We have all heard the horror stories of small businesses swindled while trying to order from factories. It pays to be cautious, especially when you have limited experience buying from China. Below we have compiled a few ways to help you identify any glaring disparities before you sign on the dotted line. However, keep in mind that it is very difficult to undertake thorough due diligence on factories yourself, even if you speak Mandarin.
To Alibaba or not to Alibaba
When browsing through Alibaba, don’t make the mistake of trusting those blue or yellow stars, or even the fancy medals. The most important thing to look for when assessing the trustworthiness of a supplier is previous customer feedback. We would not recommend placing a substantial order from a supplier with less than one hundred detailed, legible positive reviews, preferably on the same product you wish to order.
Another strategy is to request the contact information of previous happy customers in your country. You can then contact them directly to find out about their experience working with your factory.
Go direct to the source
Ask the factory to send you a copy of their business license, then find a Mandarin translator, preferably with a legal background (UpWork is great for this) to have them verify it. They should check when the company was formed, where it is located and the type of business the company is engaged in. This information should match any information they have given you so far, and what is listed on their website (in both Mandarin and English). The translator should also confirm that the information listed on the license with the the information posted about the factory on the State Administration for Industry and Commerce (SAIC) website.
Or, go pro
Shameless plug time – here at WeSource we can organize these due diligence checks for you easily and inexpensively. While the above steps will help you avoid the most obvious scams, for true peace of mind it is better to go through a third party agency that knows exactly what to look for.
It is important to know that a Chinese factory also has misgivings about you – especially if you are a first-time customer. If you have gone to the trouble to engage a local company to undertake your due diligence then the factory will understand you are serious about your order. Establishing trust on both sides will make your manufacturing process much easier and give your partnership the best chance for long term success.
Contact us today to discuss the best way to undertake due diligence on your potential manufacturing partner.