Chemical sourcing is challenging, as you can’t tell the quality by the naked eye, as with other industries like toys or garments etc.. Factory visits are therefore encouraged before importing but then, which plants would one choose to visit?
The China Petroleum and Chemical Industry Federation (CPCIF; Beijing) shows that there are over 25,000 companies in the chemical industry. Weeding through the various companies makes it a difficult task to find the right supplier to work with. In this article I will share with you the basics of how to import chemicals from China. There are several options to start your sourcing journey:
1. Finding a Supplier
a. B2B Portals:
The most convenient way to find chemical related information is through b2b portals. The top chemical b2b portals are:
There is a lot of information that you need to scale down before getting any useful and related leads. You can filter supplier based on your preferences or using portal ranking criteria’s such as “gold supplier” etc. You can also use credit check services and supplier capability assessment services if offered by the portal. E.g. Global Sources or Alibaba’s Trade Assurance. Alibaba.com also now offers volume buyer services which some might find useful. I personally haven’t used this service. If you find this to be a tedious task, there’s the “lazy” way of getting quotations: by just “posting buying request”. This way, the portal matches your request to relevant companies in their platform. You can then just review quotations and if you are not happy with the results you might have to conduct the search yourself.
B2B portal sourcing is one of the routes and possibly the first step to sourcing. Depending on the communication with potential supplier you can then go ahead and arrange samples for testing. Be aware though that suppliers will obviously send you the best quality sample and that might not necessarily be representative of the final order. After testing the sample some buyers might go ahead and place an order, which can be very risky. I personally know people that have imported from China and never set foot in the country! More on this in future post.
b. Recommendation from Forums & Social media: Sharing is caring
These days people share information about everything. Although not the conventional way, you can still find a lot of relevant information esp. on forums. But beware that suppliers themselves might write some of those recommendations.
One trick I like to use is to check right away the company’s reputation on Google search “ company name+scam” or something similar to see if there are any fraud reports against the company or if the company has been blacklisted somewhere etc.
Also you can check the blacklist via www.fraudblacklist.com
Here are some forums and groups on LinkedIn that focus on China sourcing:
- China Sourcing
- China Sourcing Forum
- China Sourcing, Networking, Import, Export, Trading, Manufacturing
- China Sourcing Group
- China Trade Group
You can post inquiries and get advice from experienced forum participants.
Most of the social media channels such as Google+, Facebook are blocked in China and not many suppliers use these.
c. Trade Shows
I personally consider attending trade shows not an efficient way to find chemicals suppliers or any other product for that matter in China. Its true that you get to see a lot of suppliers and merchandise under one roof, but without prior research one can get lost in all the confusion and excitement of such events. If possible, with proper planning, compile and research a list of manufactures from the exhibitor’s list. Based on positive preliminary due diligence you can then arrange to conduct face-to-face meetings at the trade shows. This way, you have an idea on suppliers’ capabilities beforehand. You can arrange 5 or even 10 suppliers on your list to verify their claims. Then follow up with factory visits of the top 3 suppliers. Incase the factories on your list don’t meet your criteria; you still have a chance to meet other suppliers at the trade show. Some tradeshow organizers can also arrange meetings on your behalf based on your needs.
The most popular tradeshow of course being the canton fair.
Canton Fair – Phase 1 is specifically focused on chemicals:
- Inorganic: Chemicals, Acids , Oxygen Compounds, Halogen and Sulphur Compounds
- Organic Chemicals: Hydrocarbons and Their Derivatives
- Agro – Chemicals: Pesticide, Herbicide & Fertilizers
- Dyes and Pigments
d. Trading companies and efficiencies
The supplier selection journey can be quite cumbersome and costly. It may take weeks to months – depending on your experience. Dealing with a trading company can be a good option if you don’t have the resources and know how to invest in the complexities of monitoring your supply chain. The cost will be a little bit higher, about 5-10% compared to buying directly from the factory. The best trading company, among other things, are the ones with focus in a particular industry. Avoid jack-of-all-trades. I would recommend trading companies’ esp. if you’re sourcing more than one supplier. The company you select must have an in-depth knowledge of the Chinese chemical market.
Trading companies may add value in the following ways:
- On-the-ground presence
- Project management
- Quality inspection
- Offer credit terms
e. China office.
Having China presence is ultimately these best way to source for chemicals long terms. Of course this only makes sense if you’re buying volumes in the millions of dollars. Not to mention other challenges that comes with registering the company, staffing, taxes etc.
f. Trade data
Platforms like ImportGenius.com, Flexport.com , Panjiva and other competitors in this go a long way in screening suppliers.
2. The Next step – China Visit
Prior to your China visit you should do additional research and understand the price dynamics. This helps in negotiating prices.
Remember to bring along factory evaluation documents or scorecard and be preferably accompanied by an independent or in-house technical specialists. He/she must have an understanding of the production process and application of the chemicals.
Factory Evaluation Document or Scoreboard may include:
- Profile and history of the company
- Range of products and target markets
- Test reports – Certificate of Analysis & (MSDS) sheets
- Continuity of supply and support
- Technical review of the manufacturing facilities
- Quality control measures and procedures
- ISO 9001-2000 certification
If your country of importation requires additional compliance document ask your supplier to show you previous reports of such. (E.g. EU – REACH compliance)
This procedure can be more involved depending on specific chemicals. Notwithstanding that some chemicals require export license that might delay the export procedure.
3. Contracts – English or Chinese
A lot has been covered the guys behind China Law Blog. But briefly, contracts can be in English & Chinese BUT “ If the contract is in two languages, the parties are free to choose which language will control. If the contract is in Chinese and in English and the parties do not specifically choose a governing language, a Chinese court or arbitration panel will take the Chinese version as controlling. If the contract is in English, then the court or arbitration panel will appoint a translator to do the translation. These translators are often not very good, which causes many problems in litigation/arbitration, since the case gets sidetracked in disputes about translation.”
The take away:
- Make the jurisdiction a Chinese court.
- Make the governing law Chinese law.
- Make the governing language Chinese.
4. Shipping & Logistics
As some chemicals are hazardous, great care should be taken when arranging a shipment. Not all shipping agents are familiar with handling hazardous cargo. It is also more expensive to ship chemicals than regular cargo. So you should shop around for the best freight rates or use tools such as FreightOs
You can also choose our sourcing service
this post share How To Import Chemicals From China? In the next post I’ll highlight the major challenges in sourcing chemicals from China and how to avoid the potential pitfalls.
Please comment and let me know your opinions and experience with sourcing chemicals from China