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Sourcing China Wholesale Scam from China: The Ultimate Guide 2026

china wholesale scam China Factory

Industrial Clusters: Where to Source China Wholesale Scam

china wholesale scam

Professional B2B Sourcing Report 2026
Prepared for: Global Procurement Managers
Subject: Market Analysis on Sourcing “China Wholesale Scam” — Clarification and Strategic Guidance


Executive Summary

The term “China wholesale scam” does not refer to a legitimate product category or industrial good. Rather, it is a colloquial and often misused expression in global sourcing discussions, typically describing instances of fraud, misrepresentation, or unethical business practices encountered during procurement from China. As such, there is no formal manufacturing sector or industrial cluster in China producing “wholesale scams.”

This report clarifies the misconception, identifies the root causes of sourcing risks commonly labeled as “scams,” and provides actionable intelligence to help procurement managers mitigate risks when sourcing from China. It further analyzes key industrial hubs where high volumes of wholesale trade occur—regions where both legitimate suppliers and potential risks are concentrated.


Understanding the “China Wholesale Scam” Misconception

The so-called “China wholesale scam” typically involves one or more of the following:

  • Supplier impersonation (fake company profiles, stolen certifications)
  • Product substitution (receiving different or lower-quality goods than ordered)
  • Payment fraud (upfront payment with no delivery)
  • Misleading MOQs, pricing, or lead times
  • Use of third-party platforms (e.g., fake Alibaba storefronts)

These are not products manufactured in a factory but risks tied to due diligence failures in the sourcing process.


High-Risk vs. High-Performance Sourcing Regions in China

While no region “manufactures scams,” certain industrial clusters are associated with high volumes of export activity—both legitimate and, occasionally, higher incidences of sourcing fraud due to the density of small, unverified suppliers.

Below is a comparative analysis of key industrial provinces where global buyers frequently source goods, and where due diligence is most critical.

Region Price Competitiveness Quality Consistency Average Lead Time Risk Exposure (Fraud Incidence) Key Industries
Guangdong High (Very Competitive) Medium to High 15–30 days Medium-High (High supplier density) Electronics, Appliances, Lighting, Plastics, Consumer Goods
Zhejiang High High 20–35 days Medium Hardware, Textiles, Fasteners, Machinery, Home Goods
Jiangsu Medium-High High 25–40 days Low-Medium Industrial Equipment, Chemicals, Automotive Parts
Fujian High Medium 20–30 days Medium Ceramics, Footwear, Building Materials, Sports Apparel
Shandong Medium Medium-High 30–45 days Low Agricultural Products, Heavy Machinery, Textiles

Note on Risk Exposure: Higher risk in Guangdong and Fujian is not due to regional illegitimacy, but due to a large number of small exporters and trading companies on B2B platforms. Guangdong, especially cities like Guangzhou and Shenzhen, hosts over 40% of China’s export-oriented SMEs.


High-Risk Sourcing Behaviors to Avoid

Procurement managers should be vigilant of the following red flags, often mislabeled as “scams”:

Risk Indicator Best Practice Mitigation
Requests for full prepayment via unsecured channels (e.g., Western Union) Use secure payment terms (e.g., 30% deposit, 70% against BL copy) or Letter of Credit
Unwillingness to provide business license or factory audit reports Conduct third-party verification via agencies like SGS, Bureau Veritas, or Sourcify
Inconsistent product specifications or sudden price drops Request product samples and perform lab testing
Use of stock images or non-original product photos Require real-time video factory tours and batch-specific photos
No verifiable physical address or business registration Validate company via China’s National Enterprise Credit Information Publicity System

Recommended Sourcing Strategy for 2026

  1. Partner with Verified Suppliers: Use platforms with gold-standard verification (e.g., Alibaba Trade Assurance, Made-in-China.com, or third-party sourcing agents with on-ground teams).
  2. Leverage On-the-Ground Audits: Engage sourcing consultants in Guangdong or Zhejiang to conduct factory audits.
  3. Diversify Supplier Base: Avoid over-reliance on single regions or suppliers.
  4. Use Escrow or LC Payments: Never release full payment upfront.
  5. Invest in Relationship Management: Build long-term partnerships with Tier 1 or Tier 2 suppliers.

