Top 50 FAQ About Sourcing From China

1.Q: What kind of products do you source?

    A: We specialise in setting up the production of new products, but we also can source pre-existing products. We have sourced a lot of different products over the years and would feel comfortable sourcing or setting up production for most things. Here’s some examples of product ranges we’ve sourced:

Sourcing Top trending profitable products to sell on amazon,ebay,shopify or ecommerce website

2.Q: What quantity do I need to buy?

    A: Really this depends on the factory and the product. Again, as a general rule, about 1000 pieces is the normal Minimum Order Quantity (MOQ). However, this is not always the case and can – through our existing relationship with the factory – be negotiated.

3.Q: What about samples and prototypes?

    A: We strongly recommend that our customers get 2/3 samples from the factory before going ahead with the full order. In fact, for certain products it can be necessary to get multiple samples and you should factor this in the your budget. Sample cost is factory prescribed but we normally estimate it to be the individual unit cost multiplied by three. Prototyping is part of the sampling process.

4.Q: Hey, guys, I am having trouble with figuring out what product to buy and sell. Do not want to use the generic jungle scout what all mentors say to use. Any other ways of tackling down a product with high margin and low competition?

   A: I go through pinterest for new quirky items. Also just type into Amazon Aa Ab Ac etc through whole alphabet as the auto fill shows what searches are popular then do a check on unioncorn smasher just to see competition. Time consuming but worth it.

For your reference, here are some resources relating to your situation:

How to Sourcing the right product which can earn money from Amazon quickly

5 Steps for Helping You Find the Best Products to Sell on Amazon

10 Amazon Hot Sale Products And Where You Can Find In China

5.Q: My supplier has some extra stock from my order. They said they would like my authorization to liquidate it and get some money for scrap. Is this a good idea?

   A: If the goods are already in their finished form and have more value as a final product rather than scrap, it is a bad idea to allow your supplier to liquidate your stock as they see fit because it may very well end up being sold rather than recycled and that could have gray market implications.

Here are a few suggestions.

1. Have the terms of your contacts and purchase orders clearly state what will happen to scrap and extra stock. Have an agreement before production even starts!

2. If you do agree to having it scrapped, you need some proof it was destroyed or recycled. You may need to hire an independent 3rd party if you can’t make the trip yourself. Very important if you have intellectual property like a famous brand or innovative product to protect.

6.Q: I had understood that there was a structural problem on the Chinese side, that to export you needed a special license which is not easy/inexpensive to get, hence the need to use a trading company. Is that not the case?

   A: If the manufacturer is newly opened or small scale, they may not have made the investment in time and capital to get their own export license. Also, during the first years of a new company, they are generally classed as “small scale tax payer” and only once they have a track record of paying tax and exporting well, does the government move them to “normal tax payer” status. Once at normal tax payer status, they can get the full VAT rebate at export. Since the trading company may be mature and at normal tax payer status, it sometimes saves money in the beginning for mfg to outsource the export if the mfg is small or recently opened.

A hand full of sensitive industries are highly regulated and a trading company may be required. But those industries are few and far between.

7.Q: I am looking for an agency in China to help with a purchasing project. Can anyone recommend the right approach?

    A: Are they a legitimate company with proper business licensing?

Do they have a clear track record of performance? If they can’t give you some client references, run away. That is a very big red flag.

Are they focused on a certain set of services or do they try to everything for everybody? Yes, even the 3rd party service providers have been known to outsource to others just like some factories outsource production without telling the buyer.

Is their pricing structure and service agreement well defined and transparent?

It is a major pitfall to do business with a 3rd Party service provider without a clear contract in place that outlines the service, costs, time frame and other desired attributes of the partnership.

8.Q: In China in particular, I have found that sometimes having a target price stated can be to the buyer’s advantage as quality level is often tied to price. And if the supplier doesn’t have a target, sometimes the buyer ends up overpaying on poor quality.

