Sorry for the long blog post, but I am passionate about helping buyers understand their options in China.
While walking a trade show in China, I was handed a brochure about the inspection services offered by Alibaba.com.
To the uninitiated, the marketing message on the brochure is very appealing, especially to a new-to-China buyer who doesn’t yet have the experience of dealing with China/Alibaba and/or a buyer who is unable to read between the lines of this slick marketing message. Perhaps I have grown too cynical during my 16 years sourcing in China, but here are my comments inserted into their marketing message.
Stressed about the Quality of Your Product?
Be sure with Inspection Service on Alibaba.com!
I’m still pissed off about “Ali-scam” where Alibaba staff were in collusion with Chinese crooks to trick foreign buyers into placing orders with suppliers that didn’t exist in exchange for a piece of the take. See this link to the Wall Street Journal about the Alibaba.com fraud. Here are some blog posts I contributed to which explain What buyers should learn from the recent scandal at Alibaba .
In short, until they get some more reputable companies at the top of their list, Alibaba are the last people I am going to trust to inspect my products!
Why use inspections service on Alibaba.com?
That’s obvious- because I don’t trust suppliers I find online until their trust has been earned. And I trust Alibaba suppliers the least. Sourcing expert Renaud Anjoran does a great job explaining why in his post The real Alibaba fraud: not the one everyone talks about .
Every inspector is pre-qualified by Alibaba.com
I immediately asked myself, if Alibaba has a hard time qualifying their vendors how are they going to qualify inspectors? Maybe if they have some famous inspection agents I can feel safe. To the contrary, the inspection agents found at http://inspection.alibaba.com/ are far from famous. Not a single major inspection agency is on the first page of this list at the time of writing (5.16.2012). There are some big companies on the list if you dig past the first few pages. But those companies appear not to have any active projects in the Alibaba system. I hope some professional companies join the top of the list because the real scary part is that many of the inspection agents on the current list are not even companies. They are individuals doing freelance work. Unbelievable! If these guys screw up, they are doing to disappear and leave the buyer hanging. Using these freewheeling freelancers goes against my core principles. My blog posts How to find a QC partner and Finding a good employee explain why in great detail.
Secure Escrow Payment
Payment is held released to the inspector only after you confirm receipt of the inspection report.
That does add a level of safety. But in so many words it really means they don’t even trust the inspectors in their system.
Wide price range from different types of inspectors to satisfy your specific service requirements.
Pardon the profanity, but I read this to mean, cheap-ass services for cheap-ass buyers who don’t really care about quality. The major inspection agencies (SGS, Intertek, BV) and even the mid- sized inspection firms (Asia Inspection, Asia Quality Focus, Pro QC) all charge at least 290 USD per man-day for inspection, inclusive of transport. I don’t know a single professional buyer (meaning the buyers who care about quality AND price) who use the bottom-of-the barrel inspection agents charging below 100 USD like some at Alibaba.com. I honestly believe you get what you pay for.
Maybe this is a new service at Alibaba and I am being too harsh. But I’m afraid in China we need to assume the worst until proven otherwise.
Quality Inspection Guaranteed
Compensation up to 20 times the inspection cost in the case of a false or faulty inspection.
Let’s say you pay your inspector from Alibaba.com 200 USD for the inspection. Let’s say you order a container load of pink underwear and blue underwear shows up. 20X sounded safe at first, but $200 x 20 is only $4000 in maximum liability. Your order could be 100,000 USD or 100 USD and the liability of the inspector is the same. So these services are very much geared to the lower end of buyers. I often joke that Alibaba is the flea market of global sourcing. And don’t get me wrong, flea markets can be fun. But just what you are getting into. Suggest you read the blog post Directories of Chinese suppliers & manufacturers to get another buyer’s view on how the online directories stack up.
Now to be fair, liability limited to a multiple of the day rate is indeed the standard practice across the inspection industry, from the small individual freelance inspectors to the big boys. BUT, if you really want to protect yourself and find a good inspection partner, you should not focus on the amount of liability they offer but rather focus on finding a professional agent from day 1. A legit firm with small liability is much safer than a fake company promising a massive guarantee. Guess what happens when that small company screws up. I’ll tell you what happens- freelancer Joe Wang just closes his website (no company to close) and starts over the next day under a new name and new URL. Big inspection companies can’t do that. Good luck getting any compensation from Mr. Wang (probably a fake name to begin with).
Here are some tips to find legit service providers.
Do a good search under the key words of “China + inspection + audit” and you will find plenty of options. Then ask the following questions:
Are they a legitimate company? If they ask you to pay to a personal account, this is a big red flag.
Do they have a clear track record of performance? If they can’t give you some client references, run away.
Are they focused on a certain set of services (inspection only) or do they try to everything for everybody (inspection and engineering and sourcing)? Yes, even the 3rd party service providers have been known to outsource to others just like some factories outsource production without telling the buyer. If an inspection company is also a trading company- that is a big conflict of interest.
Is their pricing structure and service agreement well defined and transparent?
It is a major pitfall to do business with a 3PQC service provider without a clear contract in place that outlines the service, costs, time frame and other desired attributes of the partnership. If something goes wrong, you want to know in advance how the company is going to stand behind their services.
The golden rule of China sourcing is to inspect the products before you make final payment before the goods leave China. So I highly encourage you to conduct inspection independent of the factory, but find the professional inspection agents or you are just wasting you money.