Due diligence in China: What to See When Visiting Chinese Factories Part 1

Seeing is believing.

So when you choose or verify Chinese supplier, the most authentic way is to visit the supplier onsite, either by yourself or hiring a third party service.

So what to see and what to check during the visit?

1) Meet with the owner
A person has character, there are all kinds of persons in the society, good people or bad people, professional people or unprofessional people, people with a mission or shortsighted people.

A company also has a character, the company’s character is determined by the owner’s character. In good time, people/companies are good to disguise themselves, pretending they are nice, charming, reliable, professional, moral people or companies. If your relationship with the people or companies go through down times(like contractual dispute, quality issue, late shipment), from how they handling those situations, you can see their true face.

So to know what kind of company you are dealing with, the best way is to meet with the owner, see what kind of person he/she is, dig a bit of his/her background/experience, if you have a chance to travel with the owner or live with the owner for a few days, if it allows, take it.

2) Meet with the salesman
Salesman is a window of a company. In many cases, you can tell if a supplier is capable, reliable, professional by looking at the salesman, is he/she reliable, capable and professional enough to handle your order well?

As a matter of fact, many factories in rural areas are struggling to attract talented staffs to work for them. Talented colleague graduates choose to stay in city(where trading companies gathered). So do you have a feeling that people from trading companies are more professional, capable and organized than people from factories?

Don’t choose suppliers that can give you good price, but have terrible salesman to deal with you, they can’t understand your English and requirement, they don’t deliver what they promise, they don’t understand the value that their service add to their products.

3) Check the warehouse
When I visit supplier, I often request to see their warehouse, the things you see in the warehouse suggest the business standing of the supplier, which they might try to disguise.

When I choose a supplier, if I have choices, I don’t want to choose suppliers that don’t have business, I want to choose suppliers that have good business, but is not too busy to take care of your business.

If a factory don’t have enough orders to keep the machine running, there must be something wrong with them. Quality not good? Product not competitive?

So supplier try to cover it up when you visit, they will keep the machine running during your visit, but if you visit their warehouses, you will find out the truth.

If they have good business, the raw material warehouse must be filled with raw material, if you are a door mat suppliers, you will have tens of tons of rubber, plastics, carpets there. If you go to the finished product warehouse, there must be packed orders there ready for shipping.

If in the factory you are visiting, the production line is operating, warehouse is empty, then this factory is not in good standing.

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