An export powerhouse, China embraces exporting goods on a global scale, enabling businesses around the world to take advantage of low manufacturing costs and a huge choice of suppliers. While buying from China is easier than ever thanks to advances in transportation, communication, and international payments, it can still seem daunting. With your supplier on the other side of the world, how can you trust your goods will arrive on time and comply with your standards?
What’s more, for decades UK buyers would visit trade fairs like the renowned Canton Fair to touch and feel products and gauge quality. Events such as these were the main link to Chinese exporters, and where a place where buyers could build direct relationships with suppliers and manufacturers. But with travel restrictions in place, how can you instill confidence in new suppliers when you can’t visit factories or attend traditional trade shows?
This is where Trade Assurance comes in. To see the difference it could make to your international business, here’s a breakdown of how this service can make buying from China less risky with pre-agreed delivery dates and product quality.
What is Trade Assurance?
- Your products are not shipped on time as per the contract with your supplier
- Your products do not meet the quality standards as per the contract with your supplier
If an issue arises with an order covered by Trade Assurance, alibaba.com will help you reach a satisfactory outcome. This could mean reimbursing some or all of your costs, or reaching another agreement between you and your supplier.
What it isn’t
So you’re not lulled into a false sense of security, it’s important to note that buying from a supplier offering Trade Assurance doesn’t mean you’re guaranteed a refund. You and the supplier need to agree to some specific terms when ordering the products; you also need to follow the Trade Assurance process, for example, communicating with the supplier via the platform so there’s an official record of what you’ve agreed.
Only when you do this, and the mediators agree that the terms of the order have been breached will you get a refund.
Unlock China and expand your business with Trade Assurance
By giving you some of the assurances you would expect when doing business closer to home, Trade Assurance can empower your business to approach new suppliers in China. Here are some of the ways it can help you grow your business.
Try new suppliers without the risk
It doesn’t matter if your company is only just expanding into Asia, or if you’ve ordered with a Chinese-based supplier before, Trade Assurance can cover you from your very first deal. This makes it easy to take advantage of reduced manufacturing costs in China because you can approach a new supplier with the peace of mind that a Trade Assurance order should meet your specified product standards.
Whereas before you might have had to rely on a personal recommendation or suppliers you have a long-established relationship with, you can now branch out and try a new supplier offering Trade Assurance. By reducing the risk of approaching a new supplier you can quickly increase your network of trusted suppliers – and if you’re not entirely happy with the service offered by a supplier there’s no obligation to keep using them.
Freedom to shop around for a good deal
While buying from China can reduce costs, if you can’t shop around for a good deal your savings will be limited. This is where Trade Assurance is a key benefit as it frees you from being restricted to the prices of a narrow pool of suppliers.
You use Alibaba.com to search for a good price, then check to see if that supplier is signed up to Trade Assurance. If they are signed up, then you can take advantage of the cost saving knowing that you can stipulate the standard of goods and a shipping deadline when placing your order.
The sheer distance goods have to travel between China and the UK can make businesses hesitant to order from a China-based supplier. Trade Assurance can help alleviate this worry as you can specify a shipping date in your contract with the supplier. If they miss this date you can file a dispute to claim a refund.
Knowing when your products should be shipped can make it easier to plan distribution and manage your stock. This can lead to additional savings on top of the product price as it helps you make your distribution chain as slick and efficient as possible. For example, if you have a large order coming from China, knowing when it will ship will mean you can plan getting the goods out to stores or customers as quickly as possible.
Products that meet your standards
When placing an order with a Trade Assurance supplier be as specific as possible about your requirements in the purchase contract. Stipulate the exact materials and dimensions, for example the precise mix of cotton, nylon, and polyester rather than referring to something that’s hard to quantify like ‘good quality material’.
Once you’ve agreed your specific product standards with the supplier, Trade Assurance ensures the product you receive should meet the requirements, or you can raise a dispute. This gives you the buying confidence to make significant orders from a supplier in China knowing that despite the production costs potentially being cheaper the finished product should be of an acceptable quality.
Risks and considerations
While Trade Assurance brings peace of mind when placing an order with a China-based supplier it only covers specific aspects of your order – shipping date and quality. It’s not a total guarantee of a refund and you’ll need to make sure you consider the following:
- The detail needed in your order contract as your Trade Assurance claim can only enforce the terms of the contract
- That both the buyer’s and the seller’s perspectives will be considered in a dispute – the platform you purchased from won’t automatically side with you
- That payments have to be made through the platform or via integrated wire transfer, for example with an FX specialist like WorldFirst, not to the seller’s private account
- That there are maximum claim amounts assigned to a supplier defining the limit of what can be claimed in a dispute
- The time limit for making a claim – for example Alibaba’s Trade Assurance protects your order for 30 days after you receive it
- That your order may not be covered if you don’t follow the Trade Assurance buying process as outlined on the purchasing platform
How to use Alibaba’s Trade Assurance service
To help you see how Trade Assurance could work for your business, here’s a breakdown of how Alibaba protects its customers when either product quality or ship date is not what was agreed.
