by Dan Harris in 'China Law Blog'

The other day, I did a post, entitled, "Sourcing Product From China: The Definitive Checklist." That post dealt with the steps, from beginning to end, one should take in sourcing from China. I received the following email in response to that post:

Really liked your post linking over to Renaud's checklist. I have been put in charge of our China sourcing so I have been reading everything I can get my hands on (digitally speaking, pun intended) on that topic. Just saw this post by Mike Bellamy that I thought might make a nice follow up to your checklist post.

The post to which this reader was referring is "How to select a supplier," and it prescribes the various steps for finding China "suppliers who meet targets for price quality and lead time." The post calls for step one to be defining the right supplier and it provides a "survey template" to rank potential suppliers on their price, quality, location, service attitude and "other attributes." Step two then becomes finding/identifying the supplier who meets the necessary attributes. This step consists of the following:

• Initial research generating a list of 50 to 100 potential suppliers using web directories…
• Assume the vendor is a middleman until proven otherwise, not the other way around.
• Avoid factories that refuse to list the name or location of the production facility. If they only show a HK, Taiwan or other non-PRC address, then they probably don't own the PRC factory and are a middleman of some sort.
• Focus on those factories that can clearly show production experience with your particular product or production method.
• Be aware that polished English skills do not reflect production skills. Often the most polished websites are set up by trading companies.
• Look for clear information about operation size, equipment and staffing.
• Review the 50 to 100 candidates' websites and brochures against client' desired attribute list (but hold off on price until later) and narrow the field down to 15 to 20 candidates.

After you have done the above, make contact per the following:

• Send an email asking for initial product-specific information (price, minimum order size, lead time).
• Are samples available? If they don't have samples readily available, they probably don't deal in your product on a regular basis.
• Granted the sales team will be the most polished in terms of English skills, but how is their understanding of your basic requests? If you ask for information on a red umbrella and get sent a sample of a blue shoe, you are going to have problems with communication down the road!
• Confirm the actual production location and ask for ownership papers of the factory.

After you have narrowed the field to around five "highly qualified candidates," you should bring in a quality auditor to check out the factory and you should conduct due diligence "to confirm the factory has a good reputation, no legal problems and is sound financially." Your next step is sampling.

This is a great list.

I particularly like the advice on making sure you are dealing with the factory and not a broker and that English language skills are not very relevant. My firm has been called in many times to deal with factories that provided bad product, only to discover that our client never even had a contract with the factory; its only contract was with a broker. In these situations, the factory can easily claim that it never agreed to any quality or timeliness specifications. I also cannot tell you how many times I have heard/seen someone go wrong for thinking English language skills directly correlate to high quality when, near as I can tell, there is no correlation at all.

What do you think?

Dan Harris is founder of the Harris & Moure law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.