How to Verify and Check China Company

How to Verify and Check China Company

I cannot stress the importance of this step enough.

I have so many clients that have come to me to save them simply because they failed to check the China company prior to placing an order.

I have cases where clients came to me after their manufacturer simply disappeared, where factories had slow communication or stopped replying in English, even extreme cases where manufacturers started demanding more money after the order was placed and deposit paid.

All these could have been avoided if the company had been properly checked out.

Not all companies in China are bad or scammers, in fact only a very small percentage.

 

How to Check Chinese company

However it is almost standard practice for factories to quote beyond their means - i.e. quote at a low price to grab your attention only to find out at a later stage the quote was for plastic instead of stainless steel etc. etc.

Communication can also be an issue, often the staff assigned to handle your order are fresh out of school, sure they can speak a few words of English, but do you feel comfortable with a 17 year old with no experience handling your order?

I have seen factories with dirt floors, with no roof, with finished products sitting in the rain - I could go on and on but I think I have made my point:

Screen and verify your manufacturers thoroughly and you will have a manufacturer you can work with long term at world beating prices.

So what do you need to verify:

  • Is the manufacturer a real and legit company?
  • Is the manufacturer is financially sound, capable of fulfilling your order, and in a dispute, able to financially compensate your loss
  • Is the manufacturer is capable of performing the contract, do they have relevant human expertise, machinery and technical capability of filling your order

As you are searching for manufacturers using the methods outlined in step one we assume you have dropped any of the following:

  • Manufacturers that list or promote any counterfeit or copy products
  • Manufacturers that are very difficult to find other than a minor presence such as on a free website, but they don't have their own website or paid membership on sites such as Alibaba
  • Companies that demand payment to Western Union or direct transfer to personal bank accounts

Now you should be at the step of Screening and Verifying manufacturers with a shortlist of manufacturers.

Our goal here should be to gradually reduce the number to 2-3 manufacturers for the final step in the screening process of a site visit.

At this stage you will have obtained quotes from manufacturers. Use your judgement here because as I mentioned earlier some manufacturers will use tricks such as quoting very low prices to attract you to them.

However, you should be able to drop some manufacturers after they have quoted their price, product or service such as communication problems will be an indicator they are not suitable.

 

Sampling and Trial Orders

Another key step is sampling or placing a trial order.

Some bigger factories will offer a free sample, however in any case you should definitely arrange to inspect a sample in order to judge the quality.

A sample can also be useful later in contract negotiations as you have a physical product to base the quality level on.

The last step involves check into the company legal and financial status as well as a factory inspection to verify their ability to fulfil your order.

The China company background check will include:

  • Visit the company
  • Confirm chinese company registration and Chinese legal status with local Government
  • Due diligence on the company including references and company history

The factory inspection will cover:

  • The production machinery and technical capacity of the factory, what is the monthly production capacity.
  • The human element: Factory management, technical expertise of the staff and number of workers to ensure production ability and achieve maximum quality.
  • An assessment of the assets of the company such as buildings, land, machinery etc.
  • The registered capital of the company.

I haven't simplified this process to highlight that it is difficult and very important.

Large companies have the resources to verify manufacturers themselves however small to medium sized companies often skip the step entirely because they can't travel to China, can't speak Chinese or do not have the resources to verify the manufacturer themselves.

They might get lucky and stumble on a great manufacturer, or their attempt to import from China could become their worst nightmare.

ChinaFind provide China sourcing service and Chinese company check for any company large or small.

We are a trusted company with great experience in this area and I stress that it would be better to use our services in advance than find yourself in a situation where you have lost time and money far greater cost than your original order value.

Contact us here »

Related articles:

How to Find a Manufacturer in China
How to Negotiate with a Chinese Manufacturer
How to Oversee and Control Production in China
How to Arrange Quality Inspections in China
How to Arrange Shipping and Customs Brokerage from China

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