Alibaba is used by millions of buyers and sellers around the world and is one of the foremost online platforms for global wholesale trade1 . Its Trade Assurance service is a built-in protection service that forms a seamless part of the order journey, making it a great platform for buying from China-based suppliers. The service is completely free too, giving you the chance to recoup thousands on a late or subpar order without having to budget for an additional service fee.
To buy from a supplier with Alibaba Trade Assurance:
- Select the Trade Assurance filter when searching for a product
- Look for the Trade Assurance logo on product listing pages
- Select the ‘Order with Trade Assurance’ button if buying from a supplier you’ve already ordered from
- Use the Alibaba Message Centre to ask the seller if they offer Trade Assurance
Using Trade Assurance on alibaba.com is like making any other order on their site, you just need to follow certain steps to help make sure you can make a Trade Assurance claim if needed. Once you’ve identified a seller offering Trade Assurance make sure that you:
- Communicate with them via the platform using the Alibaba Message Center so there’s an official record
- Request a sample to ensure the product meets your specifications before placing the full order
- Specify the shipping date when you order
- Be clear about your exact product and delivery requirements and create a detailed purchase order (PO) detailing all aspects of the order and shipping
- Pay for the order on the platform or via wire transfer with a service like WorldFirst, NOT directly to the seller’s private account
Additional ways you can protect your order
Production monitoring and inspection services.
For an additional fee local third-party inspection service will visit the seller’s location to ensure everything runs smoothly.
If you’ve followed the steps to get protection then you can make an Alibaba Trade Assurance claim if the supplier fails to comply with your clearly stated order requirements. This means you can shop around through the huge range of products and deals on Alibaba knowing your investment is protected should the shipping date or order quality not meet what was agreed in your order.
Alibaba Trade Assurance tip
You must pay for your order on Alibaba.com, not through third parties (exception: wire transfer) for your order to qualify for Trade Assurance protection.
How to pay using WorldFirst International Wire Transfer
Step 1: Access the Alibaba payment platform through:
Step 2: Select “Wire transfer”, then select “International wire transfer”. Verify your payment amount information and select “View account information”.
Step 3: Download or print the international wire transfer account information page. This has the important information you will need to set up a payment beneficiary.
Step 4: Complete the wire transfer via the WorldFirst online portal or over the phone with one of our China payment experts. Make sure to include your Alibaba order ID in the remarks.
Making an Alibaba Trade Assurance claim
You can access the ‘Apply for refund’ functionality on the platform once you’ve made your initial payment for your order.
If you’re waiting for the supplier to confirm they’ve shipped the order, first contact them via the Message Center. If the supplier doesn’t schedule the delivery or agree an extension with you, you can ask Alibaba for a refund.
If the order quality is not in line with your order contract you’ll need to ask for a refund within 30 days of receiving your order.
Once you submit a dispute both you and the supplier have 30 days to negotiate without the involvement of Alibaba. You should communicate with the seller via the Message Center so there is an official record of your conversations and anything you agree to.
To break the process down further, here’s a timeline of what can happen once you raise a dispute:
- Day 4 – the first point at which you can select ‘escalate dispute’ to ask Alibaba to mediate if the seller hasn’t responded
- Day 7 – the dispute will automatically be escalated if the supplier hasn’t responded to your proposed solution
- Day 7 – the dispute will automatically be cancelled if you the buyer haven’t responded to a proposed solution
- Day 30 – if you and the seller have been negotiating but are yet to reach an agreement Alibaba will step in as a mediator
When the Alibaba Dispute Mediation Team get involved they will first ask for evidence from you and the seller – usually within 5 working days. Once they have sufficient evidence they will make a decision including if all costs will be met by the seller or if Alibaba will support the return of goods at all.
A Trade Assurance limit can apply to suppliers so if your order exceeds this limit you won’t get a full refund. For example, if you have a £15,000 order but your supplier is only covered for £10,000, with Trade Assurance your refund will be limited to £10,000. This means it’s well worth checking a supplier’s Trade Assurance limit before you place a large order with them.
Support from Alibaba and China payments experts
WorldFirst has more than a decade of experience helping businesses pay into China, and in-depth knowledge of the Alibaba platform.
Use WorldFirst to help you finalise your Alibaba purchases and benefit from:
- Flexibility to pay Chinese suppliers online in CNH, USD, HKD, or EUR
- Competitive foreign exchange rates
- A secure, easy-to-use online platform
- Same- and next-day payment options^
Speed up payments to Asia
Access our networks and over a decade of experience helping businesses pay into China. WorldFirst have made over 1 million payments into China in the 12 past months, valued at almost £13bn
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* When opting to pay suppliers on Alibaba.com by transfer to Singapore or Hong Kong settlement accounts
If you’re interested in understanding the solutions offered by WorldFirst, our team of experienced relationship managers are on hand to provide you with the information you need. To find out more, visit our website, email email@example.com, or call 0203 925 9326.
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2 – Average cost comparison