I’m sure a lot of you guys who come across my blog are searching online for intuitive posts on how to make thousands of pounds or (Chinese RMB) in one day? That’s what we are all using Google for right?
It’s important to remember that while you’re looking for these answers you also look out for how to avoid losing the same amount of money. I recall before I came here I would sit in my office in the UK Googling my little socks off with searches like “How to make money importing from china”, “How to get rich in china” I don’t think I ever searched “How to avoid getting scammed losing my money in China”. Lets face it, if China can make you it can also break you and that’s just as likely, if not more likely to happen, especially when you combine China with the Internet and Exporting.
Along with sourcing and helping people manufacture their goods here I have also been helping customers outside China liaise with suppliers and safely complete their transactions. This is an essential part of doing business in any part of the world, closing the deal is where the issues often arise. I was contacted a couple of months ago by a customer who wanted me to check out and make a payment on an order he was about to complete. This customer has been dealing with a supplier in China for a few months buying and selling external hard drives. He went on to tell me that he has been buying the hard drives in small batches of 100 at a time and now wants to increase his margin by ordering them in bulk. This is common practice as many buyers want to test the water on products both from a sales and trust perspective. This buyer, lets call him John, was happy for me to share this story with you.
John and I have exchanged a lot of emails both about business and his general interest on China as a whole. He has become one of the many great friends I have made via this blog and that’s one of the great parts of this business, meeting interesting characters from all over the world. I have helped him source a few goods but the hard drives are something he had been buying previously. As John now wanted to increase his order he wanted me to visit and check out his supplier – a factory based about an hour from where I live in China. I was happy to do so and fitted it in with another factory visit I had in that area. I made an appointment to visit the girl he had been dealing with and headed down to her office.
Through various broken communications I ended up meeting her away from her factory and she brought me a sample to check the quality of her goods. The sample was spot on and she seemed like a lovely girl, happy to help. She was quite young, about 22 but that’s pretty normal here as a lot of the younger generation spearhead the sales teams here as they have a richer knowledge of the online sales platforms used for selling. I explained to her that we required the 1000 units to the same specification as the sample which is the same model John has buying for the last few months and we required it within a week. This was to be a repeat order John would need every 6 weeks and I explained that i would need to visit the factory and satisfy myself with its operation before I could make the first order. She was a little resistant to this but i said it had to happen and as I was in the area today it would be better to do it now. She made some phone calls and we then headed to a factory.
The factory visit here is always a grey area as its difficult to know who owns the factory. Many times I have been taken to a factory by a salesperson who claims to own it but I find out later this is not the case. I suppose it’s not too important who owns the factory after all it’s not a showing off contest we are in, we are just interested in the product quality being up to scratch and the price providing the margin we require. Factories are usually solely focused on producing and its often more beneficial to buy from a third-party anyway. This particular factory looked good and although the particular model was nowhere to be seen this again is not unusual as most orders are made to order anyway. I explained that i would collect the stock in person the following week and would pay when I collected the goods. I always, always do this and its my best advantage here. I’m in China so why not absolutely minimise any risks by physically checking the stock myself? She was uncomfortable with this as she explained that a deposit would be required before production. This again is normal and I can see her point, last thing anyone wants is to produce 1000 units for an order that never gets paid. I negotiated the deposit amount and the deal was done.
About 12 days later after some typical “delays” the goods were ready for collection and I headed down to make the pickup and inspect the goods. I was given an address for the office which again was away from the factory. I had made my own decision that this girl was not a factory owner or employee simply a trading agent but she had good pricing (to be honest the pricing she offered was really cheap), perhaps better than I could get direct from the factory for just 1000 units so I was happy to work with her. I arrive and the goods are there boxed with some samples ready on the table for me to check. Again the samples were good and I was impressed with the quality. I then do my usual checks on the remaining stock, I begin opening boxes and looking at the rest of the stock, again all looks good, all stock is there and random checks booting up the hard drives is good, all showing correct memory and no issues. The boxes and hard drive case carry Johns own branding logo and all looks really pro. I had opened up maybe half of the stock and this is when things got a little strange.
She was very uncomfortable with me making these checks as she apparently has another meeting, the goods had been securely packed and she had not got the time. Not really my problem as my concern is the goods, not her schedule. I decide to open up a hard drive and that’s when it got interesting.
The girls face was a look of disappointment, not shock, no excuses. Just a look that let me know I was right to make the extra checks. The hard drives were using a chip to make my laptop think that they contained 500 GB memory when in reality they were using a 128 MB SD card and would only ever hold a fraction of what they were intended for. This is common practice for memory here in China and something I have experienced before. To make the weight seem legit heavy fixing bolts had been glued into the casing. I opened up several more, all the same.
For those of you who don’t know each of these should sell for about 50 GBP and this is whats supposed to be inside the casing of an external hard drive, an actual hard drive like this:
Realistically this girl has lost a good solid customer and all to make a short-term gain on one order instead of a steady income for a good time to come. This seems to be the mentality of a lot of sellers here and it leads to this kind of thing happening often.
This is not the first time this has happened to me, nor will it be the last. The unusual thing was the way this girl 100% did not believe I would find out the goods were fraudulent. She was so bare faced it surprised me. It made me think that you never can take your eye of the ball here, even when you think you have all your bases covered you must double-check everything. At 1000 units the order was around £20,000 GBP and the retail value of these goods would be something like £40,000 GBP. Had these goods arrived with John he could not have sold them and would have been heavily out of product losing all the profit he has made from the last years eBay selling.
Luckily i was able to nip this in the bud and protect John from losing that investment. I have since found him an alternative supplier and he can move forwards with his business.
It is absolute key to get every product you source form China as cheaply as possible but that does not mean you should put yourself at risk just to save a few pounds. Remember on each transaction you are always at risk especially with a new seller or a large quantity. What do you know about the person your buying from apart from what they have told you on msn? China is not our back garden so we cannot treat it as such.
Couple of lessons to learn – none of which are ground breaking…… If the price seems to good to be true it probably is. Always check your stock, at every interval to cover all your bases. Only buy from people that you wholeheartedly trust. Remember that your sending these people equivalents of years and years worth of salary and the could just vanish.
People lose thousands upon thousands of pounds here every day, don’t let it be you.