Why You MUST Have a Sales Contract & How to Ensures It’s Done Properly
When you place an order with a factory you simply must have a contract. If there’s a problem with your order, getting the factory to take responsibility is impossible without a contract. While contracts are rarely the FINAL word in China, they offer you an important bargaining positioning to reference again and again.
Here are five important considerations:
- Phone calls and verbal commitments from your factory rep are absolutely NOT enough. You need to get a written, stamped document from a factory manager/owner that says exactly what you both agree to.
- Getting a sales person to sign off on a contract is NOT ENOUGH. You need to get this contract stamped by someone in an authority position – an owner or manager. Not the English speaking sales staff. It’s very common for Chinese factories to use the excuse “that sales person left the company, so your contract is invalid”.
- All payments to the factory must be tied into passing the quality control (QC) standards you have set. These QC standards must be detailed in the contract and have been signed, stamped and agreed upon by a decision maker. It doesn’t count, unless the right person signs off on the contract.
- Never change your contract once it has been made. This says to the supplier – I’m willing to accept lower quality. It’s a slippery slope to follow.
- A well written contract is an absolute necessity. It offers you a strong bargaining position and holds the factory accountable to the standards you have set.
Do I really need a Contract?
Many think “the legal system is still quite under developed in China, what’s the point in making a contract? If someone defaults for any reason, would you really take them to court?”
The answer is yes you would. China’s legal system does give you some rights. And while you would take them to court if you had to – importantly – the act of having a proper contract makes this event extremely unlikely.
A contract offers you a strong bargaining position should something go wrong.
If problems occur and you need to visit the factory and apply pressure, you can reference your contract, giving them no way to deflect blame.
Four Sales Contract Specifics – Never Forget to Include These
When making a contract with a Chinese factory, there are specific points to remember:
- You should make sure that all your specification and details are clearly laid out in the contact. However, bear in mind you need to keep the contract as short as possible. Don’t write long winded paragraphs. Use bullet points and keep it simple. Importantly, don’t forget to put everything in - no matter how obvious.
- You’ll want to establish the factories policy on replacement of defective merchandise. You’ll want to write how the supplier will replace any defective items, indicating that they will be responsible for replacing the product, but also arranging for the collection and return shipment as well.
- In China, people do not use letter headed paper. They don’t recognise this. Instead, each company in China has a stamp. If the factory hasn’t put their stamp to the contract, even if it has been signed, it makes the contract worthless.
- Include the address where your goods will be produced. It’s not uncommon for suppliers to show you one set of production facilities while outsourcing production to a smaller factory nearby. A less reliable factory with lower standards, lower quality and using cheaper materials. If your quality control/factory audit uncovers such games, you need to ensure you have the production address in your contract.
Why Easy Imex?
EASY IMEX creates all the sales contracts on your behalf – ensuring those with real authority are signing off on them.
As a Chinese registered business, Chinese manufactures tend to abide to our contracts more than they would if it were with an overseas company, as our contracts are valid under Chinese law.
If a factory knows you have zero presence in China, you’ll be ignored should something go wrong.
Being on the ground in China – Chinese factories treat Easy Imex differently from the beginning. Why? Because they know we will turn up to the factory in person and apply pressure. We will reference the contract, giving them no way to deflect blame. They know we will hold them accountable. Something many importers fail to do.
A well written contract is an absolute necessity. It offers you strong bargaining position, and holds the factory accountable to the standards you have set. If you do not have a solid contract and problems occur – you can guarantee the factory are going to deflect blame.
Easy Imex - Customers have their say - Import from China
“ADAM AND HIS TEAM KNOW WHERE TO SOURCE QUALITY PRODUCTS FROM AND CAN SORT OUT THE ISSUES WHICH COME UP FROM TIME TO TIME”
I've used Easy Imex for 3 years now and they have provided an excellent service.
Adam and his team deal with Chinese factories daily and know how they work. It's very different to how we do business in Australia and Easy Imex can deal with this better than myself.
Follow up of warranty claims is a very important. It can be very difficult and frustrating if you’re in Australia trying to communicate in English via email if problems arise dealing direct with factories. Adam and his team know who and where to source quality products from and can sort out the issues which come up from time to time.
Wayne Nicolaci, Melbourne, Australia
“OVER THE 12 CONTAINERS ORDERED TO DATE PRODUCT QUALITY HAS BEEN EXCELLENT”
We engaged Easy Imex in 2009 to source a range of consumable products, esky bags and promotional merchandise. The service was fast, efficient and professional. We'd previously worked with another importer and had some major quality issues. Over the 12 containers ordered to date the product quality has been excellent. I'd happily endorse Easy Imex to other importers.
“EASY IMEX ARE A TRUSTWORTHY, EFFICIENT COMPANY...WITH GOOD KNOWLEDGE OF THE CHINESE MARKETPLACE”
Easy Imex are a trustworthy, efficient company. They are easy to deal with, very friendly and with good knowledge of the Chinese marketplace. They helped me in many ways:-
- Saving money. My previous agent was very greedy and secretive.
- No headaches with stock that is not “quite right”. No “quality fade”. This saves so much time…and money.
- Their direct contact with the manufacturer keeps the quality compliant with the TGA (therapeutic goods association). Everything is checked very carefully. I receive detailed emails which allow me to check everything before it leaves the factory.
- They support me to maintain my good reputation, which, being a small business, is very valuable to me.
Adam is just so nice to deal with. A great, caring communicator. He is also very accommodating when I want some changes made. Nothing is a hassle. I feel confident that he will fulfil my needs in the future as he has done in the past.
Barbara Elkins, Wisdom for Living, Central Coast, Australia
"I FEEL SECURITY KNOWING THAT EVEN THOUGH YOU MAY BE SENDING LARGE AMOUNTS OF MONEY HALFWAY AROUND THE WORLD, YOU ARE GOING TO GET THE PRODUCT THAT YOU REQUESTED"
On one of our container shipments, we had some product damaged due to loading errors. When we received the product we unloaded it and took pictures and contacted Adam with the managed results. He credited us for the damage and also made changes in the loading procedure so this would not happen again. Everyone makes mistakes, it’s how you handle the mistakes with your customers that installs confidence.
I feel security in knowing that even though you may be sending large amounts of money halfway around the world, you are going to get the product that you requested.”
Jerry Tauzier, Lee Medical, USA
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