It’s a tempting thought that many business entrepreneurs have entertained over the years: find the factory in China that makes a brand-name product and negotiate to buy it direct from them.
Unfortunately, it doesn’t work that way, and if you pursue such an idea, you will end up either losing your money, or being sued by the brand owner.
Brands such as Nokia, IBM and Apple own the rights to the supply of their products. The Chinese factory where they are produced is contractually bound to only sell to the owners of the brand or their licensed distributors, and only in the quantities that are commissioned.
Becoming a licensed distributor is a difficult and costly undertaking and it is the only way you can buy direct from the manufacturer. The Chinese factory has a lucrative contract with the brand owner, which they are not about to jeopardise by doing backdoor deals. They have checks and balances in place to see that their employees aren’t tempted to do so either.
So what about all those internet ads from Chinese sellers offering brand name products at huge discounts? The truth is, they are either fakes or scams.
If they are fakes, what you will get is a product that looks very similar to a brand name product. It may even come with a certificate of authenticity, but it is still a fake. No licensed supplier of brand name products is ever issued with such a certificate by the brand owner, unless that supplier needs it to defend themselves against a legal challenge in court.
If it’s a scam, on the other hand, then the chances are you will not receive anything at all. You will send your money and that will be the last you hear from your so-called ‘supplier’. You will have no product, no money and no legal recourse at all.
A more realistic and profitable way to import from China is to select a product that has no brand at all. This leaves you free to create your own brand, while still acknowledging on your labelling that the product was made in China. This is called ‘grey importing’ and is common practice for a lot of internet businesses and also some larger retailers.
Of course, if the product is a variation on a branded product, you need to make sure it does not violate any patent laws. A case in point was a small Australian firm who tried to sell electrical switches from China in similar packaging to that used by Clipsal. They found themselves in court for infringement of Clipsal’s Intellectual Property Rights.
The other drawback with grey importing is that the product does not come with a valid warranty, something that you will have to supply yourself in order to make it an attractive sale item.
Importing from China can be fraught with hazards if you don’t know what you’re doing. The best way to go about it is to go through an import agent who’s ‘on the ground’ in China and working on your behalf.
That way, you’ll know the product you’re buying is legal, genuine and of good quality and will be delivered to you in the right quantities and at the right price.