   A: In other words, the supplier tries to get the highest price for the lowest quality they can negotiate. While I don’t suggest you tell your potential suppliers during the Request For Quotation process what is your target price, I do suggest that after you narrow down the top potential suppliers, you focus on using the best price from the RFQ research to work with your top supplier to achieve the best price to quality ratio.

Suggested reading: Best 7 Ways to Use Alibaba RFQ

9.Q: How to get my suppliers to respect the agreed terms and conditions of our contract/purchase order?

    A: Contracts are signed in front of a group. Loss of face for breaking one’s word is often more effective than fear of legal repercussions.

Some buyers have a general contract in place with the supplier under which various purchase orders are placed. I do it the other way around and each time I place the PO, I have the contract attached and signed off at the same time. My contract defines the relationship in terms of dealing with Intellectual Property, penalty for late orders and such.

Perhaps the most important thing I do is to make the contract bi-lingual and easy to understand. Getting my suppliers to understand and agree in person to a set of concepts is much more effective than giving them a 40 page document in US legal-speak that doesn’t even get translated by the supplier, let alone reviewed and understood.

I also suggest considering your volume when you select a supplier. I have found if you are a small buyer for a big supplier, your terms and conditions may not be as respected as you would like. I think the sweet spot is to make up about 20-35% of a factory’s output.

10.Q: Does anyone have advice on how to do a product launch and what’s the most important aspect of product launching?


A:Start with a healthy PPC campaign, because otherwise your listing is invisible in search.

B: Youtube has also dozens of videos about that particular topic. Search for “Amazon launch”, the click “Filter” on the upper right corner, and click “Upload date”, so you get the freshest posts.

11.Q: Hi waiting for sample and ordering product is taking a lot of time. I am customizing the product. If I get standard one it will be quicker. Is the wait time worth for unique product?

      A: Don’t take shortcuts because you’re impatient. You know the right thing to do is be unique and stand out as selling the same thing will most likely get low sales – especially with low reviews compared to the competition.

For your reference, here are some resources relating to your situation:

How to Sourcing the right product which can earn money from Amazon quickly

5 Steps for Helping You Find the Best Products to Sell on Amazon

12.Q:What Products can you manufacture in China?

      A:China is now the workshop of the world. The quality of most Chinese manufacturing is comparable to any developed economy, however it remains crucial to be discerning when identifying Chinese suppliers. Based upon agreed MOQ criteria we can research the market and define appropriate China suppliers for almost any product.

13.Q:What happens to the information I provide to you regarding my product?

       A:Your privacy and IPR protection is important to us. We often arrange mutually agreeable non-disclosure agreements and IPR protection.

14.Q: Why should I opt China for the sourcing of materials?

       A: China is internationally known as the Global Vendor/ Global Supplier. Since China is exporting goods in big volumes all around the world hence the economies of bulk production gives you a huge variety to select from as well as price benefit. The variety and range available in China is not visible in India, Europe or USA. So to avail the benefit of wide variety at good price you may opt China. The material available in china, meets international standards. Which helps in enhancing the beauty of any given project at a cheaper price.

15.Q: Do factory compensate for damaged goods?

       A: Generally, this is a rare occurrence as there are many redundant inspections performed by the factory, and finally by our staff. If the goods are damaged during shipment then the goods are insured so you can claim insurance. If the damage is of the nature that the part can be replaced, we will help you in getting a replacement. And in case of an incorrect supply of material we shall get it replaced.

16.Q: How does Leelinesourcing secure the best available price?

       A: Leelinesourcing has a network of hundreds of factories which we have had experience working with in the past as well as new competitive and qualified factories. Thus we get the factories to compete for your business by offering up the best price while still maintaining the quality standard.

For your reference, here are some resources relating to your situation:

How to get your best wholesale price from Suppliers

Suggested reading: Best 50 China Wholesale Markets

17.Q: Why should I pay for samples when I can get free samples from Alibaba or another B2B website?

