Home How We Help Grow your business Preparing to Export Chinese supplier due diligence checklist

Preparing to Export

Chinese supplier due diligence checklist

Whatever product you can think of, it’s likely that you can find it being manufactured in China. And these days, the internet provides a perfect tool to identify a long list of self-claimed Chinese manufacturers with decent websites.

However, foreign companies sometimes find themselves lost in a vast sea of choices, end up with faulty products imported from China or fall into the trap of working with a ‘suitcase company’ – a Chinese term to describe fraudulent or fake businesses.

The key to finding the right Chinese suppliers or manufacturers is ‘qualifying’. In other words, conduct due diligence on your Chinese manufacturing partners or suppliers before you sign the contract.

Here are some questions to consider when doing due diligence checks on suppliers.

1. Do they have a genuine business licence?

Is the business a genuine business? Obtain a copy of their business licence and, if possible, check with the local Commerce and Industry Administration Bureau on the legitimacy of the Chinese business.

2. Are they a manufacturer or a supplier?

Smart Chinese middlemen understand many businesses want to cut down on costs and go directly to manufacturers. As such, they may claim they are manufacturing what you need when in reality they are suppliers themselves.

Again, obtain a copy of their business licence to check their business scope and investigate with local government agencies or industry bodies directly or through a Chinese business consultant.

3. Do they have the capabilities to meet your current and future demand?

Check with the employees of the company on their manufacturing capabilities. If you are placing big orders or look at working with a long-term manufacturing partner, it is worth visiting the Chinese manufacturer’s site to better assess their capabilities.

4. What quality control do they have in place?

Does your potential Chinese manufacturer have a quality control system in place? Do they have an international quality accreditation? Obtain a copy of their accreditation and cross-check it with the relevant issuing authorisation organisation.

5. Do they have a good reputation?

Is the Chinese manufacturer a reputable business in the industry and do they protect clients’ intellectual property? Check with industry bodies, their other clients and suppliers and conduct secondary research to find information on the company’s reputation.

6. Are they committed to your business?

Is your potential Chinese manufacturer committed to working with you? If your business is not vital to them, you are likely to be at the bottom of the list when they prioritise orders, and they may delay the production or delivery of your orders during peak times.

Export