Ultimate Guide on Sourcing Chemical Products from Chinese Suppliers Part 2

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4.Purchase top exporter list for your products from China Customs, stick with big suppliers only

When coming to chemical trade, oftentimes, the purchase value can reach 1 million or even 10 million USD per order or per month.

This is huge project.

Many buyers will borrow loan from the bank to pay the supplier, do it wrong for once, then you are at risk of bankruptcy or even going to jail.

Going through the dispute cases we have witnessed in chemical industry, we found there is one thing in common – the suppliers are either small trading company, or new company or offshore Hongkong company or even fake company.

So when you are trying to buy big quantity of chemical products(like Urea 46) from China, first of all, you need to identify who is the top exporters of this products in the past year in China?

If you can dig out the top 10 exporters in China for the product Urea 46, get a quote from each of them, and choose one to deal with, that is the right thing to do to make your transaction safe.

Companies like Piers have been offering this service.

China Customs has a subsidiary company that sell China import and export data, to acquire the top Chinese exporter list, you need to know the HS code for this products, as this data are abstracted from custom clearance form, people might call same products different name, but in 98% cases, it should use same HS code.

The tricky part with this is that some similar products might be categorized under the same HS code, for example, there is Urea 23, Urea 46, or other fertilizers, that might use the same HS code. In that case, when you purchased the top exporter list and contact the suppliers on this list, you might find out that only 30% of the suppliers on this list can provide Urea 46.

Despite of this, the top export list is still valuable. It is the only way to indentify big and decent suppliers for certain product.

The top suppliers will be sorted by either exported value or exported quantity. The list is in Chinese. You would need to do some research to find their contact information online, as the list only have supplier name, export volume and ranking.

We recommend big buyers and chemical buyers to use this custom data for sourcing.

5. Avoid Companies that Operate in city b, but register in city A

We done hundreds of verification every year. To be fair, most suppliers are good. 5% are fishy for different reasons.

Chemical industry is notorious for fraud and dispute. So even many Chinese trading companies don’t accept inquiries on chemical products. They know even they are Chinese companies, even they are veterans in the business, but they are not 100% confident that they can make it safe.

One trick those bad suppliers use is that registering their company in Dalian or Qingdao(or any other place), while operate only in a city in another province, most probably in Hebei province, where the chemical scammers gathered.

They call their office in Hebei province, a branch or a subsidiary company, which they can’t show a license.

What is my perception of this operation is that they are preparing of running away after getting your money.

If a company is registered in Dalian, they they need to pay tax in Dalian, they are governed by local police, court, administration of industry and commerce, tax bureau, customs. However, they only operate in Shijiangzhuang city of Hebei province, even though they don’t have a license there.

So after they get your money, the scenario would be like this:
You have to report the case to local police, when you go to local police, the police will find they are not operating within their jurisdictional area.

You go to the Dalian court to sue the company, and they don’t have an address in Dalian to deliver the notice of respondence to action.

You make a complaint with local administration of industry and commerce, sorry, they also can't find the company in Dalian.

Then you might try to do the same in Shijiangzhuang city, the government will tell you, this company is not registered in Shijiangzhuang, so they don’t have jurisdiction.

I can't see any other reason of this operation, other than causing obstacles for you to get your money back.

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