       A: When paying for a sample through Leelinesourcing, you are paying the direct cost of the sample to the factory. Leelinesourcing never profits from a sample cost. Agents on Alibaba/B2B websites often provide free samples at first, but you will surely be paying much more than the sample’s cost when placing an order.

Suggested reading: Best 30 Sourcing Websites

Suggested reading: Best 20 China Wholesale Websites

Suggested reading: Is Alibaba safe and legit?

18.Q: How do I avoid defective goods and poor quality after I place my order?

       A: The key to avoid poor quality and defective products is prevention. Implementing the following will guarantee success every time:

(a) You understand your own quality needs down to the smallest details

(b) The factory fully understands your quality criteria and is willing, able and experienced to deliver goods as per your requirements.

(c) You have a quality control program in place that is followed through by all parties involved.

For your reference, here are some resources relating to your situation:

How to Tell your Supplier Package your Goods correctly to meet the standard of Amazon FBA requirements

19.Q: What happens if defective merchandise arrives at my warehouse?

       A: If this happens, you will find it very difficult to get your money back under the direct approach because it means the goods went through your own quality control and passed. With an agent or a full service provider, you generally have recourse and can get a credit on future orders to remedy the situation.

For your reference, here are some resources relating to your situation:

How to Tell your Supplier Package your Goods correctly to meet the standard of Amazon FBA requirements

20.Q: What is the best approach to China sourcing?

       A: The best approach to sourcing in China depends on your specific needs. There are three approaches one should consider:

– The direct approach

– The agent approach

– The full service provider

For your reference, here are some resources relating to your situation:

13 Tips You Should Keep In Mind When You Are Thinking of Outsourcing From China

TOP 70 Sourcing Agent Company In China

why have a sourcing agent in a target market

The advantages of the sourcing company

Suggested reading: Sourcing Agent 101: How to Find Best Sourcing Agent?

21.Q:What savings can I expect from sourcing in China?

       A:Savings usually depend on the product but generally savings are:

– Production costs: 20% to 50% savings

– Tooling costs: Over 50% savings

– Every intermediary step: 10% to 15% savings per step

For your reference, here are some resources relating to your situation:

How Does A Freight Forwarder Help You With Your Business

The advantages of the sourcing company

22.Q:What products are ideal for sourcing in China?

       A:Products that have:

– High Labor Content

– High quality/labor ratio

– Sufficient value to justify shipping costs

For your reference, here are some resources relating to your situation:

13 Tips You Should Keep In Mind When You Are Thinking of Outsourcing From China

How to sell chinese products make money on amazon online

How to Sourcing the right product which can earn money from Amazon quickly

Suggested reading: Best 10 Alibaba Freight Forwarders

23.Q: Can Leelinesouring help me with my buying program?

       A: Yes, Leelinesourcing has a wide range of sourcing related services. Leelinesourcing services are especially valuable for

(a) Established import companies who have existing purchasing programs and a lot of experience in China sourcing and who seek better control over their sources;

(b) Importers who use agents and who prefer to deal directly with factories.

(c) New importers who have a clear understanding of their needs. The services are designed to provide direct access to the most competitive Chinese manufacturers and manage the follow-up of orders placed.

For your reference, here are some resources relating to your situation:

Amazon FBA Sourcing Services

Amazon FBA prep services

Amazon FBA private label service

Amazon FBA logistics service

Suggested reading: Top 10 Chinese Manufacturing Companies

24.Q: Supplier didn’t ship the order and kept our deposit. What to do?

       A: I have a couple of options for you.

If you wish to get the order shipped with this supplier, but reduce your risk, you could consider linking the supplier’s performance to you payment. For example, pay the supplier after the goods have been inspected but before the goods ship out of China. This inspection could take place at the factory if a random inspection is sufficient, or 100% inspection could take place at a 3rd party if you wanted a very close inspection. It would also be wise if you had a team representing you on the ground in China to help mediate and explain to the Chinese supplier how the above solutions benefits both parties.

