And it is that lack of effort and investment that is the common cause of people having problems.

    If you don’t know how to reduce the risk then either don’t do it or find someone that can. Throw away lines like that don’t help.

    You’re actually right. I didn’t apply that to the correct context. If you’re buying through Alibaba without doing any research, there’s a good chance you’re going to have a bad time.

    However I’ve personally done a fair bit of business by purchasing wholesale from Chinese factories and selling retail in Australia. It’s mostly been positive, but I’ve still been duped by a company I have had an extremely good business relationship with.

    I ordered something I’ve order 100+ of before, got a batch of 50, and they were all defective. Losing me a good $4,000.

    And if you ignore that last sentence I wrote, and look at the rest of my post, you can see that I’m not talking against Chinese business and I’ve recommended that Lee does all the checks.

    #1194887
    Lee333
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    The company has given me an excellent quote. Only $1000 more than the Aus company gave for only 1000 copies (quote is for 2500). They are also sending a paper sample. They seem to be worth going with. Will see when I get the paper…

    #1194888
    alliedib
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    Lee333, post: 229264, member: 72706 wrote:
    I am wondering if there is some way I can insure myself in case of being ripped off. They require 50 per cent upfront and the remainder before shipping.

    Hi Lee,

    From my experience in the insurance industry you can’t cover for it (if there is a policy available it is very well hidden from the mainstream insurance market).

    Have you considered escrow as an alternative? That is probably the safest option…

    Regards,

    Mark

    #1194889
    Johny
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    Mark, in theory something like escrow is a good idea.

    In practice however, despite what you read the number of REAL factories that use payment options like paypal and escrow are limited.

    There are some very good reasons for that, one being that a deposit is requested to get the order started as opposed to escrow where the money is not available until after the order is completed and even received by the buyer.

    It’s easy to then say that you won’t deal with someone who won’t take escrow, but the result of that is limiting your potential supplier base, as they are the ones who will set the terms. Escrow favours the buyer not the supplier so there is no need to budge for what is essentially a very small order.

    Due diligence is key. Do that well and things like payment terms become less important.

    #1194890
    Lee333
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    enix, post: 229292, member: 76650 wrote:
    To address your question in particular; your insurance is called tax. AFAIK that’s the best that can be offered.
    Include the cost of your initial batch in your tax statement as an expense to the business. I’ve done that in the past as a sole trader and knocked my tax down significantly.

    I was under the impression that start-up costs are usually not deductible as they are made before any income is produced. However, that’s something I’ll explore in more detail further down the line.

    If I am happy with the paper sample the Shanghai company is sending, I’m probably going to plough ahead. At 50 per cent up front and a printed product for approval before finalising, I’ll be risking a bit under $3000, so it won’t kill me… In my current situation, 3K is quite a fortune, but I’ll still have the other 3 if the printed sample is not up to par. I doubt escrow is an option. After all, they take a risk, too.

    Having said that, I will explore the Sydney market further. I have seen too many quotes well above the Shanghai one, but you never know until you look more. The Shanghai quote is high because of the US dollar conversion, so it could be there is something local that would suit better.

    Of course, another option I’m exploring for the first turnout is print on demand… pricier but not as heavy on upfront costs…

    #1194891
    alliedib
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    Lee333, post: 229320, member: 72706 wrote:
    The company has given me an excellent quote. Only $1000 more than the Aus company gave for only 1000 copies (quote is for 2500). They are also sending a paper sample. They seem to be worth going with. Will see when I get the paper…

    Did you see what the Australian company came back with for the 2500 option? Reason I ask is that rarely the price for 2500qty is 2.5x 1000 qty…

    Plus if you buy from an Australian supplier, any insurance you take out for the product would only relate to being a wholesaler / retailer, not manufacturer (which would be the case if you imported from China). I am not sure of the actual product but it may be a concern worth looking into.

    Regards,

    Mark

    #1194892
    Lee333
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    I have contacted the Australian supplier to ask for a new quote for 2500. I still want a paper sample from them…

    #1194893
    Lee333
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    Wow. Just got the quote from the Aussie printer for 2500 copies. It’s 2.3 times the amount for 1000. Will keep looking…

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