One of our readers sends us mail asking to help him in his new deal. He is buying goods from china for at min 10 years, all this period he worked by LC (letter of credit) but today he faced a new problem related to the payment system required by his supplier.
Chinese supplier changed his payment method to TT. Payment will be as follow %30 TT in advance, %70 TT after sending the BL (bill of loading) copy by fax.
Our reader asked us if this will be safe for him and what he can do if the supplier will let him with no goods delivery.
At start buyer must understand that TT is found delivery with no condition, sow after execution your found will be in the possession of your supplier with no condition and he can use your money at any time to any deal.
So after 30% payment to supplier, if goods not delivered buyer cannot do anything to get his found buck as theirs no condition and obligation to force the seller to refund. There’s no guarantee that suppler will send the products.
We advice in this case to travel to your supplier and tray to accomplish payment and goods shipment in the same time, this will be the best effective method to secure your deal. Near this you can insist from your side (if you have no ability to travel) to pay the rest of sum not against BL (bill of loading) but only on the arrival of cargo at the port after inspection before the customs clearance.
All what we list above can be somehow secure if you are dealing with supplier that you worked with him with no problem on other similar deals .if you are dealing with new supplier we advice to use a third party verification and deal assistance.
In our days theirs a lots of company that works in china as intermediary between seller and buyer (don’t confuse with trading company),this company are not selling to you goods but his service to seek for supplier, find goods with the needed quality and target price, travel to your supplier and do verification in your favor. By the use of this company service, you can secure your founds and get supplier that can conform to your needs of work.
What you can request when you amend company to work for you in china or somewhere else.
As it s quite risky to enter in business relation with supplier that you didn’t know, amended company must help you visit and assess your supplier, then send you full factory audit report (seller details).
For factory audit, you mainly check on their following aspects.
1) Company Profile
2) Audit Checklist
2.1 Business License
2.2 Production Capacity
2.3 Foreign Trade Capacity
2.4 Product Research & Development Capacity
2.5 Quality Management System and Product Certification
2.6 Suppliers/Sub-contractors Control
2.7 Production Progress Control
2.8 Random Product Inspection and Continuous Improvement
2.9 The Company Development Plan