If you have already given up on the supplier due to their poor performance, then here are two ideas:

List them at SupplierBlackList and expose them to the world and help other buyers avoid this bad supplier.

Consider issuing a demand letter from a Chinese lawyer to show them you are series about getting your money back as they messed up the order and caused you substantial financial loss.

For your reference, here are some resources relating to your situation:

How To Choose Your China Supplier And Sourcing Agent

How to find Reliable suppliers to grow your business

25.Q: What method of payments do Chinese suppliers prefer?

       A: Chinese suppliers prefer 100% in advance via bank transfer (or better yet- cash) and they would be very happy if you don’t bother to use a contract or PO. Some buyers are crazy enough to do business that way and if something goes wrong, they have no leverage.

I assume the question is really about what methods will Chinese suppliers accept, rather than what do they prefer, and if you are looking for payment methods that are fair to both the buyer and the seller, you may be interested in these links:

How To Minimize Risks When Import Products From China

Suggested reading: Alibaba Payment

26.Q: How not to lose money when sourcing from China?

       A: Sometimes the letter of credit states that funds transfer to the seller upon provision of bill of lading (meaning the goods are on the boat and ready to ship). However, if the seller shipped you a box of rocks, you wouldn’t know until after the payment was made. So make sure the terms of the LC protect you and even more important- be sure to conduct your due diligence upfront and have 3rd party inspection in place to ensure the item shipping is what you actually ordered.

Here are some more resources explaining how to source safe:

8 tips guide of importing process from china for newbies

How to find Reliable suppliers to grow your business

6 Things To Remember Before Working With Chinese Suppliers

How To Minimize Risks When Import Products From China

27.Q: My order is late. Who is to blame?

       A: A well written PO keeps the supplier honest.

If you are shipping out of China and the B/L is being provided as the goods are about to ship out, then 6 weeks does sound like a very long time to wait, even if the 6 weeks includes clearing inbound customs in Australia.

In the effort to fight corruption and enforce safety/quality standards, in 2013/2014 I have noticed that shipments with values over 100K USD are being inspected by the port authority in much more detail in the past. This inspection can hold up the shipment for weeks. While the inspections are random, if you are on a blacklist or if you have a value of over 100K USD, you may find “random” inspections are the norm, not the exception.

You ask who is responsible for that delay. The answer depends on the terms of your contract. For example, once I started putting in penalty terms for late delivery, my suppliers “magically” starting hitting the delivery dates. Unless you have clear terms in your contract the freight forwarder will blame the supplier and the supplier will blame the freight forwarder, when shipments are late.

Related content:

How To Minimize Risks When Import Products From China

8 tips guide of importing process from china for newbies

28.Q: Regarding brand name products, the ones that you can find in a store. Does anyone know where I can get them? I’m interested in finding wholesalers and suppliers in USA. Your help is greatly appreciated.

      A: Look on the packaging in the store of who the manufacturer is and go from there.

29.Q: Should I pay an inspection company?
– I found many best selling products on Alibaba that do the inspections.
– consider product is boxed and ready to ship to Amz FBA Warehouse.

      A: Hire inspection company to check the quality, you can not rely on pictures and one sample, and you want to make sure your product is a good quality and works properly, before ship to you so if damage can be replaced or fix before coming to you.

For your reference, here are some resources relating to your situation:

How to find Reliable suppliers to grow your business

30.Q: Is it wise to get three or four suppliers send you samples before you choose the final supplier to place your order?

       A: Testing a sample is a must-do before placing the order, actually inspecting some random samples in your order before delivery is also necessary. I would ask for samples from 3 suppliers, the best 3 of them. The most difficult work is to decide which are the top 3. You need to do some background investigation by checking their websites, asking as many questions as possible, the more you ask, the more you will know. By the way, don’t let them send the samples separately, that’s not a cost efficient way. Try to make them shipped together.

