Supplier background check: how useful is it in China?
Recently, we got a case of a client willing to buy for $50k of motorized vehicles. He asked us to run a quick check of the company reliability as a safety measure.
The particular supplier has a well-designed website where he exposes both “Alibaba gold” medal and the “Onsite check” mention by alibaba. He also shows the regular registration number and ISO9001 documents.
So, at first glance, no real reason to worry whether this company is trustworthy or not.
We checked deeper though and found the following:
– Registration information was in fact, from another factory. So was the ISO9001 certificate!
You’d say it is a little too big to be true, but actually all those informations are in chinese so, who is really going to check it? Most customers won’t.
– The supplier had actually no legal Chinese name and no official registration.
– Looking deeper, this supplier was really just a 2 people trading office.
– On top of that, we even found a scam claim on Internet.
We finally give them a call, to confim our findings. Say, we gave them the benefice of the doubt. But, after some basic questions about their business, they simply hang off the phone. What could possibly be wrong in asking a supplier how many workers does he have?
Working with a trader like this one, doesn’t necessarily mean the customer would not get his goods. But the risk is high and useless compared to buying from a reputable manufacturer. In case of bad reputation, some suppliers don’t hesitate to change their english name. After all, this is not not the official name in China. They will thus benefit from a fresh start with a new identity, even if they are still using their old registration date to confirm they have experience. In such cases, we also check the reputation of the Chinese name.
The background check is a simple and quick way to get a status on your supplier. It also helps to get a better understanding of their environment and thus reduces the transaction risk.
The best time for running one is before first order or sample order and after the shortlisting process.
