by Mike Bellamy in 'China Sourcing Information Center'
We buy products in China and sell around the world. The brand is under our name. We don’t sell in China, yet I recently discovered my products for sale online in China and now face problems with unauthorized “gray channel” imports into my primary markets. Any suggestions?
Unfortunately, this is not an uncommon problem. Fortunately, there are ways to fix this problem. The sourcing agency that I own (www.PSSchina.com) was recently brought in by a client to investigate a case and present a solution to the same problem you have raised. Here are some of the highlights for your reference.
Can you look at the products in the gray channel and know where they were made? In our case, investigations confirmed that the majority of products in the gray channels were directly linked to the batches of production in China which were rejected by the buyer due to quality issues.
Before the adjustments above, the suppliers were essentially selling rejects out the factory back door to subsidize their costs of production. In some cases, because of the tight quality requirements of the buyer combined with the poor quality system of the supplier, this back door income was a significant source of revenue for the suppliers. Cutting off this source of revenue was hard medicine for the supplier to swallow. Two methods proved successful to remedy the situation.
Some suppliers were dropped and a sourcing feasibility study was conducted to find more professional replacements suppliers who could meet targets for price, quality, lead-time and trust.
The suppliers worth continuing to do business with were given a sit down to explain why it was good for the supplier as well as the buyer to cut out the gray channels. Key points included:
Perhaps the most important message conveyed to the suppliers is that the brand wanted to have stable long term relationships with partners who could be trusted. To show their commitment to the suppliers, and to help the suppliers, the brand owners provided the following:
Wishing you successful China sourcing!
Question answered by Mike Bellamy, an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. Mike is also the author of "The Essential Reference Guide to China Sourcing" and founder of PassageMaker Sourcing Solutions.