Are You Dealing With Manufacturers? Try 8 Ways To Be Certain
If you’re an importer, you know it already how difficult it is to track a Chinese supplier. More often, there’s a confusion prevailing over that. In fact, it is the trading companies that pose as manufacturers and anyone who wants to import products has a bleak chance to recognize that. For example, Alibaba.com – the popular eCommerce giant also hosts the trading companies, which claim themselves as manufacturer.
Though repeatedly, concerted efforts were made online through blogs and articles for informing importers, all of it went in vain when importers still didn’t get even a clue of it. In a fresh attempt, we bring you the 8 ways to verify the Chinese suppliers, both in terms of logical and technical perspective.
1. Check Business License E-Copy – Vital Credentials
Have you been asking for the registered capital of the supplier, lately? Stop doing that because it yields no meaningful result. Usually, the registered capital is more than Chinese Yen 500,000 and yet, it is no big deal to achieve that.
On the other hand, you should for check business license, yes, the very business license that has “production, processing, or manufacturing” in Chinese (生产,加工) in its scope. You can use the Google Translate feature to translate the scope (if it’s a word or PDF document) or you can send it to a Chinese-to-English Translator. You can get find a freelancer on freelancer.com or get help from a sourcing company in China. The latter may cost a few dollars, but it’s worth it.
If they are a genuine factory/manufacturer, you would know it from the business license they provide.
2. Check Business Information Online – You Must Do It
In some condition, you do not trust the Business License E-cope which is provided by supplier. You can find suppliers’ business information on the website –China National Enterprise Credit Information Publicity System.http://www.gsxt.gov.cn. There you can find complete information about the suppliers, such as business scope, estimated date, registered capital etc.
3. Check VAT or Value Added Tax invoice to identify suppliers
Lauded as the best way to know about factories/manufacturers, a relevant check on the VAT invoice does the deed. For your information, the Chinese offer drawback on the exportation of products, only to encourage for more exports.
However, a factory can ask for an export drawback only when it shows the VAT invoice of 17%, the exact thing where you can find supplier information, such as company name, address, bank account, etc. Hence, you could ask for the same invoice to the supplier. If they are real factory/manufacturer, ask them for a clear picture of the invoice, and when they are not, they would be reluctant to entertain your query or make incessant delays. Be wary about that.
4. Find the MOQ
MOQ or Minimum Order Quantity is a specified lowest quantity that a supplier can provide. Often, the Chinese factories/manufacturers have a low-profit margin and that is why they produce larger volumes. A trading company, posing as the factory/manufacturer can offer less quantity of products to you very easily.
For example, with an idea of buying 5,000 vacuum bottles, you may search for a factory/manufacturer and just find one. However, if you request the factory/manufacturer to provide them only 500 pieces on a trial basis first order, you will get refused. Generally, a factory with 1000 pieces for MOQ won’t agree to your demand, whereas a trading company will get immediately ready to deliver those 500 pieces you requested. Of cause, the price will 20%+ higher.
5. Check Supplier’s Product Catalogue
You can ask for a product catalogue from the supplier. Typically, a factory/manufacturer produces or manufactures only one or few similar kinds of products. They won’t have a long list of products.
Nevertheless, if you find a supplier that’s offering a wide range of products and the products belong to different industries, be alert because it’s a trading company that you have connected with.
You also can check supplier’s product catalogue on B2B eCommerce such as Alibaba and Made-in-China.
6. QMS Certificates
Just keep in mind that not all factories have a QMS certificate such as ISO 9001. But, you can find that all companies with this certification are authentic factories/manufacturers. Besides, a trading company has no requirement of having this certification.
7. Ask for factory audit reports
A factory auditing report can be sought from the factory that claims of supplying products to giant companies, such as, Walmart, or any other. Probably, a factory shouldn’t have any qualms about offering the factory auditing reports. Once you have those reports, you can cross check the name with that on the Business License. If the name is same, the supplier is genuine factory/manufacturer.
Otherwise, the trading companies may provide you a factory auditing report with a different name from that of the Business License’s name. Precisely, the auditing reports are one of the essentials to verify a factory/manufacturer and identifying a trading company.
8. Location of the factory
Does it seem a little offbeat? No, it doesn’t because knowing the location of the factory is quite important. In China, there are different locations where only particular kinds of products are manufactured.
Mostly, the components of a product would be produced in the same industrial area because of easy assemblage. If one factory produces one component in one area and the other produces a different component in some other area, then it would require overhead costs of transportation as well as add complex procedures for the assemblage.
For example, most of vacuum bottles are produced by factories in Zhejiang province. If you want to get a real factory to be your supplier for vacuum bottles, try to limit the scope in Zhejiang Province.
Try these 8 ways, you can distinguish your suppliers.
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