Product Sourcing Nightmares – Bad Experiences We’ve Had With Overseas Vendors

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After publishing my article on How To Buy Wholesale Direct From Chinese Factories, a number of readers asked why my wife and I chose to pay all of this money to go to the Canton fair in China when we could have just used Alibaba.com for free to find our vendors.

Certainly, the trip was not cheap. Here’s a breakdown of our expenses.

Photo By Zach Klein

  • Multi Entry Visa Cost To China – $440 (We paid $160 extra for special service so we didn’t have to drive all the way to the Embassy in San Francisco)
  • Airfare To Hong Kong – $1740
  • Bank Transaction fees – $45 (atm and credit card foreign transaction fee)
  • Train to/from Guangzhou – $120
  • HK Taxi/Metro – $140
  • Meals and Incidentals – $550
  • Hotel in Guangzhou – $260 (can be as high as $450/day) for a 5 star hotel
  • Hotels in Hong Kong (approx $300/day) for a 5 star hotel

Now you could easily find places to stay in Hong Kong and China for far less money but my wife and I like to treat ourselves when we travel.

For this particular trip, we did not have to pay for any hotel fees in Hong Kong because we crashed with a friend, but in general hotels are especially expensive during the trade show months.

For my wife and I, the trip was all about saving time and enjoying a tax deductible vacation in Asia. In general, you can always forgo trade shows altogether and contact potential vendors individually through services like Alibaba.com and GlobalSources.net but in most cases you can’t see their entire portfolio online.

If you wish to obtain samples, often times there are long lead times (on the order of months) just to see an actual product. As you can imagine, this back and forth communication can be frustrating and take a good amount of time and effort.

The other thing that my wife and I have discovered is that Asian vendors are less likely to pull any shenanigans once you have met with them face to face and have developed a personal relationship.

What do I mean by shenanigans exactly? Let’s just say that some vendors will test you to see what they can get away with. Since they are all the way across the world in Asia, there is very little that you can do if you get delivered junk from their factories.

Below are some bad experiences we had with our Asian vendors when we first started out. Since we primarily purchase linens, all of the stories below involve textile factories.

Irregularly Shaped Merchandise

I still remember the first shipment of handkerchiefs that my wife and I received from Asia. It was a very small order (on the order of 20 dozen or so hankies), and when we busted open the package, we were extremely happy with the quality of the product.

The handkerchiefs were carefully made, soft, and they pretty much arrived pressed and ready to sell out of the box.

We had read horror stories about importing goods from Asia, and felt extremely lucky to have found a quality vendor on our first try. Everything was fantastic until we placed our second order.

The second batch was a disaster. The quality and worksmanship of the first order was nowhere to be found. While the hankies were shipped to us in packs of a dozen, only the top 5 or 6 hankies of each dozen were pristine and the remaining product was crap.

While these handkerchiefs were supposed to be square, 6 out of every 12 hankies were either rectangular or some weird trapezoidal shape.

When we complained over email, the vendor told us that it was because we had not ironed the fabric completely flat and that fabric stretching could account for a slightly rectangular shape.

What complete and utter BS! The hankies we received weren’t even close to being square. A hanky that was supposed to be 13 by 13 sometimes ended up being 15 by 11.

There’s no way in hell that you could stretch a cotton piece of fabric 2-3 inches by ironing it improperly. What pissed us off even more was that it seemed as though these vendors tried to hide bad and irregular product by mixing it in with the good on purpose hoping that we wouldn’t notice.

What’s worse was that since the quality of our first order was so good, we didn’t even bother going through the product before shipping it out to customers. As a result, we received a lot of angry customers and had to give out a bunch of refunds.

Stains In the Fabric

It was only after repeated complaints about the irregular shaped fabric did the quality slowly start improving.

While the workmanship was not as good as the first batch, we started ordering larger quantities and were told to expect some degree of irregularity since the hankies were all hand made. Fine! Despite the defects, we were still making a decent profit.

No sooner did we think that everything was all good again, we started noticing small stains in the fabric of select handkerchief styles.

