Everything great about Alibaba is true, and then some. But there are also nuisances and pitfalls to avoid.
Most Chinese companies hire new college graduates who can speak passable English for sales. Passable means that they can speak basic practical English. Far too often, they say yes, even if they do not understand what a client is saying.
Should Chinese companies hire salespeople who can speak and write the English language at a high level? Of course, they should. But that is not the case, so clients will have to make adjustments.
They can understand better by reading as opposed to listening. So, keep communications, the important ones especially, in writing. Email and Skype communication are also a great way to save a history which could be referred to later.
Also, notice too that they all refer to themselves as a manufactory, not as a manufacturer. Some clients may find it rude when sales sends a proposal on email and write “pay attention” as if they are issuing a command. As mentioned, they know basic English but they do not mean to be rude.
Alibaba has two membership levels, free and gold. To be a gold supplier, a company has to pay $2,999. Scammers and fly-by-night operators are not likely to spend money to become a gold supplier. But more than that, Alibaba also has higher standards in checking for the legitimacy of a business before being accepted as a gold supplier.
BUT, that is not to say that all gold suppliers are reliable suppliers. Even so, serious clients should only look for suppliers who are gold suppliers.
Another thing to think about is this. There are so many manufacturers in China, big and small. But unknown to many, there are also the unlisted manufacturers. A lot of these small manufacturers do not have their own export licenses. These are taken advantage of by trading companies.
Just like at the Canton Fair, the world’s largest international trade show, a lot of trading companies are also gold suppliers. While many are honest in presenting themselves as trading companies, there are others who represent themselves as manufacturers, using the small-time manufacturers without their own export license.
This is one of the reasons why it Alibaba should be used to find suppliers and initial filtering, but visiting in person is the right thing to do before doing business.
A company can be a gold supplier and still be a world-class liar. It is hard to find a company that does not say that they want to build long-term relationships. They all will say how they are a “professional manufactory” and how they want to have a business relationship for a long time.
Keep in mind, many of the international export sales personnel are not compensated any better than other jobs. A lot of them actually earn below office standards, but they do get to earn commissions. In other words, some will say anything to close a sale so they could earn money.
But that is not the only issue. China is a young country. In fact, it opened its door only around four decades ago. It is almost impossible to find business owners age 50 and above who have an education. What they lack in formal education, they more than make up for by being street savvy.
The Chinese are known to be excellent in doing business. One of the most common tactics they use is bait and switch. They may offer great pricing for products with great quality during the first few transactions. But in time, they start to cut down by material reduction and substitution. This is when they use cheaper components to produce products to increase their profits.
To avoid this, clients may hire a third-party inspector, or they will have their own representatives go to the manufacturer and do quality assurance checks.
For clients worldwide, it is the distance to China that becomes a hindrance to making a personal visit to manufacturers there. Here, Alibaba becomes a great option to find suppliers. Although this is the way B2C e-commerce works, B2B is on a different level.
Imagine spending anywhere from $3,000 to several tens of thousands of dollars. At some point, it is the buyers who will have to decide if they need to visit prospects (manufacturers) before closing a deal. The larger the stake, then the more there is a need.
Relying on a third-party inspector, even if western owned, may be a good start, but it is never a final solution. It is a good start for anyone new to importing, but long-term, that remains to be seen.
There are far more things to consider, and this is only known to those with experience sourcing in China. This article is a meant to be a basic guide for those who are starting to or thinking of sourcing in China using Alibaba.