Identifying a supplier is one thing. Another thing is to determine what type of supplier they are. Most suppliers love to claim that they are factories (apparently, I do not know why they do that). This makes verifying the factories a lot difficult than it should be.
So, this post contains some easy ways to find out the identity of the supplier you are dealing with. Pay rapt attention to the following and catch a glimpse of the message I’m trying to pass across.
To verify the nature of the supplier, check out the following:
- Business license
Factories usually have words like ‘manufacture or produce’ in their business scope. So, identifying this in their business certificate should be very easy. If the supplier doesn’t have such, then it’s not a factory.
- Value Added Tax (VAT) Invoice
The factories can issue you a 17% VAT invoice to request a drawback on an export, which the Chinese government permits. If the supplier is not able to give this to you, they are not factories.
The MOQs of factories are usually very high and non-negotiable. They offer MOQs from which they can break even. Meanwhile, the MOQs of trading companies are flexible and not as high as that of the factories.
- Product Catalogue
Factories will deal with one particular type of product. They wouldn’t even specialize in different species of the same product. But trading companies have a more comprehensive product catalog than the factories.
- Factory Auditing Reports
If the supplier has supplied to other large companies (which the factories do), they can provide the factory auditing report stating that they have done that. If the name on the account isn’t the same as that on the license, they aren’t sincere.
- ISO 9001 certification
Most factories have this certification. The trading companies may not be able to get this as they don’t need it. This would be able to verify a factory from a trading company.
- Location of the company
China has a way of operating with factories. There are specific locations where the production of a particular product is mostly carried out. If the supplier you’re dealing with doesn’t fall into the range where they produce such a product, then it’s a trading company and not a factory.
Dear friends and importers, I know it’s not an easy job sourcing for suppliers. But don’t be disheartened. Just journey through my guidance and have a smooth sail.