Why you need to run a credit report on your prospective vendor.

I always advise people to run credit reports on vendors they might want to do business with. This is especially important if you have met a vendor on a B2B site and have never actually visited them in China. A credit report will allow you to learn about the vendor and make sure they are being truthful with you (if they tell you they are the manufacturer) and also to tell you if they have had any problems or litigation in the last 3-5 years. It will really give you a better sense of whom you might be dealing with, assuming you just cannot travel to China to audit them ( what you really need to do and what I always advise doing).

Running a credit report on vendors you might want to do business with is important now more than ever because credit it very tight in China now. Regional banks have made a lot of bad loans over the past decade and in order to curb this behavior the Chinese Central Bank has drastically cut lending to regional banks. It wants to force regional banks to collect on their outstanding loans rather than paper them over with new loans. In other words, if you work with a vendor who needs a loan to do your order you may run into problems. So you really do not want to become involved with a vendor who is not in good financial standing. And a credit report should be able to tell you that. I think that is worth $ 250.00.



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