When you’re verifying a potential supplier you are essentially looking at these two aspects:
1. Does the supplier have the ability to produce the products you want to buy?
2. Is the company a legitimate business with good reputation and not a scam or business on the verge of bankruptcy?
This article offers simple and effective strategies to answer these two questions – let's get started.
1. Make a phone call
To avoid being traced by law enforcement authorities, most scammers do not provide genuine registration information online. For example, they will provide a false company address, telephone and fax number, or persuade buyers to contact them by mobile phone only.
Make a phone call to the China supplier’s landline and ask for the company registration number and business license number while you’re at it. An alarm should sound off in your mind if a supplier only has a mobile number and not a landline. In China, it is possible for people to buy hundreds of mobile phone numbers without any restriction or limitation. This is why scammers almost always use mobile phone numbers instead of landline telephones.
2. Check business licenses
Chinese suppliers have to register with the Chinese government authorities and obtain a unique company registration number. If your supplier is unable to provide you a unique company registration number, it's too risky to continue dealing with them. To verify the registration number, visit their local administrative government website or contact their local Bureau of Industry Commerce.
3. Money matters
While we're on the topic of money, when it comes to payment, tell your potential China suppliers that you want to get your products picked up by your local agent from their address. See if they allow for this. Scammers will never agree to it but real legit suppliers will.
In addition, TT, Western Union, and MoneyGram are the most common mode of payment in China, but good suppliers accept PayPal as well. Always be cautious of using untraceable wire service transfers with suppliers you do not know – these are highly risky and susceptible to fraud.
4. Conduct factory audits (or at least pretend to)
Tell potential suppliers that you’ll have their factory audited before any Purchase Order is issued, and later will want their production inspected before any shipment is authorized. Mention it right away in your first encounter or email. If the supplier refuses or starts making excuses why it wouldn’t be a good idea, that’s a red flag!
5. Visit the company or factory in person
This is the best way to verify your suppliers – you won’t know much about an organization unless you visit it. You can also discuss your products, prices, quality inspection, and delivery time expectations face to face. It’s impossible for you to go visit every potential supplier you have in mind, so go through the earlier steps outlined in this article, and narrow down your selections before deciding to jump on a plane and visit their office or factory in person.
The best way to reduce fraud (regardless of whether you’re trading online or offline) is for buyers and sellers to conduct proper due diligence and research before entering any transaction. Be meticulous with this verification process, and you will know if your potential supplier can be trusted.
Lastly, once you have developed a good working relationship with a reputable Chinese supplier.
Zhenheng Machinery, 38-years manufacturer experience, provides efficient solutions in concrete production industry.
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