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Choosing the Right Supplier: Background Checks

Jul 21, 2021 | Case Studies, Manufacturing in China, Sourcing Agents

A lot can go into choosing the right supplier for your business. Pricing logistics, quality – all of these and more affect which manufacturer is right for you.

How do you find the right supplier?

Background checks are used to reduce the risks. Just like with any business, whether it’s abroad or at home, running a background check can provide you with details of what the suppliers is like and if they’re a good fit for you. It’s not just about quality, it’s also about standards and their overall etiquette.

We cannot stress enough how important this step is in deciding where to manufacture.

Take one of our clients, for example:

We were approached by the client looking to launch their product in China.

They had previously decided to try and find a supplier themselves, but with no knowledge of the process or background information, they found that the samples weren’t in line with what they were looking for. So, instead, they came to us.

As part of the procurement process, GHL explained to the client how they could expand their reach into more global territories. This inevitably led to the mention of intellectual property and the importance of registering for trademarks.

It was later discovered that their previous supplier in China had registered their brand in the country. It was not a company GHL had dealt with previously, but as part of the process with clients, we decided to run a background check on them.

The check revealed that the owner of the supply company also owned a separate business in which he had registered the client’s brand name, creating a problem for them now that they could no longer register their brand in the country. This behaviour wasn’t new – the same company had done this to 18 other brands over the past 6-12 months, something GHL would have picked up on at the start in the standard background checks.

So, you see, background checks are more important that you may have realised.

There are a few things you can do to find the one that’s right for you:

  1. Choose the right target

Instead of talking to salespersons or finding information at tradeshows, narrow it down to simply finding the business name and official address.

2. Arrange an audit

Once you have all the information needed, contact the company to arrange an audit of the factory. If the supplier begins acting suspiciously at the mention of an audit before any PO is issued, that’s a sure sign that something is wrong.

3. Google is your friend

Looking up reviews on Google or other search engines is one of the easiest ways to find out how trustworthy the supplier is. You can take it a step further by including words like “scam” or “dishonest” in your search to narrow down responses.

4. B2B directories

These also provide you with more information on companies, such as whether they are verified or if the contact information is consistent.

5. Seek professional advice

Background checks are standard practice with GHL and new suppliers. It’s important to know who you are dealing with before you start imparting valuable information. Not only do you get background information on the company, but you recieve expert advice on the next steps before any payment is made or brands are lost.

If you need practical and reliable support in finding the right supplier for you, contact the GHL team today.

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