Doing business with the Chinese online may seem like a good opportunity. In most cases, online business is savvy, cost-effective, and easy: you save a lot of money, which would otherwise be spent on plane tickets, negotiations, or onsite checks, so, in case of ordering simple, mass-produced goods, why bother? Obviously, there are some risks, but some may say that if our potential partner has the status of a “Gold Supplier”, then what could possibly go wrong? Well, many things: sourcing from China is not as easy as buying a book on Amazon. This is the guide on how to source from B2B platforms in China: answers to the most common questions.
B2B platforms in China – FAQ
What is a B2B platform? What are the biggest B2B platforms for China sourcing?
B2B means “business to business”. It is a type of e-commerce, an exchange of products, services, or information. A B2B transaction is conducted between two companies, such as wholesalers and online retailers.
A B2B platform is for companies to make transactions. The company that runs the webpage makes money from membership fees and extra fees and – of course – may charge every successful transaction according to its own rules.
There are several B2B platforms in China; the most famous is Alibaba. There are also:
Every one of them operates on a similar basis: a seller can create his company profile, display products, and wait for the buyers to come. Webpages may offer additional services, such as a message center and even some sort of verifying supplier services.
What kind of companies are on the Chinese B2B platforms?
Someone said once that “70% of those companies on Chinese online platforms are scammers.” It is an exaggeration, but you must be aware that quite a lot of those companies engage in fraud. Setting up a supplier account on a B2B platform is, after all, very easy.
Firstly, you should note that many of those companies are traders, not manufacturers. They buy the goods in a factory, sell them to foreign customers, and naturally charge a margin, so the goods are slightly more expensive. If the order is not a big one, or if you want to source various goods from one company, using a B2B platform is not a bad idea.
Secondly, many companies pose as real, legitimate companies. It is not a big deal to copy all the products’ pictures and publish them on their own page (therefore, you should check whether the pictures are watermarked). As soon as the advance payment is wired to the company, the scammer disappears with the received money. We already described some of the scams in our Import from China Guide; check it for further information.
What is a “Gold Supplier”? Does it mean that the company is trustworthy?
“Gold Supplier” is a paid, premium membership for suppliers on Alibaba. It also exists on other B2B platforms, for example on Makepolo (as a “Diamond Member”). The key information is that the huge membership fee is paid by the seller and, as we mentioned above, is one of the ways of earning money through the B2B platform. So the “Gold Supplier” has some additional functions enabled on his profile page, and his company products came up first in the B2B search engine, but it does not mean that he is trustworthy. “Gold Supplier” means only one thing – that the company was able to afford the premium membership fee.
How many companies are on B2B platforms? Will I be able to find a suitable partner?
Alibaba boasts that it has “millions of buyers and suppliers.” Even though, you must remember that many Chinese companies are not using the internet as their main tool of communication – traditionally, in China, business is done by personal contacts or/and phone. Chinese companies’ web pages are often not updated and hard to navigate. Moreover, the scammers may take advantage of it and prepare a perfect webpage, which will lure foreign customers into cooperation.
On the other hand, no presence or limited presence on the internet is also a red flag. The company, which does not have a webpage, may not have enough means to fulfill your requirements.
You should keep in mind that the best deals are done “offline” – on the basis of personal contact with our Chinese counterpart.
If I get into trouble, how can my problem be solved?
Alibaba offers a service called “Dispute Centre”, where complaints on suppliers can be filled. But if you encounter a scammer, you have a poor chance of tracing him, let alone getting money back. You may, of course, sue the Chinese company, but if there is no contract signed, you will just lose more. So, the only way to avoid problems is to check the credibility of the Chinese company beforehand.
Should I use B2B portals despite the risk?
There are many examples of importers that were scammed by their Chinese suppliers. Many may ask: should we use B2B portals anyway? Yes, but with caution. You should always check if the company is reliable, and conduct onsite quality control before placing an order.
Moreover, if you source from B2B platforms, stay away from anything branded. Genuine, high-end electronic equipment is not cheaper in China than in other countries, so if you encounter reasonably priced “Samsung” or “Apple” products, they will be fake in 99% of cases and you will lose a lot of money.
What else should I keep in mind when placing orders on B2B platforms?
Apart from the things mentioned above, you should always be aware of the fact that the more complicated and technologically advanced products, the bigger the risk. Quality check is a must, and the sample order is not enough – if you, for example, order cellphone batteries of 2300mAh capacity, you will most likely get the sample that fulfills the requirements, but the final batch of goods will be 1000mAh batteries…
To sum up, if you are willing to make a good deal and place an order, you should verify the supplier. Skimping on a Due Diligence Report or onsite Quality Control will certainly cause dozens of unsolvable problems.