How to Confirm That Your Chinese Manufacturer is Legitimate

It’s a horror story that plays out far too often. A business finds a manufacturer that seems to have great prices and solid turnaround times. Only to find that the goods that turn up are way below standard, if they arrive at all. Worse, the manufacturer in question has stopped responding to your emails, making off with a good chunk of your money.

Thankfully, such stories are easy to avoid. Here at Easy Imex, we have years of experience in sourcing suppliers from China. Here are our top tips to avoid being taken for a ride.

P.S For more tips on avoiding untrustworthy Chinese manufacturers, see our list of ‘red flags’ that should scare you away from any manufacturer.

What Should I Check?

To be able to confirm your chinese manufacturer´s legitimacy, there are some factors that must be check out before jumping into conclusions .

Business Licence

Any legitimate Chinese manufacturer should be able to provide their business license. This is a document verifying the business’s right to operate legally in mainland China.

You can confirm the legitimacy of a Chinese business license by typing the business name or UCSI number into the National Enterprise Credit Information Publicity System (NECIPS). NECIPS is run by the Chinese government, so if the business is officially registered, it will be listed there.

Website

It is always a good sign if your manufacturer has an online presence, complete with a professional looking website.

Reviews

Positive reviews can be bought, so they are not a guaranteed indicator of a supplier’s legitimacy. However, a large number of positive reviews is usually a good sign. You can also ask the manufacturer to provide you with references from buyers that they have worked with previously.

Bad reviews are always a cause for concern. During your initial research into your Chinese manufacturer, try looking them up on Supplierblacklist.com. Supplier Blacklist is an online platform where buyers can list manufacturers that they have had bad experiences with.

Business Address

Ideally, you will visit the factory yourself, or send a trusted third party to do it for you. If this is not possible, at least make sure the business address is consistent across all documents and platforms. You should also check the address on Google maps. Ask yourself, does the address look like a legitimate factory?

All About Site Visits

Site visits are essential for ensuring your business partners meet your expectations. Here’s what you need to know before, during, and after your visit

Plan Ahead

Make a checklist in advance of all the questions you want to ask and the things you want to see. You don’t want to leave and find that you have forgotten anything, especially if you travelled to conduct the visit.

Inspect their documents

An in-person site visit is a great opportunity to take a good look at all of the business’s documents and confirm that everything is authentic. Documents you may wish to see include Business License, Certificate of Foreign Trade Registration and China Customs Registration Certificate. These documents prove that your Chinese manufacturer is a legitimate business, and that they are authorised to import and export.

Assess the Factory

Pay attention to the scale of the factory. Is it feasible that a factory of this size could manage your order in the given time frame? Pay close attention to quality control procedures and the professionalism of the factory as a whole.

Or…Have a Third Party Do it For You

Travelling to China to conduct a site visit is not affordable or practical for everyone. When this is the case, some businesses hire a third party inspection service to visit the factory on their behalf. Alternatively, if you work with a sourcing company such as Easy Imex, they can have their resident staff visit the factory for you. Sourcing companies are a particularly strong option, because if the factory is not up to standard, they can suggest a list of excellent alternatives.

How to Protect Yourself When Purchasing

Regardless of how careful you have been in selecting your manufacturer, it is still important to protect your money during and after the transaction. Here are some of the steps you can take to protect yourself.

Contracts

The contract is your first line of defence when purchasing from a Chinese manufacturer. Make sure that your contract is crystal clear with regards to payment schedule, payment terms, delivery times, product specifications and product quality.

Be sure to include an arbitration clause, in case things go wrong. Lawsuits against Chinese suppliers tend to be slow and expensive.

Escrow services

If you are paying through a platform like Alibaba or Made in China, you will already be subject to their refund policy. However, if you are arranging everything yourself, you might want to use an escrow service. Escrow services are third-parties that hold onto the money and only release it to the manufacturer once the goods have arrived in good condition.

Letters of Credit

Letters of Credit are another popular choice when paying international suppliers. A letter of credit is a legally binding guarantee that a seller will receive payment for their goods, provided they are delivered on time, in promised condition, and meeting any other agreed upon conditions. The payment in these cases is guaranteed by the buyer’s bank. Letters of credit are a common method, because they mitigate the risks for both buyers and sellers.

Conclusion

Finding a trustworthy Chinese manufacturer can be an intimidating prospect. However, by following the advice laid out above, you can minimise your risk of being let down. It is important to check your manufacturer’s documents, their online presence, and to take a good look at their factory. It is also essential to protect yourself with a secure payment method.

If you still need a hand finding the right supplier, consider working with a sourcing company such as Easy Imex. We have years of experience connecting businesses with the ideal supplier for them, so that they can focus their energy on making their business grow.