China sourcing for small businesses – in a nutshell

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I was on Linked In last week and came across this post by a lawyer in Melbourne, Australia, David Salveson of MCP Group Lawyers, in one of the China discussion groups. I thought David put it as well as anyone in terms of what it takes to succeed when sourcing in China ( or at least what it takes to reduce risk). I asked him if I could reprint his post here in this blog and he said yes. So here it is along with some of my own comments at the end.

“The purchase of goods from China without the required due diligence is a recipe for disaster. Most if not all legitimate suppliers in China are there to help you through the procurement process but you have to do your homework first before placing any official orders with any supplier in China. Make sure you undertake an audit of the supplier, ascertain what associations and trading certifications it has, work out how long they have been in business, establish a working protocol around your expectations as to the procurement process, can you undertake an inline inspection, payment terms and delivery requirement expectations. Can you engage with an outside party to assist with certification of the manufacturing process? Learn who your supplier may have made similar products for before. Understand the age of machinery and skill level of employees. Do they have a social audit protocol? Work with your supplier on the development of counter samples, pre production samples and tooling processes. The adoption of a sampling and production schedule with key dates and expectations is a must to ensure satisfactory delivery.”

I agree with everything here with just a couple of caveats. I would not place too much stock in certifications or associations as they can be mere window dressing and sometimes fake. However, always look at licenses ( business and export) and make sure the name on the license is in fact the person you are dealing with. I would add that in fact the best way to do what David advises is to travel to China and see for yourself. In fact going to China to audit your suppliers is an example of doing your due diligence more than anything else.

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