How to Manage Product Returns When Importing Products from Asia

Importers are stuck between a rock and a hard place when it comes to product warranties and returns. At home, you need to comply with consumer protection laws, which may allow your customers to return your product for any reason within a certain time span.

At the same, importers have little to nothing to fall back on when it comes to returning products or claiming refunds from their overseas manufacturers.

In this article, I share some of our experiences managing returns, and why you should never assume that your supplier will offer any support.

This is covered

• There are no product warranties in international trade
• Returning products is slow and expensive
• Spare parts and installations
• Compensating for lost revenue
• You need to budget for defective items and customer returns
• Always get your products quality inspected

There are no product warranties in international trade

There are no international agreements in place regulating refunds, returns or warranties when importing products. While some manufacturers claim that they do offer a ‘product warranty’, this should not be confused with a consumer warranty.

Assuming your supplier even has a written warranty policy, you’ll likely find that it only consists of ‘free’ replacement parts - as long as you’re willing to pay for delivery.

Under no circumstances should you expect a refund from your supplier or a free shipment of replacement products.

It’s ultimately up to your supplier if they’re willing to honor their own ‘warranty policy’, assuming they have one, to begin with. Any successful product return should be seen as a bonus, and not something you should expect to fall back on.

Returning products is slow and expensive

A few years ago we helped customer manufacture watches in Shenzhen. The watches passed the quality inspection with no major defects identified and shipped a few days afterward.

But, it didn’t take long before the customer found that something was not right with the latest production run.

After a few days of testing, they found that the watch’s hands were moving too slow. Given that this rendered the watches essentially worthless, it was an existential issue for the importer.

Long story short, it turned out that the hands assembled on the watches were too heavy. This, in turn, was caused by the buyer’s desire the get the watch hands plated in a nice looking metallic blue color.

Most watches use aluminum hands, while this specific watch had copper hands. The problem is that copper density (8.96 g/cm³) is almost four times that of aluminum (2.7 g/cm³) - thus making the hands too heavy for the quartz movement.

Why is this story relevant?

Because it demonstrates that severe quality issues are not always caused by the supplier. In this case, the root cause was the buyer’s request to achieve a certain material color and finish. The supplier found a way to comply with the buyer’s request, which in turn caused an unexpected quality issue.

Return and repair

The customer and supplier agreed that neither party was to blame for the situation. Meanwhile, we helped them work out the terms to return the watches back to Shenzhen and replace the hands.

This is what we managed to get them to agree on:

• The buyer covers the return cost to Shenzhen, China/li>
• The supplier manages customs clearance in China
• The supplier covers the cost to remake new aluminum hands
• The supplier covers the labor cost
• The supplier covers the cost to deliver the watches back to the customer

Result

In the end, the customer got the watches they had paid for. However, all in all, it took more than 4 months from the first defect report until the repaired and functional watches were delivered to the customer. While the supplier did cover some expenses, the customer still lost 4 months of revenue.

It’s also important to note that this was a supplier that we had worked with for a number of years. They cooperated with us throughout the process out of self-interest. That said, they could have pulled the plug at any moment.

Spare parts and installations

Some suppliers provide free spare parts, together with the first shipment. They can also send additional spare parts if you run out - assuming they have some in stock - but the importer is always expected to cover the delivery cost.

Further, all don’t expect any post-sales installation of maintenance. This is simply not included when you buy machines, electronics, and other products directly from OEM suppliers.

Compensating for lost revenue

Manufacturers never compensate for lost revenue due to production delays or quality issues. This is simply not something that the average OEM supplier have the margins for.

You need to budget for defective items and customer returns

Importers selling B2C are always responsible for complying with domestic consumer protection laws. This responsibility cannot be shifted to suppliers in foreign countries.

As such, you need to plan and budget for warranty claims and returns, while also assuming no support from your supplier. You should never count on any support from your supplier - all product repairs, replacements or refunds should be considered a bonus.

Always get your products quality inspected

There’s nothing to fall back on when importing products from manufacturers in China, Vietnam, India, and other developing countries. Production costs are lower for a reason.

This is the reality, regardless of whether you accept that or not.

Ultimately, you must be pragmatic and operate under the assumption that shipped products can never be returned to the supplier.

What this means for you as an importer is that everything comes down to the pre-shipment quality inspection. This is your last chance to verify that your products are matching your design, material and quality requirements.

Luckily, you can use Bureau Veritas InSpec to book quality inspections online.