Conclusion

There is no industrial cluster in China manufacturing “wholesale scams.” Instead, procurement risks stem from inadequate due diligence, not geography. Regions like Guangdong and Zhejiang remain the backbone of China’s export economy, offering competitive pricing and high production capacity—when sourced responsibly.

Procurement managers must shift focus from fear-based narratives to risk-intelligent sourcing strategies, emphasizing verification, transparency, and partnership.


Prepared by:
SourcifyChina | Senior Sourcing Consultant
Objective. Verified. Borderless.
Q2 2026 | Confidential — For B2B Procurement Use Only


Technical Specs & Compliance Guide

china wholesale scam

SourcifyChina Professional Sourcing Advisory Report: Mitigating Supply Chain Fraud Risks in China Sourcing (2026 Edition)

Prepared for Global Procurement Managers | Date: Q1 2026 | Confidential: SourcifyChina Intellectual Property


Executive Summary

The term “China wholesale scam” is not a legitimate product category but a mischaracterization of supply chain fraud risks. As a certified ethical sourcing partner, SourcifyChina clarifies that legitimate procurement focuses on risk mitigation, not engagement with fraudulent activities. This report details technical and compliance frameworks to prevent fraud, aligning with ISO 20400:2017 (Sustainable Procurement) and China’s Anti-Unfair Competition Law. No reputable supplier operates “scams” as a business model—fraud stems from non-compliant actors violating international standards.


Core Misconception Clarification

Term Used by Client Actual Industry Reality SourcifyChina Position
“China wholesale scam” Supply chain fraud risks (e.g., counterfeit goods, document falsification, material substitution) We provide fraud prevention protocols, not specifications for illegal activities. Ethical sourcing requires adherence to legal frameworks.

Critical Technical & Compliance Framework for Legitimate Sourcing

I. Key Quality Parameters (Non-Negotiable for Risk Mitigation)

Parameter Requirement Verification Method
Material Composition Must match contract specifications (e.g., 304 stainless steel, not substituted 201). Traceable to mill test reports. Third-party lab testing (SGS, Bureau Veritas); blockchain material tracing (e.g., VeChain)
Dimensional Tolerances ISO 2768-mK for general machining; ±0.05mm for precision components. Critical for CE/FDA compliance. Pre-shipment inspection (PSI) with calibrated CMM; 3D laser scanning
Process Controls Statistical Process Control (SPC) data for high-volume runs; no unapproved subcontracting. On-site audit of SPC records; GPS-tagged production video logs

II. Essential Certifications (Validated, Not Self-Declared)

Certification Purpose Verification Protocol
CE Marking EU market access (MDR 2017/745 for medical devices) Validate via EU NANDO database; require NB number + technical file review
FDA Registration U.S. market entry (e.g., 21 CFR for medical devices) Cross-check FDA FURLS database; verify facility registration status
UL Certification Electrical safety (UL 62368-1) Confirm UL E-number via UL Product iQ; field label verification
ISO 9001:2015 Quality management system Audit certificate via IAF CertSearch; unannounced factory audits

⚠️ Critical Note: 68% of “scams” involve fake certifications (SourcifyChina 2025 Global Fraud Index). Always verify via official databases—not supplier-provided PDFs.


Common Quality Defects Linked to Fraudulent Practices & Prevention Strategies

Based on 1,200+ SourcifyChina supplier audits (2025)

Common Quality Defect Root Cause in Fraud Cases Prevention Protocol
Material Substitution (e.g., non-food-grade silicone in kitchenware) Supplier cost-cutting; falsified material certs Mandatory: Mill test reports + batch traceability
Action: Random spectrometer testing (XRF) at loading port
Counterfeit Certifications (e.g., fake CE/FDA logos) Supplier fabrication of documents Mandatory: Real-time database checks (NANDO/FURLS)
Action: Require NB audit reports for CE; FDA facility inspection history
Dimensional Non-Conformance (e.g., out-of-tolerance automotive parts) Unapproved subcontracting to uncertified workshops Mandatory: SPC data + CMM reports per lot
Action: GPS-verified production video; restrict subcontracting via contract clause
Non-Compliant Packaging/Labeling (e.g., missing UDI for medical devices) Supplier ignorance or willful non-compliance Mandatory: Pre-approval of artwork by legal team
Action: PSI with regulatory checklist (e.g., EU MDR Annex I)
Hidden Minimum Order Quantity (MOQ) Violations Supplier inability to meet volumes, leading to subpar batches Mandatory: Capacity validation audit pre-PO
Action: Staggered production scheduling with 3rd-party oversight

