If you are already dealing with the import business, then you might be aware that China is the world’s popular manufacturing hub for imported products. While many businesses have had a good experience working with Chinese suppliers, there is a small ratio that has got duped by suppliers. One of the reasons for such instances to occur is businesses not verifying the credibility of the suppliers.
Searching for Suppliers Online
If you are looking for suppliers for your products, the first thing you would do is go to sourcing platforms such as Alibaba or Made in China to search for credible suppliers. Now, the catch here is that many platforms do not offer complete transparency about the suppliers. If you get duped, you cannot blame these sourcing platforms for not providing complete information.
So, the question is how to verify Chinese sourcing company in such cases? Sourcing platforms can furnish information about the Chinese suppliers of your business. You can shortlist a bunch of suppliers and call them up. Talk to them about your requirements and see how well they understand the same.
Many times, you might not get a favourable response from the suppliers. Chinese suppliers are wary of foreigners who do not speak Mandarin, and this can often lead to mistrust amongst them. In such situations, you can hire sourcing agents who have experience in getting through to these suppliers.
Credible sourcing agents will be fluent in Mandarin and can negotiate on your behalf with the suppliers. In addition to this, they will take care of the entire verification process right from choosing the suppliers and drawing up the final contract with them. They will give you regular updates by sharing reports and taking your opinions wherever required.
One of the easiest ways how to verify Chinese sourcing company is by drawing up a contract with them. Ensure that you mention all the terms and conditions and the price that has been negotiated. Has the contract been verified by a lawyer before signing the dotted line?
Your contract should mention the registered address of the supplier, the roles, and responsibilities of each party, along with other instructions required for your project. If the company is not genuine, they will have second thoughts about signing the contract.
Offer them a good price to start with. This will motivate the suppliers to talk more about their companies and their production capacity.
Other ways in which you can verify sourcing companies are by:
- Check if they have an official website with correct contact details
- Ask questions about their completed projects and see how well they answer them
- Check the business establishment and verify these by asking for licenses and registration documents
- Ask your sourcing agents to investigate the information you have received from the suppliers
When it comes to verifying suppliers, you need to take into consideration facts. No matter what information has been provided by the suppliers, it should be backed by facts.
If you are not sure which registered and non-registered information you can verify, the below list might give you a clear idea:
- Product catalogues are not registered documents
- Images on sourcing websites showing images of multiple factories for the supplier are not to be considered for verification
- FDA, CE, and ROHS documents produced by the suppliers might not give you the correct pictures
Registered documents include:
- Type of business
- Registered name of the supplier in Chinese
- Scope of business
- Registered capital
Different Aspects of Verifying Chinese Suppliers
There are various aspects that you as a business need to investigate when you are looking at how to verify Chinese sourcing company.
- Verification based on the due diligence
- Verification based on quality audits
- Verification based on order samples
- Verification based on factory audits
Due diligence is conducted before signing any legal contracts with the suppliers.
Some of the questions you need to ask the suppliers would be:
- Are they legitimate businesses?
- Does the business have any debts?
- Are they on the verge of bankruptcy?
- Does the company pay taxes?
- Who owns the business?
- Will the production happen in their company or third-party?
- What is their net turnover?
All the above questions can help you identify red flags and prevent you from getting scammed.
Another important verification is based on the quality of the products.
Some of the questions that you can ask suppliers are:
- What is the MOQ for the orders?
- Have they had any experience working on similar orders?
- Does the company have the capability to produce your products as per your requirement?
- What is the equipment that they use?
- How many employees are there in the organization?
Quality audits are conducted by third parties who are experienced in conducting QC audits. They will investigate the HR policies, client information, organizational charts, and child labour issues, and review the licenses and certificates.
Another factor that you need to keep in mind when looking at how to verify Chinese sourcing company is by requesting samples of your products. Some suppliers might charge you for the samples. Ask them to share their registered business account to transfer the money. This will give you an idea of the authenticity of the suppliers.
In the case of factory audit verification, you can either ask your sourcing agents to visit the site and inspect the premises or visit the premises yourself. This gives you a chance to meet the people involved with your order and build a rapport with them.
Factory audits can even give you insights on:
- What are the types of equipment they use?
- Is the premise hygienic?
- What are the working conditions?
- Do they have a QMS (Quality Management System) in place?
- How are the labelling and the packaging of the products done?
Searching for credible Chinese sourcing suppliers requires a lot of patience and effort from your side and if you are not careful, you can end up getting scammed. Now that you are aware of how to verify Chinese sourcing company, you can use these skills to work with legitimate suppliers and improve the profits of your business.