AboutHank S Expertise Ask me about sourcing products in China, finding manufacturers in China, importing from China, developing new products in China, moving manufacturing to China, price negotiations with suppliers in China, and logistics-related issues.
Experience I lived in China from 1993 to 2003 where I learned Chinese and worked in the fields of logistics, marketing and manufacturing services. I have visited hundreds of factories in China. I am authorized by the NYS Unified Court System as an interpreter of Mandarin Chinese. I have an MBA in international business and entrepreneurship. I work in a U.S. company as product development and sourcing manager.
Education/Credentials MBA, International Business & Entrepreneurship, City University of NY
BA, East Asian Studies & Chinese, City University of NY
Studied international trade taught in Chinese at the University of International Business & Economics in Beijing
Chinese language study at Beijing University & Nanjing University
Question Hi there!
We are currently working with a great sourcer in China and have put in a few smaller orders with him that have worked out quite well ($5,000) or so. We received the order in good time and it was of good quality. We paid 30% when we placed the order and paid the remaining %70 when the order left China. We are now looking at putting in a very substantial order with our sourcing agent ($100,000+). We pay our sourcer direct, who then pays the factory. We have never met him in person and while we did get a couple of references and are very happy so far, our shareholders are very concerned if we pay this large amount on the same payment terms we did for the smaller orders. Is it customary to ask the sourcer to get bonded or engage an escrow agent? What happens if the money goes missing or the shipment is deficient? This is a lot to gamble.
Answer Although your sourcing agent's past performance is a good indication that things will probably turn out fine, anything can happen. You and your shareholders are correct to be concerned.
There is no need to gamble, and never mind what's "customary" - do what makes sense and what puts you and your shareholders at ease.
First, you need some kind of written contract or agreement with your sourcing agent that spells out your and his responsibilities. The agreement need not be complex. It should address the main issues of payment, product quality and delivery. You can draft it yourself or ask your sourcing agent to draft it.
Next, you should utilize a safe payment method that assuages the concerns of your shareholders and protects you against the risks you mentioned. Which method you use is up to you. Good luck, Hank