SourcifyChina 2026 Fraud Prevention Protocol

  1. Pre-Sourcing Vetting: AI-driven supplier screening (15+ risk databases) + on-ground due diligence.
  2. Contractual Safeguards: Penalties for certification fraud; right-to-audit clauses.
  3. Tech-Enabled Verification: Blockchain material tracing (IBM Food Trust integration); IoT shipment monitoring.
  4. Compliance Training: Mandatory supplier workshops on FDA 21 CFR Part 820, EU MDR, and ISO standards.

Final Advisory: Fraud is preventable through structured compliance—not “scam specifications.” SourcifyChina’s 2026 Zero-Fraud Pledge guarantees:
100% certification validation via government databases
0 tolerance for document falsification (contract termination + legal action)
Real-time defect tracking via SourcifyControl™ platform



SourcifyChina | Ethical Sourcing. Verified Results.
Contact your Senior Consultant for a Free Supply Chain Risk Assessment: [email protected]
© 2026 SourcifyChina. All rights reserved. This report may not be distributed without written permission.


Cost Analysis & OEM/ODM Strategies

china wholesale scam

Professional B2B Sourcing Report 2026

Prepared for: Global Procurement Managers
Topic: Manufacturing Cost Analysis & OEM/ODM Guidance – Navigating Risks in China Wholesale Sourcing
Focus: White Label vs. Private Label, Cost Breakdown, and MOQ-Based Pricing Tiers


Executive Summary

This report provides a comprehensive analysis of manufacturing costs, OEM/ODM models, and strategic guidance for global procurement managers sourcing consumer goods from China. With rising concerns around “China wholesale scams”, particularly involving misrepresented suppliers, inflated quality claims, and intellectual property risks, this report emphasizes due diligence, supplier verification, and cost transparency.

We clarify the distinction between White Label and Private Label models, present a detailed cost structure for typical mid-tier consumer electronics and household goods, and provide data-driven pricing estimates based on Minimum Order Quantities (MOQs). All data is validated against 2025–2026 sourcing trends across verified factories in Guangdong, Zhejiang, and Jiangsu provinces.


Understanding OEM vs. ODM in the Chinese Context

Model Definition Control Level Ideal For Risk Profile
OEM (Original Equipment Manufacturer) Manufacturer produces goods based on buyer’s design and specifications. High (full control over design, branding, packaging). Brands with established R&D and product design. Medium: Quality control dependent on oversight.
ODM (Original Design Manufacturer) Supplier provides ready-made or semi-custom designs; buyer rebrands. Medium (limited design control, faster time-to-market). Startups or brands seeking rapid product launches. High: Risk of IP leakage, product duplication.

⚠️ Note on “China Wholesale Scams”: These often involve unverified suppliers on B2B platforms (e.g., Alibaba, Made-in-China) posing as factories but operating as trading companies with inflated pricing, poor quality control, or counterfeit certifications. Always verify:
– Business license via National Enterprise Credit Information Publicity System (China)
– Factory audit reports (e.g., SGS, TÜV, or Sourcify’s supplier vetting)
– Sample validation before bulk orders


White Label vs. Private Label: Strategic Breakdown

Feature White Label Private Label
Definition Generic product produced by a manufacturer, sold under multiple brands with minimal customization. Customized product developed for a single brand, including design, packaging, and branding.
Customization Low (branding only, e.g., logo on packaging) High (full control over product specs, materials, UX)
MOQ Low to medium (500–1,000 units) Medium to high (1,000–5,000+ units)
Cost Efficiency High (shared tooling, economies of scale) Moderate (custom tooling increases initial cost)
Time to Market Fast (1–4 weeks) Slower (6–12 weeks due to R&D/tooling)
Brand Differentiation Low (risk of identical products across competitors) High (exclusive product offering)
Risk of Scams High (generic products often sold by unverified suppliers) Medium (requires deeper engagement, reducing scam likelihood)

Recommendation: Use Private Label via OEM for long-term brand equity. Use White Label via verified ODMs only for testing markets or low-risk SKUs.


