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If you have ever tried to figure out an ideal way of doing business with a Chinese factory, whether you want to deal with them directly or go through a China trading company, you aren’t the only one. A lot of clients have inquired about how to certify a Chinese supplier to be a factory or a trading company. In this article, I am going to lay out nine effective ways to validate Chinese suppliers.
Collaboration with a factory can create several benefits, for instance, straight connection and lower costs. You can effectively handle the changes or the problems when you manufacture the components with the plant itself. Moreover, the factory becomes the reason why there is no intermediary involved which can lead to more competitive prices.
For the companies with the minimum requirements and want to work with a Chinese company, they will work with a Chinese manufacturer instead of a China trading company. Despite this, it is hard to figure out whether the selected vendor representative on Alibaba or picked at the China fair is a factory or a trader. The solution to this question remains in this article.
Tip#1: Tell China Vendor that You can Work with All Types of Chinese Companies
Please keep in mind the following information:
You can be forthright with your Chinese vendors and assure them that it’s not an issue to work with them, whether they are factories or trading companies. This will help alleviate their fears of losing your business if they are truthful with you.
Also, please inform your potential vendor that your company may send someone to conduct a factory audit or verification. As per your company policy, if the audit results do not match their claims, you will not be able to work with them in the future.
By doing so, you will have given your potential vendor face value in advance while also setting boundaries before entering into any agreement.
Tip#2: Ask Them If They Own the Factory or Work with Other Factory?
Knowing whether a vendor is a manufacturer or a trading company is a crucial question.
However, sometimes the answer may not be straightforward and is referred to as a “grey answer.” For instance, the vendor might respond with “Yes, we have a factory” when asked about their business type.
To ensure clarity, it is important to confirm whether the vendor owns the factory or partners with other factories for their product. This distinction is critical.
Tip#3: Asking the Vendor for Their Business License
There is a part for describing the business scope, as you can see from the following picture, a factory’s business license should include the manufacturing type and related products. There is no such information on the trading company’s license. The problem is that the license is in Chinese; it requires you to find someone who knows Chinese and can check for you.
Tip#4: Check Their Catalogue or Products Ranges on Their Sites
Typically, a factory will only specialize in several fields. For example, a plastic factory can produce all kinds of plastic products, plastic toys, plastic housewares, etc. But they can’t provide other products in different materials, such as ceramic items, or paper items.
However, a trader can provide all kinds of these products, and you can quickly figure them out by checking their product lines. Unless the supplier has both their factory and trading company, they may put all the products in their catalog.
Tip#5: Check Business Type and Company Profiles
This is the easiest and fastest way to verify an actual factory or a trader, browse the vendor’s website, and then click the company profile to check the details. As you can see, the business type from the following picture has been marked as a manufacturer, in which a trader won’t have that label.
Also, you can see the vendor’s address, if they are located in an area like Room #1608 World Plaza, they will be more likely a trader, cause most of the factories are located in some field like an industrial park.
Tip#6: Inform Them that You will Need a Sudden On-site Audit of the Factory
When you just started contacting a vendor, they would always say that they are an actual factory instead of a trader.
Sometimes it doesn’t work if you just simply visit the factory together with the vendor, cause everything can be scheduled before visiting.
You can require a sudden on-site visit to see the vendor’s reaction, If they are a factory, it’s no problem for them, and they would answer you immediately: welcome, we also would like you to have a visit. We will make a presentation to you or something like that. If the vendor is a trader, they will find some reasons to make you stop doing that, but they may tell you the facts or the actual situation if you insist on doing that.
Tip#7: Asking Them if They Have any Available Certificates in Hands
If you got the info from the vendor that they are working with big retailers, such as Walmart and Target, you could ask them to provide the audit reports as this is the mandatory term for working with such retailers, BSCI, SMETA, SEDEX, or anything else.
You can check the factory’s name upon the reports, if it matches the vendor’s name, then they are a factory for sure. Even ISO 9001 also works because the Chinese local trading companies usually would not apply for that, but sometimes the foreign trading companies would apply for the ISO certificate.
Tip#8: Asking for a Video Meeting to Check the Facilities
Making a sudden video meeting without informing the vendor, and asking them if they can show you the facilities, is better to check the whole factory, warehouse, production lines, and inspection process. Then you will have your impression of this vendor.
If they can’t show you the facilities, I think you have the answers already, unless they are producing some exclusive products and their facilities are super confidential and refuse to show you. That could be an exception.
Tip#9: Vendor’s Location vs. Industrial Location
It’s also a solution to verify by checking the vendor’s location and compare with the industrial area of your products. Let me take the plastic toys and RC toys, for example. You can easily find toy manufacturers in Shantou. If you find the vendor’s location is far away from there, it’s more likely they are a trader rather than a factory. Cause the Shantou area has the complete supply chain for those products, raw materials, tooling factories, etc.
Exception:
Of course, an exception could be there. Some large-scale vendor has their own factories and trading companies. Their factory usually specializes in some fields, and their trading company takes care of the rest business. They typically run separately, but sometimes they can work together on a project. This means they may have different names and addresses, you have to pay attention to that also.
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Final Thoughts
Have you found your answer after going through this blog? Verifying Chinese vendors is a good preparation before starting your cooperation. Of course, you can also contact us if you need it.
Leave a comment down below and share your thoughts with us!