Nothing large per se, but if you looked at some of the hankies very carefully, you would notice small dots and sometimes small lines in the fabric.

Naturally, these stains were unacceptable. Since we were selling to would be brides, all of our merchandise needed to be perfect or close to perfect.

When we pointed the imperfections out to our vendors over email, they mentioned that all of those dots could be easily washed away by laundering the hankies. The catch-22 here was that once the hankies were laundered, they could no longer be sold as new.

Just for the sake of argument, we threw some of the stained hankies into the wash, but none of the stains ever did come out. Thus, we were stuck with a batch of stained and unsellable goods.

Crispy Fabric

After being shipped crap a few more times, we ended up dropping that first vendor and found another one through a global sourcing website.

This time, we made sure to emphasize that we did not want any stains or irregularly shaped fabric. And the vendor reassured us that we would not have these problems with his factories.

He turned out to be correct. The hankies arrived perfectly square and stain free, but the fabric felt like crap. Instead of a soft and delicate handkerchief, the hankies were thin, crispy and had the consistency of paper. ARGH!!!

Even though the vendor told us that everything was 100% cotton, there’s no way in hell that cotton could feel so coarse. I suspect that to save money, they used a mixture of polyester along with the cotton or something along those lines.

In short, the hankies we received were mostly unsellable and we had to scrap most of the batch.

The Resolution

After having a few bad experiences with our initial vendors, my wife and I ultimately decided to hop on a plane to visit and find new potential vendors in person in Hong Kong and in China. We even decided to visit our first vendor just to checkout his facilities.

After visiting our vendors in person, the quality of our goods drastically improved. In fact, after speaking with our first crappy vendor and showing him samples of the irregular hankies that he sent us, he promised to go through each shipment by hand before shipping it out to our office.

I can’t really explain the result, but after physically meeting with our vendors, both the quality and speed of fulfillment of our orders drastically improved. After meeting face to face, our vendors also became more receptive to our complaints.

This is why I always emphasize in my articles the importance of personally meeting with the people you do business with, especially in Asia. It’s all about the relationships.

So is it worth several thousand dollars to travel to China and meet with hundreds of vendors face to face all at once? Definitely. There is no doubt in my mind.

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15 thoughts on “Product Sourcing Nightmares – Bad Experiences We’ve Had With Overseas Vendors”

  1. lynn says:

    Were you ever given any refunds, or did you absorb the losses? Is there any real recourse you could have taken (other than dropping the vendor)?

    1. @Lynn
      There was probably no official recourse that we could have realistically taken without expending a lot of time and effort. Again, it’s all about business relationships. Since we were new and an unknown quantity in the eyes of the vendor, we didn’t have much clout. After all, our orders were an extremely small fraction of their business. After we went and met with them directly and showed them that we were serious, things got a lot better (with the first vendor). In any case, to answer your question, we absorbed most of the losses though we did manage to get some store credit by returning the defective merchandise when we flew out to China.

  2. Why would you order again from the first vendor after they sent you crap? It seems to me that all of the vendors that you mentioned are not really concerned about quality or service. They are just giving you the minimum required to keep you as a customer.

    I would find 4 new and better suppliers. I would make small orders from all of them, and gradually increase the size. Then, whenever you have a problem with one vendor, you have backups ready to go.

    Also, I would find a vendor that charges more. The problem with all those vendors is that they are competing on price. If they really care about quality they will go out of business because another company will offer a better price. And they will make a profit because of the business practices that you mentions.

    Isn’t there a Yelp or something for Chinese vendors? If hundreds of thousands of companies around the world are dealing with the same problem that you are, there must be a good solution somewhere.