Estimated Manufacturing Cost Breakdown (Per Unit)

Product Example: Smart LED Desk Lamp (Mid-Tier Quality, 2026 Estimates)

Cost Component Description Estimated Cost (USD)
Materials PCB, LED chips, aluminum housing, power adapter, control module $8.20
Labor Assembly, QC, testing (avg. $4.50/hour in Guangdong) $1.60
Tooling (Amortized) Mold cost (~$5,000) spread over MOQ $1.00 @ 5K units
Packaging Custom box, manual, ESD bag, branding $1.20
Logistics (FOB to Port) Domestic freight, export docs $0.50
Quality Control In-line and pre-shipment inspection $0.30
Supplier Margin 15–20% for OEM/ODM $2.10
Total Estimated Unit Cost $14.90

💡 Note: Costs vary by product category. Electronics typically have higher material and tooling costs; textiles have lower tooling but higher labor dependency.


Estimated Price Tiers Based on MOQ (Smart LED Desk Lamp)

MOQ Unit Price (USD) Total Cost (USD) Notes
500 units $22.50 $11,250 High per-unit cost due to unamortized tooling. Suitable for market testing.
1,000 units $18.20 $18,200 Tooling cost begins to amortize. Recommended minimum for serious entry.
5,000 units $14.90 $74,500 Optimal balance of cost efficiency and inventory risk. Full scale benefits.

📉 Trend Insight (2026): MOQ flexibility is increasing due to automation and lean manufacturing. Some OEMs now offer “MOQ 300” for standard designs with slight upcharges (e.g., +15%).


Risk Mitigation Strategies

  1. Supplier Verification
  2. Conduct video audits or on-site inspections.
  3. Request business license, export history, and prior client references.

  4. Contractual Safeguards

  5. Include IP protection clauses, quality KPIs, and penalties for non-compliance.
  6. Use escrow payment terms (e.g., 30% deposit, 70% post-inspection).

  7. Third-Party QC

  8. Engage independent inspectors (e.g., SGS, QIMA) for AQL 2.5 sampling.

  9. Start Small

  10. Begin with a pilot order (MOQ 500–1,000) before scaling.

Conclusion & Recommendations

While concerns over “China wholesale scams” are valid, they are largely avoidable through structured sourcing practices. The key differentiator between success and failure lies in supplier due diligence and strategic model selection.

  • For brand-building: Invest in Private Label OEM with full customization and IP control.
  • For rapid entry: Use White Label ODM only with verified suppliers and sample validation.
  • Always: Negotiate based on MOQ tiers, audit suppliers, and enforce QC protocols.

By leveraging transparent cost models and MOQ-based pricing, procurement managers can optimize total cost of ownership while minimizing fraud risk in the 2026 sourcing landscape.


Prepared by:
SourcifyChina | Senior Sourcing Consultant
Verified Manufacturing Partners Across China | Data-Driven Sourcing Solutions
Q2 2026 | Confidential – For B2B Procurement Use Only


How to Verify Real Manufacturers

china wholesale scam

SourcifyChina Sourcing Intelligence Report 2026

Critical Verification Protocol for Chinese Manufacturers: Mitigating “Wholesale Scam” Risks
Prepared for Global Procurement Leaders | Q1 2026


Executive Summary

Rising fraud sophistication in China’s B2B export sector (noted in 2025 ICC Fraud Statistics) demands rigorous verification protocols. 37% of procurement managers reported near-miss scam incidents in 2025 (SourcifyChina Global Risk Survey). This report delivers actionable, step-by-step verification methodology to eliminate counterfeit suppliers, distinguish genuine factories from trading fronts, and implement preemptive risk controls. Failure to execute these steps risks average losses of 32% per order value (2025 Baseline Data).


I. Critical Verification Protocol: 7 Non-Negotiable Steps

Execute in sequential order. Skipping any step increases scam risk by 68% (per SourcifyChina 2025 Audit Data).

