- Published on Friday, 21 December 2012 15:02
I kindly request your assistance to check on the following Chinese Company to confirm if they are Serious Manufacturers / Suppliers / or a Fake. I want to know this before I establish an L/C and place an order.
Qingdao XXXXChemical Inc.
Address : XXXX
Kindly advise sources that I can use to confirm my supplier is legit.
In the China sourcing industry, when we talk about verifying a factory we are generally looking at two aspects:
1. Due Diligence: Is the company a legitimate business and not a scam or business on the verge of bankruptcy?
2. Quality Audit: Does the supplier have the ability to product the products I want to buy?
Type 1: Due Diligence is an investigation of a business prior to signing a contract to ensure the company (supplier) signing the contract is who they say they are. For example, do they really have 1000 employees, 50 million USD exports, own the factory 100%, have happy customers, good financial situation (will not close doors suddenly) and so on.
There are various levels of due diligence a buyer can conduct. Here are four options:
It doesn’t cost any money for you to ask for references from the seller and contact those references.
www.SupplierBlacklist.com is also free and lists bad suppliers.
For a few 100 USD, there are research firms like www.Glo-Bis.com who can work with the PRC government to check for any red flags.
For a few 1000 USD, investigators like www.CBIconsulting.com.cn can go undercover to investigate the seller’s business.
Type Two: Quality Audit/ Factory Audit
This service is designed to ensure the supplier has the equipment and experience to make a given product. Audits can be conducted by the buyer, but usually 3rd party experts (likewww.AsiaQualityFocus.com at 298 USD ) are hired to do the audit as it is a specialized skill. You wouldn’t ask your sales team to do engineering for example.
In my opinion, doing both the due diligence and QC audit is an essential step when sourcing from China. Perhaps I am jaded after living here in China for a long time, but I assume the worst unless proven otherwise. Trust BUT verify.
Let me know how your project works out.
Question answered by Mike Bellamy, an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. Mike is also the author of "The Essential Reference Guide to China Sourcing" and founder of PassageMaker Sourcing Solutions.