Truth about sourcing famous brands in China, not all Apples are equal

Truth about sourcing famous brands in China, not all Apples are equal

A Chinese supplier is offering famous brands at lower prices than your country, due diligence would be wise, it may be a scam. Even if it’s made in China, it may not actually be available in China.

The truth about famous international brands. If it’s fashion or electronics, please realize two things.

1) Just because it’s made in China, does not mean that it’s available in China.

Various major brands including apple manufacture their goods in China as it is cheaper there. This may lead the buyer to think that one can get products at a cheaper rate from China but it is not true. Chinese suppliers that produce branded goods in China have a strong distribution network channels that would make it difficult for you to get branded goods at cheaper price in China.

Example:

“You can’t knock on the Foxconn factory—Foxconn is the official supplier for Apple, they’re the contact manufacturer—and expect them to sell you an order out of the back door, because Apple commands such a leverage over them and has strict regulations about what channels products are being sold.  Not just the “Apple’s” of the world, any well-managed brand is going to have control over their supply chain.  If you think you’re getting a back-door product, it’s most likely a counterfeit, or perhaps it’s rejected product from the actual factory.”

Scam Alert Warning - Small Scale Foreign Buyers

2) Tax Structure in China

If a Chinese supplier is offering branded goods at lower prices than in your country, it may be a scam. Keep in mind that because of the tax structure in China, the tax on such branded products is high so as to protect the local Chinese companies. It’s actually less expensive for you to buy the latest tablet in American or Hong Kong or Dubai, one of these free trade ports, as oppose to Mainland China.  So even if it’s available and made here, the same product may be more expensive in China at the wholesale or retail lever than wholesale or retail level back home.

Example:

“For example, where I live in China, whenever the newest iPad products comes out, my Chinese neighbors who have passports would often go over to Hong Kong, some of them would fly to the US, they buy a bunch of products, bring it back into China—essential smuggle it at a small scale—and sell it to consumers in China.  So it’s less expensive for them to go overseas, buy the product, and bring it back, and they can make money doing that in China.  So obviously, the cost structure is set up so that many of these products simply aren’t available at the competitive price in China, even if they’re made there.”

Scam Alert - Small Scale Foreign Buyers are at much higher risk

Most small buyers especially the new buyers are hesitant to do formal due diligence to verify if the supplier is legit, maybe they are working on a tight budget or easily trust the seller as they are offering cheaper price. If you fall in these category, do not hesitate to do proper due diligence.

About the Author: Michael J. Bellamy

About the Author: Michael J. Bellamy

Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses.  Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.

A featured presenter on China issues at seminars, trade shows and corporate events across the globe.

Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/

Mike is the author of “The Essential Reference Guide to China Sourcing
(available on Amazon).

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