Made in China tools have come a long way since China started mass manufacturing for export. Granted, some junk bin quality tools are still coming out of China, but price points up to mid price range are now being covered. Those made in China sockets and wrenches found in big box stores these days are usually at least half way decent. That being said, the attitude towards quality control and intellectual property is still an issue. Japan, South Korea, and Taiwan have all gotten past the point where they realized that if they don't take quality control seriously, their products will not be competitive due to rising production costs. Anyone can make an up to standard product when there aren't cost pressures. It's those who can build to cost while having minimal quality control issues that have a competitive edge. Copying someone else's technology and products is also a dead end. Anyone can produce pirated goods. It will be interesting to see how much tool production moves from China to Vietnam in the coming years.
Did you know that China is responsible for producing 57% of the world’s steel? Yearly, their exports of steel products to Saudi Arabia are valued at US$969 million. However, while there are many reputable steel mills, it’s wise to always stay alert as fraudulent suppliers exist within the industry.
Let’s look at six warning flags based on our real-life examples to help you identify fraudulent suppliers and reduce risks when sourcing steel products from China.
Exercise caution if a supplier’s website is beautifully designed but is only available in English and use a personal cell phone number as the primary contact information.
Well-established suppliers usually have websites with multilingual options (English and Mandarin) and correct contact details, including address, phone number, and email.
Companies in China are generally required to have a Chinese name. This name comprises Chinese characters but is transliterated for international communication and branding purposes.
If a company solely uses an English name, it may raise concerns regarding its authenticity.
Be cautious of suppliers whose company history displays inconsistencies between their registration date, claimed establishment date, and business scope. You can cross-check this information using the National Enterprise Credit Information Publicity System in China to check the supplier’s registration date and its business scope.
If your prospective supplier provides you with an invoice showing bank account details at a different address (for example, in Singapore or Hong Kong) than the company’s registered address (example Shanghai, Shenzhen), exercise caution. The supplier’s invoice should match the company’s location name, and the bank account details should be consistent with the company name in Pinyin.
Remember that you will have more protection if you transact with a Chinese company in mainland China that uses a bank account registered in Mainland China.
It goes without saying that while pricing is desirable, unusually low prices should raise concerns about the quality and authenticity of steel products. It’s important to be careful if you come across prices much lower than the usual market rates.
Lastly, verify any photos of the company’s exterior building. Unfortunately, there have been instances where trading companies and factories display images of grand offices that are not their own and are taken elsewhere. Just take this image as an example.
Not only did the inspected company use someone else’s image. While taking a closer look at the location, we can see that the inspection location is in a logistics park, not a factory location, which would be an unlikely location for a company who claims to be a steel mill.
Remember that these examples are just a few red flags we commonly encounter while auditing steel mills and trading companies in China. Having a reliable and objective quality partner on-site in China to visit the intended supplier/factory is the best option to protect yourself from fraudulent suppliers and reduce risks.
With over a decade of experience, HQTS Group has assisted businesses trading or manufacturing steel products minimising risks when procuring steel from China. Contact us today to learn more about our services.