Techniques to access the truth about your supplier

Excerpt from “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book)

Here are some “softball questions” I look to toss out during a factory tour or at the dinner/lunch following the tour, to get the supplier talking. When they are comfortable and at ease, they may go off-script and give you some juicy information.

  • “What are their plans for the future?”  Most factory staff are proud of their business and want to tell you all their hopes and aspirations. If they have their eyes set on becoming China’s #1 toilet brush maker and you are asking them for help with toothbrushes…you may have an issue.
  • What are their biggest headaches?  You may hear about trouble with staff, or rolling black outs, or that their rent keeps going up or that they hate small orders…watch out if any of these issues affect you the buyer!  This is a great question to ask because they simply don’t put this stuff in their websites or on their brochures!

It may be uncomfortable to ask for sensitive information like ownership papers, business licenses and client references.  Certainly you don’t want to come across as being rude and letting the supplier feel they are guilty until proven innocent, but this is something you have to do to be safe!  I have found that playing good-cop, bad-cop is an effective solution to this dilemma; usually by saying something like this:  “Mr. Factory Manager, you run a nice shop and I am impressed with you and your team.  I want to go home and tell my team about what a great supplier you will be, but my boss is a real stickler for detail and he is making me fill out this check list. I could care less about the following, but under our company’s Standard Operating Procedure (SOP) for conducting a supplier audit, I need to get a copy of the following documents….thanks for your understanding and sorry to trouble you”.

If the supplier still tries to wiggle out of giving you the information, it should be a red flag. Here are some common scenarios:

  • Supplier doesn’t want you to see their business license for some reason. Perhaps the factory history, ownership, scope of business is very different from the story they have presented you.

Here are the common excuses you will hear:

  • “Our business license is at another location.”- This is highly unlikely as all businesses in China are required by law to have their business license framed and posted on the wall or other highly visible place in the office.
  • “Our business license if getting updated and is not available now.”- Highly unlikely as to operate without a pre-approved business license is illegal.
  • “Here is the license of our parent company (in HK or Taiwan for example)”.  This is not a PRC license.

Wishing you successful China sourcing!

Mike Bellamy

About the blogger

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com)

1 Comment

  1. 6 more quality articles that you should read on June 27, 2012 at 5:05 pm

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