For business owners or manufacturers, it is vital to trust their suppliers and partners. A business partnership will sour or prove dangerous if the partners can’t verify the authenticity of their counterpart. China is a major trade supplier for several brands and companies. People who do regular business with Chinese suppliers should verify their authenticity before getting into business with them.
In this article, we are going to review the ways and means to verify that your Chinese suppliers are indeed factories and not trading companies.
Ensuring your Chinese suppliers have a Chinese Business License
A Chinese business license is provided to companies doing business internationally. By checking the license you can have an insight into their professional dealings and business records.
Request your Chinese suppliers to send their official company name in Chinese along with their registration number. Visit this Government website to enter the details and learn their past transactions or company information.
If it is a factory, the description or title will include the words manufacturer/producer’ to indicate so.
Do they have a high MOQ?
MOQ or Minimum Order Quantity is the minimum number of orders a company will accept. If your Chinese suppliers is a factory, they will have a high MOQ.
Since factories produce items in bulk because of cost-effectiveness, their MOQ will be higher than trading companies. Trading companies can make small batches or sell at low MOQ because they only have to pay for storage and transport. Ask your supplier for their acceptable MOQ to confirm their authenticity.
Carry On-site Visits Chinese suppliers
Inform your Chinese suppliers that you intend to visit their site or factory for inspection. Insist that you are excited and eager to see their offerings as promised.
The trading companies will have to confess their reality as they don’t want to be caught red handed. Of course, on-site visits and inspections are only possible after you have shortlisted a set of suppliers.
Assessing your Chinese supplier’s Product Categories
A factory will have a line of similar or in the same genre of product categories available.
For example, if your supplier is L’Oreal, they will only be producing beauty and skin care products. You can’t expect them to deliver shoes or stationery. On the other hand, trading companies will have something of everything available. A factory will always specialize in one product category so assess and evaluate that by asking questions or requesting information.
Have a Technical Q&A
A factory worker or manager will have in-depth knowledge about manufacturing, processing, and exporting.
They will encourage you to ask questions and answer them with ease. Don’t hesitate to ask technical, probing questions. Trading companies will have no expertise or knowledge about producing and will be unable to satisfy your curiosity.
Viewing Factory Audit Reports
Chinese suppliers who have worked with multinational companies would have gone through factory audits.
Larger brands or MNCs carry in-depth checks, audits, and inspections of a facility. Emphasize the importance of seeing these audit reports before you get into the business. Cross check the name of the company on the audit report with the name and details you have in hand. If they fail to send an audit report, there is a high risk of them being a trading company.
Conclusion
It can be really easy for companies to get fooled by the various nuances involved in verifying if a Chinese supplier is a factory or a trading company. Just remember to be alert, ask as many questions as you want, and do the required research before signing any agreement or contract.
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