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You just received a new batch. You did everything right, including clear product spec sheets and a pre-shipment inspection. And still, the supplier manages to mess up your order.
Sometimes, quality issues slip through, and you need to know how to deal with situations that involve returning defective items to your supplier.
In this article, you will learn how the entire process works:
How to report defective products to your supplier
Why you should not even ask for a refund
How to write a ‘product remake action plan’
How to incentive your supplier to remake or repair the defective items
1. Check your products and report defects immediately
Defective or damaged products must be reported immediately. Preferably within 48 hours of receiving the shipment. The longer you delay, the harder it will be to support a claim that the supplier is responsible.
You don’t need to do a visual check on every single unit, but check at least 10% of the quantity.
If you find any quality issues, that are not in line with the pre-shipment inspection result, you must provide the following:
List of defects
List of defective units
Value of defective units
This must be sent by email to the supplier immediately.
Remaking the defective units is the only option in many cases. However, the supplier will most likely require that you return the defective units for an assessment. Remaking the goods also takes a few weeks, at a minimum.
Option B: Repair
In some cases, the products can be ‘fixed’. For example, the supplier can replace a component, or remove defects. That said, you must return the goods to the factory, and they’ll need at least a few weeks to repair the units.
Option C: Discount at next order
This is the easy way out for both parties, as there’s no need for returning the goods to the factory. But, you can’t be sure if the supplier will actually honor their promise to deduct the value of the defective units when you place the next order.
4. Give your supplier strong incentives to cooperate
Instead, you need to understand the suppliers motivations, and fears:
a. The supplier may have spent months making product samples for you. They clearly want more than one order. The prospects of receiving future orders, may be enough to incentivize them to remake the goods.
Well, at least as you don’t ask for a refund, or compensation for quality issues that are caused by you, not by them.
Keep in mind that you can only report a supplier if you can prove that they caused the quality issues, and refuse to compensate you.
Rather than sending a hundred angry emails, you should try to maintain a positive (yet serious) tone. Be firm, and demand a quick resolution to the situation – but discuss planned future orders and products at the same time.
If you don’t, they might just stop replying your emails, and there’s little you can do about that.
This is international trade, and the customer is not always right. Consumer protection laws don’t apply, and you have no legal right to return products, or get a refund.
This is the risk that comes with working with a developing low cost country.
5. Expect to pay the return shipment cost
Most scenarios require that you return the defective items to the factory, so that they can examine and remake.
Even if the quality issues are caused by the supplier, you should not expect them to pay for the return freight. Factories don’t price in return shipments.
But, you can ask them to pay for the shipment back to your warehouse.
6. How product returns affect import duties and other taxes
Returning products to your Chinese factory also has implications on import duties and taxes.
At this point, you’ve already paid the import duties.
When you return the goods to your supplier, they may be asked to pay import duties.
But, sometimes the courier charges the sender, rather than the importer. Recently I dealt with a case involving a return shipment to Shenzhen.
Rather than charging the supplier in Shenzhen, DHL (their air courier) sent the invoice to our customer.
Confirm the following before returning the goods to your supplier:
a. Who will pay China import duties?
b. What is the declared value?
c. Which company / address shall receive the return shipment?
7. Get to work as soon as the supplier receives the returned goods
It should only take around 10 days to deliver the goods to your supplier, including time spent on customs clearance procedures in China.
Once the supplier receives the package, they need to examine the defective items, and confirm how they will remake or repair the products, and present a timetable.
Remaking products is certainly not a top priority for most suppliers, so expect that you’ll need to keep pushing them.
Ready to import and launch your own product?
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a. Private Label & OEM Product Manufacturer Lists
b. Product Specification Templates
c. Product Label Samples
d. Compliance Document Samples
e. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire process
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Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
Hey there, I’m Fredrik!
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