Asking vendors for references – don’t waste your time

What people are saying about the EAC blog:

I want to thank you for your very informative and helpful blog. I took over the day to day management of a small sourcing agency based in Ho Chi Minh City Vietnam about a year ago and your blog has proven invaluable.
-from a sourcing agent in Vietnam

I am evaluating some suppliers now and, as I always do with these projects, I ask suppliers to list companies they have manufactured for. This will give me an idea of how global they are, if they are used to things like audits – in the case of Wal- Mart suppliers – and the quality and range of product they are capable of producing. However, I have no way of knowing whether the info they provide to me is truthful or, if it is truthful whether the vendor in questions was a good supplier for the companies they have listed. I have worked with some vendors over the years who did orders for global brands but their quality or delivery time left so much to be desired that I knew it was pretty much one order and out. But yet they always dropped the names of these brands when trying to solicit new business.

There are China sourcing companies who advise getting references from factories and actually checking them out. If the firm will not let you check their references, they say this is a red flag and advise not doing business with them. In fact this advice sounds more practical than it is for several reasons:

1.) Checking references is not really part of the Asian business culture, at least not in the two countries where I have experience, Japan and China. If you are applying for a job you may be asked to submit references. But people will most likely not check them. This is in stark contrast to the US where checking references is regarded as a critical step in the process of hiring someone. China vendors do not understand this.

2.) You are potentially asking for a reference of a company whose product you compete with. There is conflict of interest written all over this, for both you and the vendor. Vendors not knowing the market in your country may think you are a competitor of their current customer and that their current customer would not be pleased if they found out their vendor was making product for their competitor.

3.) Most China vendors will in fact not be willing to provide you with contact info of a company they have manufactured for. I have always assumed this but to test this assumption – and for this blog post – I emailed 3 vendors and asked them if they would be wiling to provide me with contact info of their vendors should I give them an order:
Here are the replies I received:

Vendor A

It is illegal to get out our customers information. I am sorry that we are not able to do against our company’s rule. I would like to let you know the brands we produced and mass production now, Company Name in US, Company Name and Company Name in UK. These brands are in middle-range market and high-range market. Regarding the others you concerned, when we start to do business, we could get to know more about each other and cooperate very well! Welcome to your trial order to start our business!!

Vendor B

Actually, we have the experience to provide New Customers with our old Customers in formations that we have worked with, but there is never any one asking for contact information. But for me, unless the one that i know they are really a big and good one, then i will provide the contact information to them. otherwise no need. But also, i think we need to confirm with our old Customers first whether they will allowed us to provide their contact information to others.

Vendor C
Before giving you the Company Name. contact information ,I need to ask if they would like to give their information to others? Once I get their approval, I will give you it!

Even though Vendor C said they would consider giving me contact info, I tend to believe they would not in fact do so, as they make it contingent on their customer’s approval. So what you are doing here is potentially writing off good vendors because the will not provide you with contact info, for one reason or another. I think more than anything then asking for vendors contact info is another example of taking western business concepts and forcing them onto your China vendors.

So what do I suggest you do instead ? Run a credit report on your vendor. This will provide you with some valuable information on which to base a decision to go foward with them or not. And if you visit the factory prior to giving your vendor an order you can ask them to show you invoices of previous overseas companies they have done production for. By looking at the dates on the invoices you can get a pretty good idea if the vendor maintains pricing and QC standards. Most vendors should be willing to share this info with you.

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