Selecting the right overseas supplier is essential to the success of your business. Your manufacturing partner impacts your product quality, costs, overhead, shipping, and customer service. A strong Chinese supplier is the foundation of a strong business.

You want to make sure that the supplier fits your needs and that you fit theirs in return. Your relationship will only last if it is mutually beneficial.

The only want to ensure they are the right choice is to thoroughly assess the supplier with inspections and questions.

What questions should you ask a supplier to ensure they are a legitimate, valuable option for your business?

Top Management Questions

  1. Who is the owner of the company? What is his or her previous experience?
  2. How many years has your factory been in business?
  3. Are there other factories in the umbrella company?
  4. Is the factory profitable? What were sales last year? What were sales like five years ago?
  • This will tell you whether or not they are expanding and whether or not they will be able to handle their overhead to stay in business moving forward.
  1. Who has invested in the factory?

 

Middle Management Questions

  1. What does the management system look like? Who makes final decisions?
  2. Who would be the point person for my orders? What is their experience and management style?
  3. How do you hire management? Do you promote internally or source externally?
  • This can tell you whether or not they train and value their factory operators.

 

Capacity Questions

  1. Who is your main market?
  2. What are your total sales in domestics and in exports?
  3. Where do you export primarily?
  4. What is your main product line?
  5. What is your output?
  • Look at a line that is similar to yours. Ask them what the output for that product is. Watch the line yourself for a few minutes and see how many products are finished. Consider this number for all operating hours to calculate total output.
  1. What is the lead time from ordering receipt to shipment?
  2. How much of the product is made in-house? What is subcontracted out?
  3. What kinds of raw materials do you buy? From whom do you buy?
  4. Would you be willing to work with my material suppliers instead?
  5. How do you maintain your machines? How many of your machines are idle or broken? Do you have maintenance checklists?
  6. Have you made recent investments in machinery?
  7. Do you have a power generator or backup production plans?
  8. Do you have plans to scale? If so, how?

The 67 Questions To Ask Every Chinese Factory businessman standing in front of wall of question marks

Quality Questions

  1. What processes do you have in place for quality control management?
  2. When do you perform inspections? during production? prior to shipment? after delivery?
  3. What proportion of products are checked during the final inspection?
  4. Do you record quality inspection results in a formal report?
  5. What is your system for dealing with defective products?
  6. How do you provide samples? When and what is the cost?
  7. Do you have a system for dealing with American inspection, customs, and safety standards?
  8. Do you have a system to defend against patent infringement?
  9. How do you train operators to meet quality standards?
  10. Do you have staff dedicated to quality control?
  11. Can you show the results of the latest two purchase orders?
  • This can help you see an approximate sample of quality.

 

Workforce Questions

  1. How many employees do you have total? How many work in production?
  2. What proportion of workers came back after last year’s Chinese New Year?
  • This will tell you the employee loyalty, which can give a clue to management and compliance standards.
  1. What is the monthly employee turnover rate?
  2. Are workers paid b the hour or by piece?
  • If they are paid per piece, you want to be aware of potential compliance concerns. You may also have a lower quality product because workers have to push out products in order to get paid.
  1. Is supplemental compensation based on individual or team results?
  2. What happens if an operator makes a mistake? Is their pay docked? Do they receive additional training?

 

Compliance Questions

  1. What are the operating hours of the factory?
  2. How many hours per week does each operator work?
  • Take into account question 33 and 39. Calculate if the number of employees and the operating hours match up. Keep in mind that Chinese law allows operators to work 44 hours per week with a maximum overtime of 3 hours per day.
  1. Do you offer overtime hours?
  2. What does your benefits package look like for operators?
  3. Do workers wear personal protective equipment?
  4. Are there accessible, updated fire extinguishers appropriately placed throughout the factory?
  5. Does the factory meet all fire codes?
  6. Are there emergency exits? Are exits blocked?
  7. How much waste do you generate?
  8. Have you invested in energy-efficient equipment?
  9. Can we have a copy of your employee records?
  • Make sure all workers are at least 16 years of age.

Read: The Importance Of Social Compliance In Your Factory

 

Payment Questions

  1. What are your payment terms? What does the initial deposit look like compared to final payment?
  • You will likely have to pay a deposit to protect the factory, but never pay full price before receiving the goods.
  1. Which payment types do you accept?
  • Remember, you should always pay with a bank line of credit or escrow service. Never pay via wire transfer or credit card. Learn more about protecting your order here.
  1. Is there a set price fixed for a specific period?
  2. What is your average MOQ for similar pieces?
  3. What impacts the cost of the product?
  4. Will you sign a negotiated contract?

The 67 Questions To Ask Every Chinese Factory shipping box with white question mark inside

Shipping Questions

  1. What are your shipping terms?
  2. What is the procedure for packing and shipping?
  3. To where will you ship products? Will you send direct to FBA?
  4. How far are you from the nearest port?
  • This will impact your cost of shipping.
  1. Do you have relationships with transporters? Will you work with my chosen shipper if I request it?
  2. How is pricing linked to shipping?
  3. Who maintains ownership while the product is in transit?

 

Testimonial Questions

  1. How many clients do you serve?
  2. Who are your customer references?
  • Ask this question a few times throughout the process. If they don’t say the same or similar references each time, they might be making them up.

 

Requests

You should also request certain documents for legitimacy. Take photos to show your investors and ensure validity.

  1. Business license
  2. ISO 9001 Certificate
  3. Last year’s tax statements

Learn more about doing your due diligence with China Law Blog.

 

Note About Cultural Differences

Keep in mind that there are some cultural differences between China and America to consider. Asking certain questions might be considered rude or offensive in China. For example, in America, it’s normal and encouraged to ask a question like, “What is the biggest challenge your factory faces?” In China, this might be considered inappropriate.

When dealing with Chinese suppliers, try to keep all questions and interactions in a positive light.

Nevertheless, if a supplier gets too offended or defensive, it might be a signal that they have something to hide.

Work with Ask Idea Sourcing to avoid these cross-cultural barriers. Our global team understands how to best approach situations, negotiations, and inspections overseas.

 

The Bottom Line

Perform inspections in-person, face-to-face. This will help you see how the supplier answers your questions. Do they lie to get your business? Do they get defensive? Are they excited? Are they collaborative? How do employees react when you’re there? Are they open and willing to provide information?

67 questions is a lot to ask—especially if you need to travel overseas to do it.

Thankfully, you don’t have to do it alone.

With the Ask Idea Sourcing supplier assessment, our team on the ground in China can inspect new suppliers for you. We also offer a list of validated, quality suppliers who have already answered these 67 questions with flying colors.

You’re ready to find the perfect supplier for your imports.

So let’s get started.