For your reference, here are some resources relating to your situation:

How to get your best wholesale price from Suppliers

31.Q: What if the price you offered is less competitive than the one I find on Alibaba? Or I want to buy from my own supplier but still want to use your service to coordinate between the supplier and me.

      A: There are two different situations for service fee:
1. For client buying products from his own supplier and he communicates with supplier for all production process, we only help check quality and arrange shipping. If there’s quality issue, we will help client negotiate with supplier. In this case, we charge 5% fee.

2. We help client communicate with supplier for the whole process, like making samples or producing. In this way, we charge 5%-10% service fee based on product value, regardless of the supplier is found by client himself or us. We also help check quality and arrange shipping.

Although client pays a little bit more service fee in the second service, we can help client save lots of time in communicating with suppliers. If there are quality issues happen, we help you negotiate with the supplier on behalf of you until the problems are fixed.

For your reference, here are some resources relating to your situation:

The advantages of the sourcing company

32.Q: Do you handle samples checking and then send the final product to Amazon? Or you are not responsible for checking samples?

       A: Our service includes: find suppliers and sourcing products from China, and quote to customers the best prices; negotiate with suppliers for samples, production and packaging; customize logo and packaging; quality control; arrange shipping to FBA. (Maybe consolidate goods with other customers to the same destination so that shipping fee will be saved).

Samples checking is free. We will ask for samples from suppliers once customers are satisfied with the quotation. Then, we send them to customers for quality checking, and customers decide whether to purchase it in bulk.

Suggested reading: Alibaba Shipping Costs

For your reference, here are some resources relating to your situation:

Amazon FBA prep services

33.Q: Will you give the list of suppliers details to my clients and then they need to choose and contact the suppliers? Or you will send the final quote to my clients after you negotiate with the suppliers?

      A: We will try our best to source several different suppliers for 1 item, and select the best 1-2 of them, then send the quotation to customers.

Normally we don’t offer our supplier’s information to customers, as our working pattern is that customers working with us, and we work with our suppliers.

But the main reason is that most of our suppliers don’t directly work with foreign customers as they don’t have English-speaking staff. Our 5%-10% service fee is not only charged to source suppliers, but also for, the most important part, negotiating with suppliers efficiently to save time and money for customers.

For your reference, here are some resources relating to your situation:

Why LeelineSourcing For Your Business

34.Q: Is the price you offered more competitive than Alibaba supplier?

       A: 80% of the suppliers we are working can offer better prices than suppliers from Alibaba. But if customers still want to buy from suppliers they found from Alibaba, we can help to gather their goods together and do QC, then ship to FBA for them. In this way, only 5% service fee will be charged. And will make sure your goods arrive at Amazon warehouse safely.

For your reference, here are some resources relating to your situation:

The advantages of the sourcing company

35.Q: What kind suppliers your company contacted? All factories?

       A: It depends on the products you require.

If your quantity can reach factories’MOQ, we surely choose factories as priority.

If your quantity is less than factories’MOQ, we will negotiate with factories to accept your quantity.

If factories can’t reduce, we will contact with some big wholesalers who with good price and quantity.

36.Q: How do you search suppliers for our orders?

       A: Normally we will give preference to those suppliers who cooperate well before cause they are tested to offer good quality and price. For those products we don’t purchase before, we do as below. Firstly, we find out the industrial clusters of your products, like building materials in Foshan, toys in Shantou, electronic products in Shenzhen, Christmas products in Yiwu market.

Secondly, we search the right factories or big wholesalers depending on your requirement and quantity.

Thirdly, we ask quotation and samples for checking. Samples can be delivered to you request (sample fee and express charge is paid by your side).

Suggested reading: Shenzhen Electronic Market Guide

Suggested reading: Best 20 Yiwu Sourcing Agents In China

Suggested reading: Yiwu Wholesale Market Guide

37.Q: Is your price is lower than suppliers from Alibaba or Made in China?