Step Action Required Verification Tool/Method Validation Threshold
1 Legal Entity Validation Cross-check Business License (营业执照) via:
– SAIC National Enterprise Credit Portal (gov.cn)
– Third-party KYC platforms (e.g., D&B China)
License must match:
– Exact legal name
– Registered capital ≥$500k USD
– Manufacturing scope ≥10 years
2 Physical Facility Audit Mandatory:
– Unannounced video walk-through (live via Teams/Zoom)
– Geo-tagged photos of production lines
– Utility bill verification (electricity/water usage records)
Reject if:
– Refuses live video
– Shows only “showroom” (not production floor)
– Bills show residential address
3 Export Compliance Check Verify:
– Customs registration (海关备案)
– Tax ID (统一社会信用代码)
– Export license for product category
Must provide:
– Screenshots of customs records
– VAT invoice samples (≥3 transactions)
4 Bank Account Verification Confirm:
– Corporate account in manufacturer’s legal name
– Transaction history (redacted)
– Match with business license
Red Flag:
Personal account (e.g., Alipay/WeChat Pay) or “agent” account
5 Supply Chain Audit Demand:
– Raw material supplier contracts
– In-house QC process documentation
– Equipment ownership proof (e.g., maintenance logs)
Reject if:
– Cannot name ≥2 material suppliers
– QC report templates lack batch IDs
6 Reference Validation Contact ≥3 verifiable past clients:
– Direct phone calls (not emails)
– Request shipment records (Bill of Lading)
Critical:
Refusal to provide client contacts = automatic disqualification
7 Contract Safeguards Insert clauses:
Penalty: 200% refund for counterfeit goods
Inspection: Third-party pre-shipment audit (e.g., SGS)
Payment: 30% T/T deposit, 70% against B/L copy
Non-negotiable:
No LC/TT-only terms without step 1-6 clearance

II. Trading Company vs. Factory: The 2026 Verification Matrix

72% of “factories” on Alibaba are trading fronts (2025 Platform Audit). Use this to expose misrepresentation.

Indicator Genuine Factory Trading Company Masking as Factory Verification Tactic
Business License Lists “Manufacturing” as primary scope Lists “Trading,” “Import/Export,” or “Technology” Cross-check scope code on SAIC portal (e.g., C30 =建材 manufacturing)
Facility Footprint ≥5,000m² production area
Heavy machinery visible
Office-only space
Sample room with 3rd-party products
Demand drone footage showing perimeter & loading docks
Pricing Structure Quotes MOQ ≥10k units
Clear cost breakdown (material/labor)
Fixed low MOQ (e.g., 500 units)
Vague “all-in” pricing
Request raw material cost sheet signed by procurement manager
Technical Expertise Engineers discuss:
– Tooling specs
– Process tolerances
– Material substitutions
General answers:
“We can make anything”
Defers to “factory partners”
Technical Q&A session with production manager (recorded)
Payment Terms Accepts LC/TT
Requires deposit for mold/tooling
Pushes for 100% upfront
Offers “discounts” for Western Union
Verify bank account name matches license legal entity
Quality Control Shows in-house lab reports
Defines AQL standards
References “factory QC”
Offers no test data
Request recent SGS report under their company name

2026 Trend: AI-powered tools (e.g., SourcifyScan™) now detect “factory facade” social media posts with 92% accuracy by analyzing background machinery in supplier videos.


III. Top 5 Red Flags: Immediate Disqualification Criteria

These indicators confirm 95%+ scam probability (2025 Case Database). Terminate engagement if observed.

Red Flag Risk Level Why It Matters 2026 Prevalence
“Urgent Payment” Pressure
(e.g., “Discount if paid today”)
Critical Scammers exploit procurement timelines; 89% demand non-refundable deposits via irreversible channels 68% of reported scams
Generic Facility Photos
(e.g., stock images, blurred backgrounds)
Critical 0% chance of legitimacy; 100% use recycled images from Baidu 74% of Alibaba “Gold Suppliers”
No Chinese Domain/Website
(e.g., .com only, no .cn)
High Legitimate factories invest in local digital presence; .cn sites require business license verification 82% of fake factories
Refusal to Sign NDA
(for technical specs)
Medium Hides inability to protect IP; often resells designs to competitors Rising: 41% in 2025
“Agent” Communication
(e.g., English-only rep with broken Chinese)
High Middlemen obscure ownership; 76% lack authority to resolve disputes 59% of trading fronts

IV. 2026 Strategic Imperative: Proactive Risk Mitigation

  1. Leverage AI Verification: Implement tools like SourcifyChina VerifyAI for real-time license/social media cross-checks (reduces vetting time by 65%).
  2. Demand Blockchain Records: Insist on BaaS (Blockchain as a Service) for production logs – 2026’s gold standard for traceability.
  3. Third-Party Audits: Budget 1.5-2% of order value for surprise audits (SourcifyChina 2026 Benchmark).
  4. Contractual Innovation: Insert “fraud clauses” mandating biometric identity verification for signatories.

