What do you do when you receive poor-quality goods from China? It's not an uncommon problem, but it can be a difficult one to resolve. For a foreign trade company that is working with Chinese suppliers, it's important to know how to cancel a contract with a supplier and get a refund. Whether you're getting ripped off or there's some other reason you want your money back, it's critical to know the options you have.
If you're importing from China, you may be wondering what kind of warranty to expect. In short, there are no warranties when importing products from China, or other countries in Asia for that matter. The only time you might be able to get one is when the supplier has a strong relationship with their manufacturer, and even then, it's rare. When you pay the balance of your order to your supplier, they have no incentive to offer any form of warranty that allows for free returns and replacements of defective products. All you might get are free spare parts—but even then, you'll still need to pay the costs of air freight. This happens because most manufacturers in China don't have the margins to offer warranties. It's part of the risk that keeps the unit cost low, and it's ultimately up to the buyer to ensure that they have a proper quality assurance program in place. Assuming that you can fall back on a supplier warranty is destined to fail. In fact, if you do get some sort of compensation, you should consider it as a bonus.
When you’re trying to get a refund from your Chinese supplier, the first thing you can do is to negotiate with him. Negotiation is the most cost-effective measure to get your money back, but the key is how to persuade the Chinese supplier to refund. To make this work, you have to have some sort of leverage on the supplier. For example, if you know other customers of the supplier, you can reveal to them that the supplier is owing money to you, and then copy the relevant correspondence to the supplier. In this way, your supplier may negotiate with you to maintain his credit with other customers. Nevertheless, you should ensure that no obligation of confidentiality to your Chinese suppliers is violated in this correspondence.
If negotiation with your supplier didn’t work you can always try to make a complaint to the Chinese Embassy or Consulates in your country. They may refer your complaint to law enforcement agencies or trade promotion agencies in China, which may be able to mediate your complaint. You also can register complaints against product quality, service, and delivery problems with local law enforcement agencies in China, like the local administration for market regulation or the local commission of commerce. Keep in mind that the response may vary depending on the size of the claim and the amount of pressure you place on officials. Additionally, if you find that the Chinese supplier has joined a business association or chamber of commerce, you can make complaints to these organizations as well. Some suppliers have spent a large amount of money to join trade organizations. Others are afraid their membership will be revoked if they commit infractions.
Litigation or arbitration against the supplier in China can be used as a last resort and only if you have a Chinese OEM agreement. Demand letters work better than you may expect, and litigation is affordable. The case will proceed at a quicker pace than what you may expect in China—usually within six months after filing an action. You should communicate appropriately with your Chinese partners before filing a lawsuit and collect as much evidence as possible during this process. Otherwise, once the legal proceedings begin, you may not get any evidence from them. It is best if you hire a law firm in China to help you sue your supplier and get your money back.
To avoid quality issues, time-consuming delays, and losing your money, we advise you to perform a factory audit and quality inspections, before placing your order or sending the full amount of money. Read more in our article *why quality control* or book your free consultation.
