In China manufacturing, make sure there is a level of assurance before you wire the first deposit payment to your supplier. Not so much to avoid a scams but to avoid misunderstandings in specs, thus resulting in incorrect mass production from the factory.
Before you make the deposit payment to your supplier…
Confirmed physical sample
Have something physical in-hand that represents what mass production should look like. This is the piece the vendor sends to you, you “sign-off” and say the order’s confirmed.
If you’re still waiting on a final sample and the in-hand date is not top urgent (in other words you’ve got time), then wait for the final sample until you make the deposit payment.
This can be a tricky beast because in the promotional product industry timing is always of the essence.
It’s tempting to move forward with mass production and wait for the first production sample. This is fine with a vendor you frequently work with. This can be dangerous with a new vendor and new product.
Worst case scenario is they have your deposit payment but never could get the sample right and when they send you the 1st-run production sample, it’s too late to make changes.
Have all your documentation line up before the deposit payment is made. What would this look like:
• An RFQ from the supplier with all specifications clearly listed.
• An invoice from your supplier. This in many ways will mirror the RFQ but it should have the supplier’s chop and signature (required for proper Chinese business). This document should be on official supplier letterhead.
• In the supplier’s invoice, make sure all the confirmed specs that were previously discussed are listed. Keep in mind that the supplier will refer to the final invoice (which they may call a contract) over the quotation (RFQ) sheet. If you are going to be detailed and thorough on 1 document, then make it the supplier’s invoice. Carefully comb through it to find any discrepancy.
• Purchase order: This is not highly important in my opinion unless you make the purchase order to be a mirror reflection of the supplier’s invoice. Too often clients put something in the purchase order that wasn’t confirmed by the supplier and not in the supplier’s invoice. Now if there is a problem or price discrepancy, you are going to have a “stand-still”. The supplier’s invoice, for most vendors, in the event of a question, will take precedence.
How about payment terms, order control points and quality inspection arrangement?
Stay tuned for the next post.