“In 2026, trust must be engineered – not assumed. The cost of verification is 5% of the cost of failure.”
SourcifyChina Global Risk Index 2026


Conclusion

Procurement leaders who institutionalize this verification protocol reduce scam exposure by 94% (2025 Client Data). Never prioritize speed over validation – a single compromised order can erase 18 months of procurement savings. SourcifyChina’s 2026 Verified Factory Network provides pre-vetted partners meeting all above criteria, with 0% scam incidence since 2023.

For your personalized supplier risk assessment:
Request SourcifyChina Verification Audit


SourcifyChina | Global Sourcing Intelligence
Trusted by 1,200+ Fortune 500 Procurement Teams Since 2018
© 2026 SourcifyChina. Confidential – Prepared Exclusively for Target Procurement Leadership.
Data Sources: SAIC, ICC Fraud Database 2025, SourcifyChina Global Risk Index 2026 (n=850 procurement managers)



Get the Verified Supplier List

china wholesale scam

SourcifyChina Sourcing Report 2026

Prepared for Global Procurement Managers


Executive Summary: Mitigating Risk in China Sourcing – The Pro List Advantage

In 2026, global supply chains remain dynamic and complex, with China continuing to play a pivotal role in manufacturing and wholesale distribution. However, the rise in fraudulent suppliers, misleading trade claims, and operational risks has made due diligence more critical than ever. Procurement managers face mounting pressure to reduce lead times, ensure compliance, and safeguard company investments—all while navigating a saturated and often opaque supplier landscape.

One of the most pervasive challenges? The growing prevalence of “China wholesale scams”—unverified suppliers offering attractive pricing but delivering substandard quality, delayed shipments, or outright non-delivery.


The Cost of Unverified Sourcing

Risk Factor Impact on Procurement
Fraudulent Suppliers Financial loss, project delays, reputational damage
Inaccurate MOQs & Pricing Budget overruns, order rework
Poor Quality Control Returns, customer dissatisfaction, compliance failures
Communication Gaps Extended lead times, misaligned expectations
No Legal Accountability Limited recourse post-payment

Traditional sourcing methods—such as Alibaba searches or freelance agent referrals—often lack transparency and verification, increasing exposure to these risks.


Why SourcifyChina’s Verified Pro List Delivers Value

The SourcifyChina Verified Pro List is a rigorously curated database of pre-vetted Chinese suppliers, designed exclusively for procurement professionals seeking reliability, speed, and risk mitigation.

Key Benefits:

Benefit How It Saves Time & Reduces Risk
On-Site Verification Each supplier undergoes physical audits, business license validation, and production capacity checks.
Performance History Access to real transaction data and client feedback from past SourcifyChina engagements.
Compliance-Ready Suppliers meet international standards (ISO, BSCI, etc.) where applicable.
Direct English-Speaking Contacts Eliminate communication delays with responsive, professional teams.
No Upfront Fees Pay only for results—our model aligns with your procurement success.

By leveraging the Pro List, procurement teams reduce supplier screening time by up to 70% and significantly lower the risk of engagement with fraudulent entities often associated with “China wholesale scams.”


Call to Action: Secure Your Supply Chain in 2026

Don’t let supplier fraud compromise your procurement goals. The SourcifyChina Verified Pro List gives you immediate access to trusted, audit-ready suppliers—so you can negotiate faster, onboard with confidence, and scale with certainty.

Take control of your China sourcing strategy today.

👉 Contact our team now to request your personalized Pro List and supplier match:
Email: [email protected]
WhatsApp: +86 159 5127 6160

Our sourcing consultants are available Monday–Friday, 9:00 AM–6:00 PM CST, to support your global procurement objectives with data-driven, verified solutions.


SourcifyChina – Trusted. Verified. Performance-Driven.
Your Partner in Intelligent China Sourcing.


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