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Why Alibaba Is Not Your Complete Answer To China Sourcing

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When you start planning your sourcing trip to China, for most people first thing comes to mind is Alibaba.com, Canton Fair and Trading companies or Sourcing agents. For many the lazy way of finding attractive suppliers on alibaba.com without getting out of your room looks very lucrative, but for the experienced there are only horror stories.

Alibaba.com is just a website run by Alibaba Group in search of profit. Like every other company their sales force of 5000 staff has monthly, quarterly and annual targets to achieve. It is becoming harder and harder for them to find real factories to be customers and most companies listed may not really be want they claim to be.

In 2007 Dan Harris, a who runs a china law consulting firm, wrote an article called “I Hate Alibaba” where he concludes that alibaba.com may be just more than a yellow pages for suppliers. He also quotes Paul Midler who coined the word “Quality Fade” to describe how Chinese manufacturers eventually reduce their product quality. He even questions if Alibaba.com is really worth what it is.

Here are his exact words:

But then I think about all the harm Alibaba has caused to so many Western SMEs and I change my mind about calling my broker/brother. Alibaba makes the naive think China sourcing is easy. I realize blaming Alibaba for the mistakes companies make in using its site is really not fair to Alibaba, but at the same time, I do not see much use for the site beyond its serving as a really good directory of potential manufacturers of particular products.

He also mentions in his recent article

My concern at that time stemmed from the fact that many of the calls my office was getting regarding really bad or never delivered product were coming from people who had sourced through Alibaba.

I think about all the harm Alibaba has caused to so many Western SMEs. Alibaba makes the naive think China sourcing is easy. I realize blaming Alibaba for the mistakes companies make in using its site is really not fair to Alibaba, but at the same time, I do not see much use for the site beyond its serving as a really good directory of potential manufacturers of particular products.

Sourcing from China is not easy and my concern with most sourcing websites is how so many who use it start to think it is easy and then they fail to take precautions and then they call the law firm because they are out hundreds of thousands (more or less) of dollars. Seems it is even worse than I thought.

Now we learn from Time Magazine that not just some of the companies that list on Alibaba are fraudulent, but that Alibaba engaged in fraud as well:

An internal investigation by independent board member Savio Kwan revealed that beginning in late 2009, Alibaba had noticed an increase in fraud claims against sellers designated as “gold suppliers,” which means they had been vetted by an independent party as legitimate merchants. The investigation revealed that about 100 Alibaba sales people, out of a staff of 5,000, were responsible for letting fraudulent entities evade regular verification measures and establish online storefronts.

The company said it uncovered fraudulent transactions by 1,219 of the “gold suppliers” registered in 2009 and 1,107 of those in 2010, accounting for about 1% of the total number of gold suppliers during those years. It further said that “the vast majority of these storefronts were set up to intentionally defraud global buyers” by advertising consumer electronics at cheap prices with low minimum-order requirements.

 

Whether you use Alibaba or not, there are certain “rules” you should follow when sourcing from China and those rules include conducting due diligence on your potential supplier, notwithstanding the color of star by their name.

The Point is you have to leave your room and invest time in searching for real good suppliers by visiting them personally or pay some additional charges to a professional sourcing company who can do all the ground work so you can sleep in peace and concentrate on your real business instead of spending time on sourcing.

Golden Alliance International Trade company has been sourcing for buyers around the world for 2001, and the knowledge and expertise has not been without turmoil. But the company has specialised in identifying, evaluating and handling right suppliers till date with 99% success rate.

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