Vetting suppliers is important. After all, these suppliers are responsible for your company’s reputation.
Hopefully, everyone by now will understand the dangers of checking Alibaba or Global Sources and ‘choosing’ a supplier who ‘looks’ good, or perhaps trusting that Alibaba Gold suppliers are somehow more legitimate and trustworthy (spoiler alert: they might not be). So what does a good vetting process look like?
Starting the relationship off the right way
The supplier selection process necessarily has to be more involved than an online search and placing an order, to get great results and end up with a sustainable, safe, relationship. That’s why we’ve created a podcast series (on the Sofeast podcast ‘China Manufacturing Decoded‘) on this topic. Hit the links below to listen to the episodes…
As this humorous picture shows, you can never be sure who you’re dealing with over the internet…
So, this episode of the podcast, I kick off the process of vetting suppliers in China right at the very beginning of your journey: Understanding the risks and ways in which Chinese suppliers can scam you.
There are 7 ways that you can get into trouble with Chinese suppliers, 5 being bad behaviors and 2 from typical lack of competency. Consider yourself cheated if they:
- Take your deposit or wired payment and disappear
- Increase the price once you’ve already paid to start the project but haven’t received anything yet (holding you to ransom)
- Raise prices between orders unexpectedly
- Steal or use your IP (product designs etc) without your permission
- Keep you in the dark about subcontracting your work and other nasties
- Are unreliable
- Can’t or won’t reach your quality standard
Now you know some of the major red flags to look out for when sourcing Chinese suppliers.
Now that you know what you don’t want from a supplier (see above), what are some of the first steps you can take to weed out suppliers who aren’t suitable?
The initial vetting process is outlined here:
Getting started by finding companies who seem suitable can start online with no need for you to be in China at all, but, as mentioned, their online claims should be taken with a large dose of salt at first.
You should follow the tips we discuss to start assessing that they and their capabilities are right for you.
This will include:
- Checking that their online profiles are consistent
- Finding out if they have any bad online reviews or news stories
- Examining their business license and listing on the Chinese government database (you may need help for this as information is in Chinese)
- Getting references
- Taking copies of their certifications and checking them with the issuing bodies (such as ISO 9001)
- …and more
This is fact-finding that you can do remotely before even considering placing an order. Also, factory audits and due diligence checks will achieve the same results for you if you’re unable to go to China (such as during the coronavirus pandemic).
Next, we focus on why and how to evaluate your potential Chinese supplier’s product engineering capabilities.
This is especially important if you’re working on new product development and manufacturing with the supplier because you’re likely going to rely on their manufacturing expertise quite a lot to get your product to market.
We mainly concentrate on the 5 key engineering attributes you need to check:
- CAD Compatibility
- In-house Design Capability
- R&D Facilities and Capability
- Prototyping Capability
- Initial Prototype Test Capability
By gaining an understanding of the above, you can decide whether the supplier has the engineering experience, knowledge, and capability to design and develop your new products before you start working with them.
Up to now, all of the information discussed can be gained remotely, but a traditional factory visit also provides a lot of value.
If you’ve now made a shortlist of suppliers or are confident that one is a good fit, now is the time to visit their facility.
What can you see? How do management and staff behave? Does what you’re seeing equate to the information you found when vetting them in earlier steps (for example, does their facility have the equipment they claimed to have online or in emails to you)?
All of these observations help you to fact-check what you thought you knew about the supplier and also speaks volumes about their professionalism and management.
Did you know that even by checking the operators’ toilets you can learn something about employee welfare!?
However, your potential supplier won’t always be willing to just volunteer information, so you’ve got to know what to look for and why before your visit and, to help you, we’ve prepared a number of factors to consider based on these three categories:
- Factory fit
- Factory management
- Factory setup and condition
Subscribe to the podcast
There are more episodes to come, so remember to subscribe! You can do so in your favorite podcast apps here:
Are you trying to find a manufacturer in China who is well-suited to your needs and can also deliver on their promises?
Sofeast has developed 10 verification steps to help importers find the right manufacturing partner in China. They’re shared in this FREE eBook: “How To Find A Manufacturer In China: 10 Verification Steps.”
- Background checks
- Manufacturing capabilities
- Quality system auditing
- Engineering resources
- Pricing, negotiation, & contracts
- …and much, much more
Just hit the button below to get your copy and put yourself in a great position to get better results from Chinese manufacturers who supply your products: