When you place an order with a Chinese factory, you must have a detailed specific contract in place. Although these contracts my not be 100% legally binding, they will give you a great deal of leverage should any problems arise. They can be used as a reference if your factory tries to cut corners or change agreed production materials.
Remember these 5 things:
- 1. Phone calls and verbal agreements with factory representatives are not enough. You need all your products details and specifications in a written contract, which is stamped by the factories management.
- 2. Your contract must be agreed with someone of authority in the factory. This should either be the owner, the factory manager or the head engineer. Never agreed important details with your English speaking sales rep, it is quite common to be told this person has left the company should there ever be a problem.
- 3. All payments to the factory after initial deposit should be conditional on your products passing set out quality control standards as outlined in your contract.
- 4. Never try to change your contract once it has been agreed, signed and stamped. This sends a signal to the factory that they can also make changes. Always be 100% certain of your exact needs before creating and submitting contracts.
- 5. A contract gives you a strong bargaining position with the factory. It is an absolute necessity to hold the factory accountable to the standards laid out in the contract.
Sales Contract Specifics
There are a number of specific points to remember when creating a contract with a Chinese Factory. Here are some of what we believe are most the important to you.
- 1. Each company in has an official stamp. It is imperative that any contract you agree and sign should be stamped. Even if your contract is signed by the company owner it is worthless without the official stamp.
- 2. All your products specific details and specifications should be clearly laid out in your contract. Keep the contract simple, but don't forget to put ever detail in – no matter how obvious.
This Should also include the factory address where the goods will be produced. It is not uncommon for factories to outsource production to smaller factories in their area. These factories may have lower standards and use cheaper materials than agreed. Having this included is very important if you should have any quality control issues later.
- 3. You need to outline a policy with the factory on faulty and defective products. This should cover if and how the factory will replace these items. Also who should cover the cost of returns and what warranty the products have.
For example some electronic products may come with a 1 year warranty, but the internal battery may only be covered by a 3 month warranty.
You need to have all these details fully covered in your contract.
Why China Factory Sourcing and why contracts are vital
- 1. China factory sourcing create and sign all contracts on your behalf.
- 2. We ensure that your contracts are signed by someone of authority within the factory and that the official company stamp is also included.
- 3. China Factory Sourcing is a Chinese registered company, so the Chinese factories we deal with tend to abide by the terms of these contracts. As once they include the company stamp, they are valid under Chinese law.
- 3. If you have no presence in China, you will just be ignored if something goes wrong. The factories know we are here and if there are any problems we will arrive at their door.
- 5. We will hold the accountable and reference the contract. This gives them no way to deflect blame.
- 6. If you don't have a detailed contract and there are any problems, you can be almost certain that the factory will not accept responsibly and try to blame you or the English speaking sales representative who will conveniently have left the company.
- 7. Your account manager with China Factory Sourcing will be a native Chinese speaker. This means that the factory can never blame language differences for any problems.