What to do in the first 48 hours
Evidence gets weaker every hour the goods sit in your warehouse. Before anyone breaks down the pallets, do this:
- Photograph the load as it arrived. Container seal number, container number, the stacked cartons, any crushing or water staining. If the seal was broken or the number does not match the bill of lading, note it on the delivery paperwork before you sign.
- Photograph carton marks and the packing list so every defect traces back to a carton, and through the carton to a production batch. Factories argue about mixed stock. Carton numbers end that argument.
- Photograph defects with a ruler in frame, plus a wide shot showing the quantity. Video of a functional failure is worth more than ten still images of a dead unit.
- Quarantine the defective units. Do not scrap, repair or sell them. A supplier who agrees to compensate will often want photos of specific serials.
- Send a short holding email the same day. Two lines is enough: the order number, that a quality problem has been found, and that a full count is coming. This starts the clock inside your contract instead of letting it run out.
Keep it on email, not only WhatsApp. Chat threads get deleted and sales reps change. An email chain with attachments is what you show a payment platform, an insurer or an arbitrator later.
Is it shipping damage or a factory defect?
This is the first fork, and importers lose weeks by claiming from the wrong party.
- Transport damage looks like crushed corners, water staining, shifted pallets, and units broken inside otherwise intact packaging. On FOB terms, risk passes to you once the goods are loaded, so the route is a claim on your cargo insurance and a notice to the carrier, usually within three days of delivery under the carrier's bill of lading terms. Note damage on the delivery receipt at the moment you sign for it.
- Factory defect looks like the wrong material or grade, the wrong colour against your approved swatch, missing components, bad welds or stitching, dimensions outside tolerance, functional failure on a new unit, wrong labelling. That is the supplier's responsibility on any Incoterm, because they shipped goods that did not match the specification.
- Packaging that was never strong enough sits in between. If cartons collapsed under normal stacking, that is usually a supplier fault, since packaging is part of the spec you approved.
If both happened, split the claim. Photograph and count them separately, and do not let the factory use a few crushed cartons as cover for a batch of bad units.
How bad is it, in numbers?
A claim built on "a lot of them are bad" gets a shrug. A claim built on a defect rate gets a settlement. Pull a proper sample rather than checking the twenty easiest cartons, and classify what you find the same way an inspector would:
- Critical defects make the product unsafe or illegal to sell. A single one is a stop.
- Major defects mean a customer would return it or refuse it.
- Minor defects are cosmetic and unlikely to trigger a return.
Compare the result to the AQL you agreed on the purchase order, commonly 2.5 for major and 4.0 for minor under ANSI/ASQ Z1.4. If the batch fails at those limits, you are not asking a favour, you are pointing at a term the factory already accepted. Write down the sample size, the number inspected, and the count in each class. Those three numbers carry the whole claim.
How do I raise the claim?
Send one structured email, in plain English, to the sales contact and copy anyone senior you have met. Include the purchase order number and shipment reference, the total quantity, the sample size and defect counts by class, the agreed AQL, dated photos and video, the carton numbers involved, and the remedy you want with a deadline for a reply. Two to three working days is a reasonable deadline.
Tone matters more than most people expect. Chinese factories respond badly to accusation and well to a documented problem with a named solution, particularly when the relationship has a future. Skip the threats in the first message. You can escalate later, and you only get one first message.
What should I ask for?
Pick the remedy that matches the defect and your stock position, and ask for it directly:
- Rework. If the fault is fixable where the goods are, a local rework team or your own staff can sort, re-test or repack, with the factory paying the labour. This is the fastest way to save a selling season.
- Free replacement units on the next production run. The most commonly accepted remedy, because it costs the factory materials rather than cash. Get the quantity and the shipping terms written down, and check who pays the freight.
- A credit note against the next order. Clean, easy for the factory to approve, and worthless if you are not ordering again. Take cash instead if the relationship is ending.
- A partial refund on the defective quantity. Realistic when a balance is still unpaid, harder once the factory has all your money.
- A discount to sell as B-grade. Sometimes the best commercial outcome for cosmetic defects, if your market and your brand allow it.
Sending the goods back to China is almost never the answer. Return freight, export clearance and duty drawback usually cost more than the goods are worth, and the factory knows it.
What leverage do I actually have?
Be honest about this before you decide how hard to push:
- An unpaid balance is the strongest position there is. This is exactly why the standard structure is 30 percent deposit and 70 percent against inspection or a copy of the bill of lading. See safe payment terms.
- Future orders. A factory that wants your next purchase order will fix this one. Say plainly that you want to keep buying and that this needs settling first.
- Alibaba Trade Assurance if you ordered and paid on the platform, which has a defined dispute window and requires your evidence and often a third-party inspection report.
- Your payment channel. Credit card and PayPal disputes have deadlines counted from the payment date. A telegraphic bank transfer has none, which is why it is the riskiest way to pay a new supplier.
- Your contract. If you signed a supply agreement or an NNN-backed contract naming a quality standard and an arbitration body such as CIETAC, you have a real escalation route. Without one, you are negotiating.
- A third-party report. An inspection firm such as SGS, QIMA, Bureau Veritas or Intertek can inspect the goods in your warehouse and issue a report. It costs a few hundred dollars and converts your word into evidence a platform or insurer will accept.
Stopping it happening twice
A defective shipment is usually the visible end of a process gap earlier in the order. The fixes are unglamorous and they work:
- Approve and seal a golden sample before production, so "acceptable" is a physical object rather than an opinion.
- Put the AQL, the defect classification and the quality standard on the purchase order itself, not in a chat message.
- Run a pre-shipment inspection while the goods are still in China and still unpaid, and gate the balance payment on a pass. Catching a bad batch at the factory costs a few hundred dollars. Catching it in your warehouse costs the batch.
- Add a during-production check on long runs, so a material substitution shows up at 20 percent complete instead of at the port.
- Ask why it happened: a changed material supplier, a subcontracted process, a new operator, or a quiet cost-down after you negotiated the price. The answer tells you whether this factory is fixable.
Where Mila Sourcing fits
Most of the claims we handle are ones the importer never has to make, because the goods were checked in China while the balance was still unpaid. Our agents run three-stage quality control against a sealed golden sample, and when something does go wrong they raise it with the factory in Mandarin, on the ground, with the purchase order terms in hand. That is Sourcing Activation and Full Production Management.
Related, if you are dealing with a bad batch right now: