hi what's up sourcing warriors I hope you're having a great day someone from
my facebook group asked me I found a direct Chinese factory but they don't
have export license what should I do so in this video I'm gonna explain
number one what should you do and number two the pros and cons of a working with
a factory who doesn't have an export license if we just met my name is yupingwang
I'm here to share with you the best
sourcing and money-making tips by the way if you're a complete beginner very
new to sourcing I have a created this what to say cheat sheet the link is below
it's a free download it has some great information
to help you start sourcing not like a rookie it will help you start source and
talk like a pro so free download - feel free to check it out so you'll find a
factory but they don't have export license why do they don't have export license
while they're talking to you without an export license actually in
China the import and export business are highly regulated and its quota based to
apply for import and export license is a complex process even if you have the
license you have to meet the annual quota so it is not uncommon to find
direct factory who doesn't have import export license it is not necessarily bad
to work with the directive factory who doesn't have export license so let me
explain the pros and cons of a working with a direct factory who doesn't have
the export license pro first or the con first? so let's go with the pro so working
with the directa factory the pro number one the advantage number one is the cost
the price these factories who doesn't have expert license most likely they are
the direct component suppliers and the subcontractors to other companies who
are doing the export business not to mention all these middlemen trading
companies so the price you're getting from these direct factories without a
export license is most likely the most competitive so that is a huge
consideration if your product is very cost sensitive and the pro number two is
the risk of a competition the risk of a competition working with the direct
factory without a driver without a driver license no without export license is
less because they are not interested in selling your product directly to the
market where you are selling they are interested in focusing producing the
product the component and the product they are producing and supply to other
people so that two advantages working with the direct factory without export
license should be considered if depending on your product price
sensitivity and the design sensitivity the cons of a working with these direct
factories without export license number one these factories are very small most
likely there are very small companies not necessarily they're not good they
could have been in business for twenty thirty years but there is still single
owner mom-and-pop shop a lot of tribal knowledge the owner knows it all there
is no process where SOPs like those big factories the Con number two is
transaction complication since the direct factory doesn't have export
license they have to find a middle person the expert agency who does have
export license in order to do business with you so the expert agency normally
charge between two to five percent to help these direct factory out so the
Proforma invoice initially coming from the directed factory now is coming from
the expert agency and the beneficiary on the Proforma invoice for your payment is
going to be the export agency when you make the wire transfer you are actually
sending money to the export agency when they
if the money they will transfer the money to the factory and then they start
the production this does add a layer of a complication to the PO
transaction because there is a middleman you involved now so what should you do now
let me tell you my experience personally I don't mind working with these direct
factory without a export license at all as long as their price is super competitive
most of the time these small direct factories their price is a lot more
competitive than other people would have quotes you and as long as their quality is
good they're dependable and they're honest people to work with just because
they're small they don't have a export license that doesn't mean they're not
good so I don't mind working with this people at all what about the transaction
complication how do you protect yourself number one make sure the Proforma in
ways coming directly from the factory to you the reason you do this is to make
sure communication trails are clear you're doing business between yourself
and in the factory just because the proforma invoice now is titled between
you and the expert agency it doesn't mean that you are all of the sudden
start to communicate with the export agency keep your communication trail
clear between you and the factory the number two is to make sure you ask the
factory to acknowledge your payment made to the export agency it doesn't matter
how much $5 a hundred dollars at the minute they acknowledged that you have
sent the payment to the export agency and they have received the payment from
the export agency you have established the connection between you the export
agency under the factory and the paper trail
is established so if you find a small direct factory who doesn't have export
license it is okay to work with them maybe it's a good fit for your business
maybe you just started as you continue to grow you can continue to find the
bigger factories who does have license I hope this video is helpful for
you if you love and enjoy the content don't forget to support this channel
subscribe and I'll see you soon