When sourcing goods from China, you have to face a difficult matter: choosing the right supplier. You have to check if your potential supplier is credible and if their terms are acceptable to you. To make this task easier for you, we prepared for you a list of issues that you should ask your future business partners about. There are 10 questions for Chinese suppliers that are worth asking before starting the cooperation.
10 questions for Chinese suppliers
MOQ – Minimum Order Quantity
One of the basic questions you should ask the supplier is about MOQ. MOQ is a minimal amount of goods for which the order can be realized. Due to the bulk nature of most orders, the price is a factor that changes along with the amount of ordered product. The more pieces of product you order, the better price you may get. At the same time, it means that you should first take an interest in MOQ and then the unit price, as this price will be conditioned by the order volume.
It is worth noting that strict adherence to the MOQ is, of course, a matter of the supplier’s will, and they may change the MOQ during negotiations. This carries the risk of receiving products of worse quality as dishonest suppliers may want to recompensate themselves for the smaller order with saving materials costs.
Chinese factory or trading company?
When ordering products, you should check if you are dealing with the actual manufacturer or only a so-called “trading company,” a middleman. As a rule, purchasing a product from a trading company usually means lower MOQ limits but also carries a bigger risk. It is not a direct manufacturer, so in case of faulty products, it is hard to blame the responsibility on them. Due to this, it is very sensible to verify who actually is our supplier.
Can I see the product?
Due to the fact that product samples may differ from the actual batch manufactured for you, a reasonable method to verify it is conducting quality control. Factory inspection in China may be carried out at various stages of production.
If the seller refuses to have an inspection carried out (of course, they have the right to do so), it takes away their credibility. In that case, it is better to choose another supplier.
Do you make OEM or ODM?
An important matter you should mention in your negotiations with a business partner is how much you want to change the initial project, its design, and the production process. It is defined as OEM and ODM.
- OEM is an acronym for “Original Equipment Manufacturer,” and it means that your supplier manufactures the ordered product according to their own design and later puts it on your trademark.
- You can customize the product according to your design when choosing ODM, meaning “Original Design Manufacturer.”
If you want to adjust the product to your brand, it is necessary to determine this matter at the beginning stages of negotiations with a potential supplier.
Factory location in China
Particular regions of China are specialized in certain branches of the industry. It is worth finding out the exact address of the factory as it will make it easier for you to verify it by conducting the audit or pinpointing the factory on the industry map in China.
Which Incoterms do you use, and how do you transport the goods?
Incoterms are internationally standardized short terms of International Commercial Terms. You should, in advance, determine the obligations of you and your business partner. It is also good to know what mode of transportation your supplier uses. Depending on the chosen mode of transportation, the time of delivery will differ. It is worth negotiating those matters, so they align with your preferences.
Product quality certificates
It is worth asking if your business partner has any certificates or if they have conducted audits. A good practice is to ask an open question, as it will get you more information than asking only about specific certificates.
If you import to the EU, the document that you will be interested in most cases will be a Declaration of Conformity, that means that a particular product fulfills quality and health regulations and is safe, so it can be sold on the territory of the European Economic Zone. You should also remember that the received certificate should be verified to confirm its authenticity.
Chinese business license
To minimize the risk of being scammed, it is good to ask for a copy of a Chinese business license. The document is often forged, so you should make sure to receive a scan in color of good quality and to further verify the information contained in the document (it is fully in Chinese).
You can have a chosen Chinese supplier verified in a matter of days!
Experience with foreign trade
To make sure what your supplier represents, you should ask about their clients, if they regularly send products abroad, if they have any references from past business partners, or ask for them to make a list of clients available to you.
Proper product packaging
Your product will probably be in transit for a long period of time. You can ask your supplier for photos of the products packaged for other clients to make sure that your order will endure the hardships of the travel.
10 questions for the Chinese supplier – summary
A set of questions that you should ask your potential Chinese supplier may look like this:
- How much is your MOQ?
- Are you a factory or a trading company?
- Can I conduct product quality control?
- Do you make OEM and ODM?
- What is the address of your factory? Can I visit it?
- Which Incoterms terms do you use?
- What certificates do you have? What audits were conducted?
- Can you send me your business license?
- Do you cooperate with foreign clients? Do you have any references?
- Can you send me a photo of packaged products?
Of course, throwing too many questions at a potential partner in the first e-mail or message is not recommended. You should follow the rules of Chinese business culture and establish a relationship. First, you should introduce yourself and talk a little about yourself, your company, and what you are looking for in a future business partner. The communication will be more efficient if you take your time.