China Factory Due Diligence

Discussion in 'International Business' started by J.McVeigh, Apr 23, 2018.

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  1. J.McVeigh

    J.McVeigh UKBF Newcomer Free Member

    28 3
    Hi All,

    With regards to due diligence, what do you ask your factories to provide you: credit checks in some shape or form, quality management systems (materials purchases and manufacturing process), Anti-Bribery and corruption policy, Anti Slavery policy, health and safety policy, sustainability policy, ISO9001, 14001, existing product test results, CE marking certs., REACH compliance and substantiation, insurances, the list goes on.....

    These are all documents that I would expect to see in European organisations. We will be employing a Chinese agent shortly, so we want to know what is reasonable to expect re. the above.

    1. Can I expect the same level of response from Chinese factories?
    2. Do you have a minimum standard set of documents that you ask your factories to provide ahead of starting a partnership?

    Thanks,

    James
     
    Posted: Apr 23, 2018 By: J.McVeigh Member since: Mar 20, 2018
    #1
  2. Maple Sourcing

    Maple Sourcing UKBF Regular Full Member

    349 75
    Majority of well established factories have ISO9001, few have ISO14001, very seldom have other company certificates, such as SEDEX, SA8000, etc.

    Regarding to product certification, some have CE/REACH certificates, but it's better you do not take the certificates seriously, because:

    1) The certificates possibly do not represent your specific product;
    2) The certificates could be outdated;
    3) Some factories may provide fake certificates.

    The good practice is to get samples and test at your own specified lab (SGS/TUV/ITS).
     
    Posted: Apr 23, 2018 By: Maple Sourcing Member since: Oct 8, 2012
    #2
  3. Mike Foulds

    Mike Foulds UKBF Newcomer Free Member

    26 8
    Hi James, as has been suggested, the factories should be able to provide certificates and test reports, and do so promptly, but I would definitely recommend receiving samples and testing prior to placing any orders, and also ensuring that, if you develop an ongoing relationship with the factory, that regular testing is done on an ongoing basis, to ensure that the quality remains high, and that they do not "downgrade" your products once you've approved the initial samples. I also feel that, dependant on the volumes you are purchasing, visiting the factory and meeting them, to develop the relationship, is very worthwhile, as it helps create trust which can be beneficial further down the line. Hope that helps
     
    Posted: Apr 23, 2018 By: Mike Foulds Member since: Mar 21, 2018
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  4. BerberLeather

    BerberLeather UKBF Newcomer Free Member

    10 3
    I would 100% agree with this. If you are importing substantial amounts then just visiting the factory and seeing how things are run over there can all fall under your due dillegence when you talk to potenial customers and buyers. Although we don't deal with China, we deal with Morocco and have visited all our suppliers in person to see working conditions etc. It has really helped to build relationships and it's great to be able to put a face to a name with the people we work with.

    We often get asked about the ethical side of our products and a lot of our wholesale customers are a lot more at ease once I can say that I've visited them in person and have personally seen myself how our suppliers create our products. What we also found when we went out there was that having that in person conversation led to the development of new items for our company, because when you have that face to face conversation it makes it easier (for us anyway) to work on a new concept with them than over masses of emails or messages.
     
    Posted: Apr 23, 2018 By: BerberLeather Member since: Apr 9, 2018
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  5. J.McVeigh

    J.McVeigh UKBF Newcomer Free Member

    28 3
    I am actually in China as we speak visiting various facilities. So far so good. As you mention, the next step if testing the materials performance.

    I have been impressed with the standard of the factories here. The standard in most has been high. Definitely been a worthwhile visit. I would second the recommendation.
     
    Posted: Apr 23, 2018 By: J.McVeigh Member since: Mar 20, 2018
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