      A: It depends on your requirement.

Suppliers in the B2B platforms may be factories, trading companies, second or even third part middlemen. There are hundreds of price for the same product and it is very hard to judge who they are by checking their website.

Actually, those clients who purchased from China before may know, there is no lowest but lower price in China. Without taking quality and service into consideration, we can always find a lower price when keep searching. However, as our past experience sourcing for our clients, they focus on good cost performance rather than lowest price.

We keep the promise that quoted price is same as the supplier’s and no any other hidden charge. As a matter of fact, our price is middle level comparing with the B2B platform suppliers’, but we offer you a easier way to buy goods from different suppliers who maybe located in different cities. This is what the B2B platform suppliers’ can’t do cause they normally only focus on one field products. For example, those who sells tiles may not know the lighting market well, or who sells sanitary wares may not know where to find a good supplier for toys. Even they can quote you price for what they find, normally they still find from Alibaba or Made in China Platforms.

Suggested reading: Best 10 Alibaba Inspection Service Companies

Suggested reading: Made In China VS Alibaba

For your reference, here are some resources relating to your situation:

Amazon FBA Sourcing Agent Fee

38.Q: If I already buy from China, can you help me to export?

       A: Yes! After your purchasing by yourself, if you worry about the supplier can’t do as you require, we can be your assistant to push production, check quality, arrange loading, exportation, customs declaration and after-sales service. The service fee is negotiable.

39.Q: If the delivery charge is higher than the goods’value, how I can do?

       A: Some customers may face an embarrassing question that the delivery charge is higher than the value of goods. How can you do? Here we offer two suggestions.

Firstly, purchasing more items instead of small quantity. Since our company help source many kinds of goods, you can ask your friends or others to share the delivery charge if they have plan to buy things from China.

Secondly, if the quantity is small and you really can’t find someone to share charge with you, we suggest you to buy in your domestic market. After all, the domestic price may be less than what you pay for buying from China cause the retailers import big quantity one time.

40.Q: Did anyone import from China before? How does this work to make sure that you will get the perfect product and there will be no difference between what you see and what you get?! Do you deal with a trusted agency there? Especially Shanghai? Or we need to travel by ourselves?

    A: Some steps would be to request samples of similar existing products, when you issue a P.O. include in it what will be your quality control plan so they know what to expect (if you hire a QC company to do the inspection they can help you draft a QC plan you can share with the manufacturer). Request a production sample, hire a QC company – they will come when the production run is complete and open random boxes for inspection. A report is issued to you before you approve shipment.

Related Content:

8 tips guide of importing process from china for newbies

Suggested reading: Best 20 USA Sourcing Agents


41.Q:When you’re ordering samples, how many suppliers on average do you get samples from? Do you order them all at the same time or one by one?

      A:Order them all at once and consolidate them to one box! You will be amazed at how much money you can save if this is a weekly or biweekly occurrence.

42.Q: Anyone have experience selling internationally in Canada, Mexico or U.K. and have tips on do’s and don’ts?What are the pros and cons of expanding to international markeplaces for private labeled brands?

      A: I think quite a bit of the decision process depends on your product and which country has the best market for it. Does your brand currently have a following in any of those countries and if so which has the highest or that you can build on easier? I’d narrow it down to one country and take into consideration import duties and shipping costs as well as regulations if there are any. Maybe Canada considering it’s just up north.

Related Content:

How to Labeling your amazon products with fba fnsku or upc stickers

43.Q: Does anyone know if this whole endeavor can be put on a credit card entirely? Will suppliers accept credit card?

       A: Suppliers can take credit cards with Alibaba Trade Assurance.

44.Q: I checked Amazon’s guidelines and all their samples have boxes. Can my packaging be purely an OPP bag without a box? So let’s say one carton contains 15 units inside. When you open the carton you will see the 15 items packaged in an OPP bag. Will that be okay or does each unit need an individual packaging box? What does Amazon require and what do you guys think? Thanks!