    1. @George
      Unfortunately, the decision making is not all that straightforward. First off, finding new vendors online or through sourcing directories is not that straightforward. You can’t really tell what they sell or what they are capable of selling/making online so there’s a lot of back and forth communication. If you want to have samples made, it can take months. If the samples aren’t what you expect, it can take months to get it right. All vendors have different minimum order requirements and you have to negotiate. When we were just starting out, we didn’t want or have the capacity to deal with too many vendors at once. We were just trying to get our feet wet. We also didn’t want to invest too much money on inventory early on especially across different unknown vendors. We were making a decent profit despite the defects and wanted to slowly ease new vendors in. Remember it always takes several months to get product back however if you’ve already done business with a vendor in the past, they can usually get you product made faster because they know what you want.

      Unfortunately, there is no real Yelp for vendors. China is not like the US. The culture is different and they are a fast developing country. The key is in developing relationships with your vendors just like with any business and relationships are best developed in person.

  3. I absolute know what you mean by Asian vendors trying to get away with what they can or pushing your limits–lived in Asia 😉

    Very entertaining read, btw.

  4. Hey Steve,

    Thanks for sharing your experience. It’s both entertaining and informative at the same time!

    When I was reading your post, I was wondering whether you’ve to give any “Ang Bao” money under the table to the representatives of the vendor you’re dealing with. I heard it’s quite rampant and is even expected in some Asian countries like China.

    Cheers,
    wp

    1. @WP
      Interesting. I would never have thought about giving red envelopes to our vendors. I’ve always thought that red envelopes were only appropriate for those who work for you or for children. I’ll have to ask some of my friends who import goods as well to see whether they slip them a little something extra under the table. Haven’t heard about this thus far though.

  5. Wow, perhaps you’re lucky to have met people with integrity. :) Would love to hear more updates on this after you’ve compared notes with your friends. Thanks!

  6. FT says:

    LOL I can so relate to this with importing fabrics. The stains on mine were apparently due to customs (who obviously unfolded and inspected each item with dirty fingers, then refolded and repackaged them all again, while failing to notice the declared value was about 80x lower than the real value of the product).

    Anyway, interesting read and would love to hear more about this side of your business.

  7. jon says:

    I live in China and I wonder if your improved “in person” results are because you are ethnically Chinese. I have other American & Canadian friends here who are ethnically Chinese and they have vastly better experiences and business relationships than I do (Caucasian). We share stories with each other and it’s like we are living in different countries.

    Also, on the subject of “Hong Bao” (means “red bag” in Chinese), many sourcing agents talk of giving hong bao to suppliers to ensure that their order is not delayed or messed up. In the western mind-set the customer is king, and since the customer is paying, the vendor should be trying everything possible to keep their business. This is not the case in China. The factory person responsible for your order is not getting a percentage of the income, just a flat salary. So you slip him something special and he makes sure your order has fewer problems. This is one area that being ethnically Chinese helps…the vendor does not like to discuss this kind of thing with the non-Chinese. Even if you are American (or from some where else), if you are Chinese, you are Chinese (in their eyes), and so you are part of the “club”. Discussing hong boa with a Caucasian would make them lose face. So even if you don’t give hong bao, maybe your ethnicity helps you do business in China.

    For these and other reasons, I almost always use a Chinese “partner” to do negotiations and “build relationships” (guanxi). Sometimes it’s just a friend who stands in when I need him as my “business partner”. I do the same for his business when he meets foreign companies who don’t trust Chinese. My white face makes foreign customers more comfortable. My friend’s Chinese face helps local manufactures feel more comfortable. Symbiotic.

    Doing business in China is complex.

    1. Maur says:

      This crossed my mind as well.

  8. You are completely right Steve about establishing relationships in China. I’ve had experiences, but more from purely a customer standpoint. My husband and I bought from the same store for almost a year before they really gave us the inside scoop on products and gave us more than fair prices for items. Sometimes if you refer customers to those places, they’ll realize you are a valuable resource for more business, hence they’ll try to please you more.

  9. SimonG says:

    This is why it’s worth paying a QC person with experience to go through each order especially because the charge could be $150-180 for the day or cheaper and the potential savings on time/money and headaches is worth the pith cost of a quality QC person. I know this from experience.

    Great Quality tips though Steve…thanks as i’m going to the Canton Fair tomorrow in fact :-)

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