Buying at the Canton Trade Fair? Watch your due diligence and go for the final day bargains

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Sep. 14 – The time of year when autumn turns leaves gold sees many Western traders also pack their bags, head for the airport with China visas neatly stamped in their passports. Yup, it’s Canton Trade Fair time again.

And two months later, it’s time when phones start ringing at the Guangzhou offices of Dezan Shira & Associates, with traders from far and wide asking for advice on what to do as “orders placed don’t seem to have arrived despite my money transfer going through.”

Canton, (actually the old colonial name of Guangzhou, although the title has stuck for the trade fair) sees the golden leaves of autumn bring two species out into play – foreign buyers, many of them small family businesses, meeting the China salesmen at the Canton Trade Fair.

So, how can you prepare yourselves to ensure you get what you buy, presumably at the right price, and ensure, without spending any serious money, that you will in fact receive the goods you have negotiated and paid for?

It’s the Canton Trade Fair, not the Canton Manufacturers Fair
Despite the appearances, 90 percent of the stands at the fair do not belong to the manufacturers directly, but to agents. That means markups – often highly significant – on products you can source in China, with just a little more homework, from the manufacturer directly. The more savvy buyers don’t attend the fair but spend the time visiting factories around Guangdong instead.

Agents
It costs money to set up a factory to make stuff, it costs peanuts to become an agent. If buying from an agent, you need to know his credentials. In fact, we’d recommend buying from the factory rather than agents, if you can, for two reasons:
1) It’s cheaper, as pointed out above
2) You can conduct due diligence on a factory, it’s far harder with an agent

Due diligence
Ask to see a copy of the factory business license if your salesman says he represents a factory. Does he? The business license will tell you:
The name of the legally responsible person
The legal registered address of the factory
Their registered capital and limited liability status (see previous post on this blog)

All pretty useful stuff to know if you’re buying and something goes wrong. Agents have a nasty habit of just disappearing, safe in the knowledge that it’s unlikely you’ll commit money to pursuing them and knowing the difficulties of your attempting to do so. Dealing with a factory gives you a legal address and person, and a local law firm will be able to follow up any dispute with them for you. Agents, like the seeds of an autumnal dandelion flower, tend to just waft away in the breezes of dispute and vanish forever.

Buying…with money
Suitcases of cash = terrible idea
Wiring of money to unknown personal accounts in China = very bad idea
Strict adherence to letters of credit and the release of funds upon acceptance of goods = good idea

The entire banking and LC system is there for your benefit. Use it.

Bargains
Stay until the last day and buy everything at a 50 percent discount or more. They do not want to take all those samples and stock back with them to the warehouse, so take advantage of it. Truly, it’s like the first day of a New Year’s sales at Macy’s.

Enjoy the fair, be sensible when dealing with salesmen, and be smart over your trading.

Dezan Shira & Associates Guangzhou office contact details are here.