How do you vet a supplier?

[Veloman]

I'm looking for advice here. I've been talking with a manufacturer through Globalsources. I was searching for them specifically because I wanted to source directly from them as I trust their product.

The sales rep requests 100% payment upfront for the first order. They want a bank wire transfer. (TT)
They are a Chinese company with HSBC bank Honk Kong.

My question is how do I verify the bank info they sent me? I don't have any reason to doubt them other than being cautious that they are who they say they are. Do I contact their bank or mine?
Thanks for any tips.

 

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[AgainstAllOdds]

What's the dollar amount of the order?

100% upfront is not typical for most factories.

What's most typical is: 30% down. 70% after production before shipping. At a minimum they'll send you pictures. You can also inspect if the dollar amount makes it worth it.

These numbers change depending on your scale. If it's a small order, then 100% upfront may be requested. If it's a very large order, and repeating, then you can sometimes find terms that involve 30% downpayment, and then 70% against the Bill of Lading (so typically you pay 1 week before the container load arrives).

If the amount of money is significant to you, then I recommend vetting the company in person or hiring a third party to do so:

Price List - V-Trust Inspection Service, Quality Control in China, Laboratory Testing, Factory Audit

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This is one I've seen a lot of at tradeshows and would trust. Their pricing is fair. $368 for a simple factory audit (you'll know the factory exists and maybe get some pictures).

 

[AgainstAllOdds]

They want a bank wire transfer. (TT)
They are a Chinese company with HSBC bank Honk Kong.

Also, wire transfer and a HK bank account is typical. Nothing suspicious about that.

 

[Walter Hay]

GlobalSources.com has quite a number of bad reviews (1 star) online and knowing how their pseudo verification system works, I would not rely on anything I read in vendor's listings.

Here is an extract from my book: For years I was registered as a vendor on GlobalSources (not to sell anything but as I have always done on Alibaba, it was to have the inside running on how the system works. I had allowed my vendor registration on Globalsources to lapse so I set out to register again recently in order to update my knowledge of their system. The process was too easy. Without any verification procedure I was immediately awarded a 3 STAR rating, about which they say: “Start as a 3-star advertiser to win buyers' trust fast.”

If you have not been able to do reasonable due diligence, I would be reluctant to pay 100% upfront. If the amount is small and won't cause you too much grief if you lose it all, the only safe way would be to pay through escrow.com.

If it is a very large order, you should take the advice given by @AgainstAllOdds, and pay by L/C.

Walter

 

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[Veloman]

With shipping expense, it's a $6000 investment. It wouldn't break me but not small change for me either.
They listed 1000 MOQ but I got them down to 600 units. They said after the first order, 50% upfront and 50% at ship date.

The $368 audit seems like a reasonable option.

 

[Veloman]

I know the company is legit, my main concern was that the sales rep I am talking to is who he says he is and the bank info he gave matches the company. The company is a reputable supplier and I've been selling their product (and I trust their quality, that's why I want to do business with them). Not that it's worth much, but the sales rep has a linkedin profile that lines up.
I also see that the company website has one of the main contacts listed - is the same name who I have been talking to. So I sent an email directly (instead of through Global Sources).

 

[Walter Hay]

I think the checking that you have done and the precaution of paying for an audit is reasonable.

The only flaw I see is that while an audit will tell you if the company is legitimate, you have no guarantee of a refund or replacement should the goods prove faulty.

It would be safer if you could get them to accept an inspection during, and preferably at the finish of, the production run, and if the inspection service finds the goods to be satisfactory, you then pay in full.

Walter

 

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[AgainstAllOdds]

I know the company is legit, my main concern was that the sales rep I am talking to is who he says he is and the bank info he gave matches the company. The company is a reputable supplier and I've been selling their product (and I trust their quality, that's why I want to do business with them). Not that it's worth much, but the sales rep has a linkedin profile that lines up.

You need to contact the direct source and confirm that he's an agent of the company if he's not using the company's domain for email.

Sometimes though, individuals will set up websites on behalf of factories and act as middlemen/scammers.

I contacted one factory in Vietnam before. Then had my Vietnamese assistant vet them. After she called the factory, she found out the factory only had a Vietnamese website. Their direct match .com domain was owned and operated by one of their dealers. Pricing would've been a lot worse.

Ideally, get an assistant in China that will call a factory for you and confirm that they're legitimate if ordering is your biggest concern.

 

[Veloman]

Update:
Everything turned out okay with my first import from China. Aside from my freight forwarder taking longer than expected, the manufacturer taking longer than expected, and a total of 150 emails between them and me. I picked up my goods at a warehouse 80 miles away, my product is to specification, US trade office got their 25% tariff from me (ouch).