      A: Most of sellers are selling in a opp bag! But NOT working for some products. Amazon does already charge for “pick and pack” since they ship it packaged.Only carton required if your product is a successful one, then you may want to do customized package for It!

Related Content:

How to Tell your Supplier Package your Goods correctly to meet the standard of Amazon FBA requirements

45.Q: I received a patent infringement letter from a company. I check the patent at USPTO. It is completely different design. They are just made of same material. They are more than 100 products at Amazon same size and shape like mine. My supplier says “they send letter to everyone but nothing happens”. What should I do? Do you have any patent attorneys you would like to offer? Thank you.

      A: Very inlikely but still pertinent… Could the material, by any chance, be patented? 3M once held the patent for Teflon, as did DuPont for Nylon, Tyvek and a bunch of other proprietary materials. Also, have in mind that a COMPONENT of the product may be patented, even though the whole product isn´t. (A notable example is the spring system that allows Gilette Mach-3 razors to move independently. Razors aren´t patented, but the spring system is).

46.Q: Do most people selling on amazon have a company website. If was looking to sell say socks and scarfs do I need a website already?

       A: You don’t need a website to get going. But it is necessary if you want register your brand.

47.Q: Do you know if “made in china” label has to be on each of the unit? Or just outside the box is fine?

       A: Just on the main box will be good,If Customs catches you your products could be sent back to China, they could be destroyed, and you could be fined. Because of all the political stuff going on, over the last few months Customs is become a lot more stringent and strict and checking.A lot of people have been posting about problems recently with not having the country of origin properly identified on their products.

48.Q: I’ve been watching lots of stuff and getting more and more a beginner would you go for OA or straight into PL?

       A: I’ve done RA OA and PL I would definitely recommend PL it’s more sustainable. Plus you can’t sell an OA account for millions. But you can sell a PL brand.

49.Q: I’m in the process of paying for my units & the shipment. The thing is that I asked the supplier if the initial payment would be with 30%. The supplier wrote me this…

Because need to do inspection. Let’s make the deposit 50%. Ok ? So that I can persuade our boss. Usually quantity more than 500pcs. We accept inspection. Small quantity doesn’t have much profit and it is troublesome.What you guys think of this?

      A: Are you paying through alibaba with trade assurance? It sounds like he is being straight with you that its a small order in their eyes. If everything else seems good and you have trade assurance pay the 50%.

50.Q: We are a USA company that wants to set up a 100% owned factor in PRC. We also heard some good reasons to set up a Hong Kong holding company for the PRC entity, but wanted to get your opinion. Please let us know what you feel are the benefits of setting up a HK company as opposed to direct ownership from the USA of the PRC entity.

   A: keeping in mind that you should consult with accounting/business formation specialists before you make an investment so they can review the particulars of your specific situation.

Because of the special status of HK to China, setting up a factory owned by a HK holding company takes less time, money and paperwork than doing PRC entity ownership directly from your HQ in USA.

If your USA HQ ever wants to sell the China assets, a potential buyer will place value on having a HK set of audited books. While you may end up running a world class set of books at your PRC factory, buyers tend to place more credibility with HK accounts.

There may be some tax deferral benefits of using HK, but you would need to consult with experts as transfer pricing issues come into play.

There is also the benefit of risk avoidance for the USA HQ.

Suggested reading: How To Get Approved For Multiple Seller Central Amazon Accounts

51.I’m interested in learning if you think a Purchase Order (PO) format for small and large orders can use the same template.

I think the case could be made that large orders and small order both need to be taken seriously when it comes to PO and contracts. At the sourcing agency where I work, we use the same PO template for both large and small orders for many years now. Basically we pulled the best practices from our larger buyers and applied it to the small buyers’ order. In my experience, I have found that the smaller orders are harder to manage because the buyer doesn’t have as much leverage with the seller. So it is very important for the small buyer to have a well defined and mutually agreed upon PO in place.

