How To Import Chemicals From China
According to the China Petroleum and Chemical Industry Federation (CPCIF; Beijing), there are over 25,000 companies in the chemical industry. Weeding through the various companies in search of the right supplier is a difficult task. Before you can begin importing, however, you need to learn the basics of how to import chemicals from China.
There are many chemical production bases and large-scale petrochemical parks geographically spread around China. These include Nantong, Suzhou, Wuxi, Binzhou, Kaifeng, Shanghai, Nanjing, and the Daya Bay. Most of the fine chemical production centres are in located in Zhejiang, Jiangsu, Shandong, Shanghai, Tianjin, Guangdong, and other coastal areas.
Chemical sourcing is challenging. Unlike other industries, chemical quality is not something you can judge with a quick glance. You should visit the production facilities and factories before agreeing to work with a supplier, but which plants should you visit? There are several ways to begin:
1. Finding a Supplier
A. B2B PORTALS:
The most convenient way to find chemical information is through B2B portals. The top chemical B2B portals are:
You will need to sort through a lot of information before you will discover any useful leads. Filter suppliers based on your preferences or using portal ranking criteria, such as “ammonium nitrate supplier,” etc. You can also use credit check services and supplier capability assessment services on many portals; Alibaba’s Trade Assurance is a good example.
Alibaba.com also now offers volume buyer services which you might find useful. If you find this to be a tedious task, there’s the “lazy” way of getting quotations: by just “posting buying request”. The portal matches your request to relevant companies in their platform and you review the quotes. If you are not happy with the results, you might have to conduct the search yourself.
B2B portal sourcing is one of the top routes, and possibly the first step, to sourcing your chemicals. Depending on your communication with potential suppliers, you may be able to arrange a delivery of samples to test. Be aware that suppliers will most likely send you their best quality samples. These small batches might not be representative of what you receive in your final order. After testing the sample some buyers choose to place a full order. This can be very risky, as can importing from China without ever visiting the facility that produces your chemicals (more on that in a future post).
b. Recommendations from Forums & Social Media
These days people share information about everything. Although not the conventional way, you can still find a lot of relevant information, especially on forums. Be aware that suppliers occasionally write some of those recommendations, however.
One trick I like to use is to check right away the company’s reputation on Google search. Enter the query “company name+scam” or similar to see if there are any fraud reports against the company, or if they have been blacklisted somewhere.
Here are some forums and groups on LinkedIn that focus on sourcing and importing from China:
- China Sourcing
- China Sourcing Forum
- China Sourcing, Networking, Import, Export, Trading, Manufacturing
- China Sourcing Group
- China Trade Group
You can post inquiries and get advice from experienced forum participants in these groups. The benefit of using a LinkedIn group is that you can also see a commenter's affiliation, and hence have a better idea if they represent a Chinese chemical corporation or are customers.
Most of the social media channels such as Google+ , Facebook are blocked in China and not many suppliers use these. As a result, you may be able to find unbiased advice in these groups, but keep in mind that many are very small and tend to be run by import/export service companies or "gurus" who "teach" you how to import from China.
c. Trade Shows
In my opinion, trade shows are not an efficient way to find chemical suppliers in China. It's true that you get to see a lot of suppliers and merchandise under one roof. Without prior research, however, one can get lost in all the confusion and excitement of such events.
If possible, compile and research a list of manufactures from the exhibitor’s list. This positive due diligence allows you to arrange face-to-face meetings at the trade shows. Before the meeting begins, you will have an idea of the suppliers’ capabilities and can save yourself time. Try to meet with five, or even ten, suppliers on your list to verify their claims. Follow up with factory visits to the top three suppliers (assuming they are local). If the factories on your list don’t meet your criteria; you still have a chance to meet other suppliers at the trade show. Some tradeshow organizers can also arrange meetings on your behalf, if you ask in advance.
The most popular tradeshow is the Canton Fair.
THE CANTON FAIR: PHASE 1 IS SPECIFICALLY FOCUSED ON CHEMICALS
- Inorganic Chemicals: Acids, oxygen compounds, halogen and sulphur compounds
- Organic Chemicals: Hydrocarbons and their derivatives
- Agro-Chemicals: Pesticides, herbicides & fertilizers
- Dyes and Pigments
Click here for more information on chemical trade exhibitions in China.
d. Trading companies and efficiencies
The supplier selection journey can be quite cumbersome and costly. It may take weeks or months, depending on your experience. Dealing with a trading company can be a good option if you don’t have the resources and know-how to invest in the complexities of monitoring your supply chain. The cost will be a little bit higher, averaging about 5-10% more than direct purchases from the factory.
The best trading companies are often focused on a particular industry. Avoid jack-of-all-trades suppliers. I would recommend working with a trading companies in many cases, but most importantly if you’re sourcing chemicals from more than one supplier. The company you select must have an indepth knowledge of the Chinese chemical market.
Trading companies add value in the following ways:
- On-the-ground presence
- Project management
- Quality inspection
- Favorable credit terms
2. The Next Step: Visiting China
Prior to your China visit, you should do additional research and study the price dynamics. This improves your negotiating position.
Remember to bring factory evaluation documents or a scorecard. If possible, arrange to be accompanied by an independent or in-house technical specialist. The specialist must have an understanding of the production process and application of the chemicals.
A factory evaluation document or scorecard should include:
- Profile and history of the company
- Range of products and target markets
- Test reports – Certificate of Analysis & (MSDS) sheets
- Continuity of supply and support
- Technical review of the manufacturing facilities
- Quality control measures and procedures
- ISO 9001-2000 certification
If your country of importation requires additional compliance documents, such as EU-REACH compliance, ask your supplier to show them to you.This procedure can be more involved for some chemicals. Also keep in mind that some chemicals require export licenses. If a license is required, the export procedure may be delayed.
3. Contracts: English or Chinese?
A lot has been covered the guys behind China Law Blog. Briefly, contracts can be in English & Chinese, BUT “ If the contract is in two languages, the parties are free to choose which language will control. If the contract is in Chinese and in English and the parties do not specifically choose a governing language, a Chinese court or arbitration panel will take the Chinese version as controlling. If the contract is in English, then the court or arbitration panel will appoint a translator to do the translation. These translators are often not very good, which causes many problems in litigation/arbitration, since the case gets sidetracked in disputes about translation.” Keep reading here.
- Make the jurisdiction a Chinese court.
- Make the governing law Chinese law.
- Make the governing language Chinese.
4. Shipping & Logistics
Some chemicals are hazardous. Great care should be taken when arranging a shipment, but not all shipping agents are familiar with handling hazardous cargo. Hazardous chemicals also tend to be more expensive to ship than regular cargo. It’s important to shop around for the best freight rates. You can use tools such as FreightOs and Xeneta.
Although this a light guide on how to import chemicals from China, the takeaway is that it is OK to work with a trading company as long as their services add value to the purchasing process by making it more efficient. The decision will ultimately be based on a lot of other factors. In the next post I’ will highlight the major challenges in sourcing chemicals from China and how to avoid the potential pitfalls.
Please comment below to share opinions and experience with sourcing chemicals from China.