Importing from China: New Web Tools To Help You Verify Suppliers

by Julian Righetti on July 16,2013 in China Trade , Factory Review ,
Importing from China

Corruption Report

Recently, an Australian woman emailed us, asking us to assist with a problem related to a purchase she made from a Chinese e-commerce cosmetics site. Apparently, she wired 1500AUD to a Chinese company in Fujian that never sent the products to Australia. What can she do? Very little unfortunately. As global e-commerce explodes around the world, many buyers are becoming more and more nervous about corruption and fraud.

While the central government in China is working to reduce

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graft in China, many unscrupulous sellers still exist. To help international buyers and procurement managers, more and more online tools are being developed to reduce fraud and e-commerce problems. Online fraud affects both buyers and sellers too. Below are some tools and issues related to selling online, buying online, and fraud related to importing from China.

Riskified.com

Riskified is an interesting tech startup out of Israel. While not China-focused, certainly the technology and online behavioral profiling would be tremendously useful for companies that are worried about buying from online Chinese sellers.

Panjiva.com

Panjiva.com relies on government customs records to validate (Chinese) suppliers claims about exports to USA. This data point is useful for large companies that want additional information about suppliers or to authenticate suppliers’ claims.

Tradesparq.com

Tradesparq.com uses social media to help connect (Chinese) suppliers and buyers.

Goodfactories.com

Dedicated to home furnishings and decor, goodfactories.com provides “more reliable” factories with reviews.

Mfg.com

A semi-auction site for buyers to upload order specifications, allowing multiple sellers to “bid” on the orders, this venture was funded by Jeff Bezos in 2005.

Do any of these websites work?

When people learned that Alibaba.com insiders were working with fraudulent “gold” sellers to deceive buyers, more and more trade verification websites popped up. Some of these websites are pretty useful-others are more useful as a general guide.

Challenges for Online Trade Verification Websites

China Paperwork Headaches

Many companies in China use intermediary companies or proxy companies for a variety of reasons. Sometimes, tax receipts, invoices, and bank accounts are linked to other entities or even individuals. This may or may not be related to fraud. For example, the standard “fa piao” tax receipt is often issued by a factory or supplier to a buyer, however, if the importing company wants to avoid paying taxes, they can simply send money to an individual who is connected to a factory-this

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happens all the time in China. However, this supplier may, in all other respects, be a good partner.

Hong Kong Intermediaries

Many Chinese companies

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have Hong Kong intermediaries that they used to minimize their tax obligations in the mainland. These companies may legally and technically “export” good from China (Hong Kong), but may not actually “own” the facilities, production, etc. They are simply trading companies. They could also, in fact, export a variety of other companies for smaller factories that can not afford to export themselves. Moreover, many companies in China specialize exclusively in providing export licenses for smaller companies. These companies themselves produce nothing

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monopoly over the license to export from China.

Online Sellers-Here Today-Gone Tomorrow

“Google” Chinese PC tablets and about 1.3 billion results filter through. Unfortunately, with so many variations of luckyseller99 online, it’s difficult to authenticate anything about online Chinese sellers, especially if they can start a new website after duping a few thousand buyers out of 1500AUD each. This makes importing from China troublesome.

Trade verification and importing from China is challenging. Hopefully, more and more tools will become available so consumers can globally shop with no risk of deception or fraud.

Hammersourcing.com is a trade services business based in Hong Kong and Shenzhen, China. For more information, contact us at import@hammersourcing.com

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