It would be very dangerous to think that because the order is small, you don’t need to be as concerned about the PO details. Unfortunately, in reality, the opposite is true.

52.I often need to send samples and key components to my supplier in Shenzhen. I find that I have lots of problems when I send via air direct to Shenzhen, but not so many problems if I send via air to Hong Kong then overland into Shenzhen. Can you help explain this?

1. Local customs officers in China have a lot of room to interpret the rules and regulations as they see fit. So if your shipment gets stuck, it is up to you to explain to the officer’s satisfaction the details of the shipment.

2. Items shipped Air direct to SZ Airport have a much higher rate of problems because

a) the customs officials there are very strict compared to sea and land ports.

b) the volume is low compared to truck via HK, so they check a higher percentage of items.

c) if problems are found, it is harder for your agent to fix things at the airport rather than SZ land/sea port because, unlike a truck, they can’t easily turn a plane around and send it back to HK to try again.

53.I realized that two things often happen in China:

The costs of raw materials go up and down, so the supplier tries to play the market and buy his raw materials at a lower cost. If the raw materials keep going up, the supplier may decide to break the contract rather than cut his margin or produce at a loss. As a Westerner used to dealing with contracts back home that “mean something”, I was totally blown away by this casual attitude in China when I first came here 12 years ago. These days when I place the PO or give a deposit to start the order, I make it real clear to the supplier that I expect him to purchase the raw materials ASAP and I have my team on site to verify materials have been purchased.

You would think the above step would solve things, but….think again. Even after verifying the materials for my order were in the factory, now and again, I would get a call at the 11th hour stating the supplier couldn’t ship and usually some reason was made up like “power outage”, “lack of workers” and the most common fake reason- “equipment or tooling problems”. 9 out of 10 times, when I looked into it, I learned that another more important buyer twisted the arm of the supplier to use my stock for their order. If you are buying 10,000 neck ties and Wal-Mart walks in to your supplier with an order for 1 million, you may find the supplier ready and willing to break the terms of your agreement to make more money from somewhere else. That is why I try to find factories that are an appropriate size where my order will get the respect it deserves. Another tool I use is to build a “goodwill piggy bank”. I try to maintain good relations through holiday greetings, frequent visits/ meals and even vacation invitations so that the suppliers get to know me as a good friend rather than just PO #. This goodwill has saved me a few times when my suppliers opted to honor the friendship when the contract alone would not have been persuasive enough.


If you have any more questions about Amazon business, please do get in touch so we can assist you in getting the right information.


Leeline sourcing company is involved in different sourcing business that will help your company’s grow, and make your international business better. No matter how big or small your orders are, we will help you source quality and affordable products, and we will ship them directly to you.

• Product Sourcing: With over 10 years experience in this field, our team will keep your mind at peace, and you will be sure that the products are supplied through a responsible supply chain.

 Amazon FBA sourcing service: We offer you Amazon seller services, from product procurement, to brand labeling, quality inspection, packaging services, product photographing and also shipping of products to FBA warehouses. Just tell us what you need, and we will help ship your products to your warehouse at lightning speed.

• Business and sourcing ideas: If you walk into our office, we will share business and sourcing ideas with you, even if you are importing yourself, our ideas will help you avoid mistakes that will be costly to your business. Our advice will surely help your business turn out better.

We will keep updating new resoures about hot selling item in china, if you are planning to open your online shop and don’t know what kind of products to choose, welcome to subscribe our articles, we will give you some sourcing inspiration.

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Article by:

Sharline Shaw

Hey I'm Sharline, the founder of Leeline Sourcing. With 10 years of experience in the field of sourcing in China, we help 2000+ clients import from China,Alibaba,1688 to Amazon FBA or shopify. If you have any questions about sourcing , pls feel free to contact us.

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