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Checking buyer reference when buying from Chinese suppliers

By Fredrik Grönkvist

Buyer references are taken for granted in many countries. I mean, how else do you know that you can trust a potential supplier. And after all, they should work to sell themselves to you, not the other way around. Well, that’s how things should be. However, there’s a gap between how things should be, and the reality of a Chinese supplier.

In this article, we explain why many Chinese suppliers aren’t overly keen on sharing information about their existing buyers, and why you are part of the problem. We also explain why testimonials aren’t that relevant to begin with, in the world of OEM manufacturing.

 

1. Suppliers fear their competitors might approach their customers

Transparency is, for many reasons, an alien concept to most Chinese manufacturers. My personal experience, when discussing this matter with factory managers in the country, is that most consider giving away customer references, or testimonials, as an invitation to their competitors to move in on them.

And, they are right. Considering how price sensitive many buyers are, suppliers do well to hide their customer base from competing manufacturers.

 

2. Meanwhile, buyers aren’t too keen on giving away their suppliers

Picture your company name being listed on a supplier’s website, Global Sources or B2B page, for your competitors to see. I bet my tailor made 15 dollar (100 RMB) shirt that you wouldn’t like that.

As a matter of fact, many buyers require their suppliers to not share any information about their products, and them being a customer.

Hence, suppliers are often very limited when it comes to sharing buyer references. Surely, they are wise to not risk upsetting an existing, potentially long term, customer for the sake of pleasing a ‘maybe to become’ buyer.

 

3. And in all honesty, would you associate your brand with manufacturing in Asia?

We’ve had customers coming to us, requesting us to remove their testimonial, after it turned out that our site shows up on Google, whenever someone do a search for their company name. They want publicity, but not the kind of publicity that tells the world that they import their products from China.

Personally, I’d see a testimonial on sites like ours, as a sign that the brand in question takes their procurement, product safety and social compliance strategy seriously. After all, we know they have their stuff made somewhere in Asia anyway.

That said, I do see where they are coming from. But, before you ask your competitors to publicly label their products a ‘Made in China’, consider if you yourself are willing to do so.

 

4. In the end, buyer references are rather irrelevant

So, they make products for Disney, so they have to be ‘good’. That’s probably the case, when they assemble goods for Disney. However, suppliers aren’t categorized into ‘good’ and ‘bad’. There are a number of factors to consider.

First, many suppliers focus on different price segments. What works for one company, may not work for you. They may not have experience making the kind of product, function or quality that your business requires. They may not even have the right network subcontractors.

Second. It’s true that a ‘good supplier’ (I really don’t like using that term, for various reasons) is the foundation for a company that relies on manufacturing overseas. However, finding the right supplier is only half the equation. The second half consists your own product development, product safety and quality assurance procedures.

Disney has an army of engineers, product compliance and procurement experts that can make that happen. You don’t. As such, their success, with a particular supplier, does not automatically translate into the same outcome for your business.

Third. You are not Disney, so your orders will not be treated as theirs. This means that you will not get the same attention on the production floor. As a result the defect rate may increase, among other things.

That said, the fact that Disney buys from them is not a bad thing. But it’s not enough for you make a decision on a manufacturing partner.

 

5. If buyer references aren’t that valuable, what should we look at when selecting a manufacturer?

The lesson here is not that you shouldn’t ask for buyer references. In fact, you should ask them. And, as Mike Bellamy of Passage Maker mentioned in this podcast (by Global from Asia), one good advice is to ask for buyer references that not located in your home market. For example, if you’re based in the United States, ask for references in the European Union or Australia.

Instead, the essence here is that you should not rely on buyer references, when you choose a supplier. At best, they are a bonus. One of many signals used when assessing manufacturers in China, and other Asian countries.


Fredrik Grönkvist is the co-founder of ScandinAsian Enterprise in Shanghai. Since 2010, he and his team have helped hundreds of companies worldwide, primarily in the EU and US, to develop and manufacture products in China. He is also the main contributor on www.chinaimportal.com, a leading knowledge base for small- to medium-sized enterprises importing from Asia. For further questions, you can contact him on www.chinaimportal.com/contact-us/.

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