You have the product. You have the specifications. You’re ready to take it to market.
Now all you need is a manufacturer.
And this is where a lot of people go off the tracks. Manufacturing, especially when you’re dealing with a company overseas, is one of the higher fraud risks you can take on. Fraud costs companies around the world around $3.6 billion.
If you’re looking for a manufacturer for your products, you need to make sure you’re vetting it properly, otherwise you can get yourself in trouble fast. Especially if you want to do a big run. The more money you spend, the more important it is you get it right. There are a few signs you need to be wary of when you’re vetting a manufacturer.
They Don’t Have Any Certifications on Their Profile
Alibaba is one of the premier sources to find manufacturers in China, and it’s the starting point for many people who are looking for someone to make their product. Gold Supplier status is one of the first things you should look for.
On Alibaba, a Gold Supplier has been certified by a third-party source that states that they’re an actual legitimate business. It’s a paid membership and every year the counter next to the company’s name will update to indicate their status.
That number is important because most scammers will get caught within one or two years. That membership also costs several thousand dollars, and it indicates that the factory is big enough to afford it. If you don’t see the Gold Supplier badge — and often if they don’t have more than two years next to it — it’s probably worth avoiding. You might get a good supplier anyway but you’re taking on a risk that isn’t necessary.
Free profiles are much higher risk. Avoid them. Stick to Gold Suppliers.
And while you’re at it, look for an onsite check badge too. That indicates that Alibaba or another third-party source has certified that there’s an actual business there.
You Haven’t Conducted a Third-Party Check
Of course, if you want to conduct your own third-party check, there are firms that specialize in that too. These range from full intermediaries like Sourcify to smaller quality control firms that just verify that there’s a business there and they seem like they do manufacturing.
If it gives you extra peace of mind, it’s worth engaging with a company that looks into Chinese manufacturers to confirm that they’re actually who they say they are. Many companies on sites like Alibaba are resellers or fraudsters that just want to turn and burn with the money.
If you can find out what bank they use or who some of their current customers are, you may be able to conduct some limited checks yourself too. It all depends on your level of comfort.
You Didn’t Check for an AliExpress Store or Website
You can tell a lot about a company by how many things they’re capable of doing. Fraudulent manufacturers will likely only put in the bare minimum of effort to make themselves seem legitimate. Better and more capable manufacturers will do more.
AliExpress is a main focus for dropshippers. Check the manufacturer’s profile and click on the Contacts page — if they have a shop on AliExpress, they’ll usually drop a link in that section of the profile.
A dropshipper who also does manufacturing is much more likely to be a reputable and capable company than one that only manufactures. You can even order samples from the AliExpress store to find out what their quality control is like to get a true sense of the kind of products you might get.
And some manufacturers even go the extra mile and have a website in English. An English-language website is a good sign that the company is legitimate and willing to put in the time and work to appeal to an English-language audience. Even if the website isn’t that great objectively, if they’ve put one together it’s indicative of their investment.
You Didn’t Fly Over to See Them
Not everyone can afford this, but when you’re vetting companies through your platform of choice it can be a good idea to get some face time in with the ones you’re thinking about using.
You can reference some guides to get you started if you want to go over and check yourself, but some good things to have in your back pocket are:
- A few words of Mandarin. Most people don’t speak English, and if you don’t know how to say anything at all you’re going to be in trouble.
- Get a little bit of renminbi (Chinese currency). Some places will take credit cards but you should have a little local currency on you.
- Get an invitation letter from a Chinese business or a letter of introduction from your company. This will help with the visa process.
If you do decide to go visit the manufacturer, let them know. Most fraudsters will be scared off by the very suggestion of a visit.
You Sent Money to a Personal Bank Account
This cannot be emphasized enough: never send money to a personal bank account. No matter how good the story is. No matter how much you think it’s safe. It is never ever safe to send money to a personal bank account.
This is one of the best signs you’re being scammed. and many fraudsters will come up with elaborate ways to explain why you can’t send money to the company itself. Don’t fall for them.
Doing business overseas can be worrisome because you can never be sure who’s on the other end of the communication. You can avoid a lot of fraud by being prepared and forewarned with these tips. And for even more peace of mind, Sourcify can connect you to a list of manufacturer’s we’ve already vetted.
Contact us today and make sure you don’t fall victim to fraud.
Image Credit:
- Featured Image, Unsplash
