A few days ago I wrote a post entitled Hidden Commissions Between China Factories And Sourcing Agents, which included these sentences:
That’s why I won’t put my hand in the sourcing game. More and more importers are aware of hidden commissions in China, and I don’t want to be suspected.
I don’t even want to give contacts of “good factories”.
A reader sent me a message and asked me to expand on this. I guess he is not the only one wondering about this, so here I go.
I’ve been asked many, many times for “the contact of a good factory in China”, and I admit I did this favor a few times for regular clients in an industry niche that I know very well (lingerie/underwear). Since then, I decided to stop it completely.
I know some people who do this openly. Let’s say they audit 200 factories in China for a large importer of toys. Then they have a very valuable database, and they can rent it to interested buyers.
I believe it is NOT a good idea for my company, though. There are several reasons for this:
-1- I promise my clients that their data will be kept confidential. In the case of the lingerie suppliers that I recommended, I knew them mostly from my previous job.
That first reason is good enough, but there are a few more, as you can read below.
-2- There is a good chance that I don’t know a good factory in a particular industry. We might have checked shipments of, say, high-gloss-finish wood furniture, but quality was always less than desirable. In this case, if I tell the truth, the purchaser might think I tell him a while lie.
-3- What’s a “good factory”? A large factory with a good quality management system? It is nice for a large buyer, not for a small importer (it would probably be too expensive for small volume manufacturing, and nobody there pays attention to tiny orders).
-4- Even if I recommendeded a factory that is suitable to a particular buyer (and that would likely take work/thinking), how would I know that this factory will not subcontract this buyer’s production in a cheaper workshop? And who would get an angry phone call when the supposedly-good supplier shipped shoddy goods??
-5- As my small company grows up and some other employees are directly in contact with clients, should I allow them to play match-makers? My priority is to keep my company clean, and I don’t want to create opportunities for dirty stuff.
-6- If I incorporated “matchmaking with a good factory” in my list of services, many experienced purchasers would think “well, these guys probably get money from a back door”.
Does it make sense?