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Lilly + Associates International | 305-513-9540 | 9655 NW 33rd Street, Miami FL USA | www.shiplilly.com

From first time shippers to seasoned veterans, choosing a factory in China can be a daunting task. Before placing the first purchase order, certain research should be done to ensure the buyer is protected. There are countless stories of buyers wanting to source from a certain origin supplier, paying the purchase order, and then the supplier “disappears” taking the buyer’s purchase order payment and never sending the goods.

What is important to YOU?Do you have complex product requirements? Is cost the main factor? Be sure to have strict guidelines on what is important to you before choosing a factory.

Smoke in MirrorsA factory visit alone is not enough to confirm the supplier is legitimate. While a factory visit is indeed an important aspect of the selection process, the buyer needs to ensure documents and finances are also inspected. There are many reports of the so-called factory representative not even being associated with that factory at all.

Use Your Common SenseAre the goods significantly discounted from the market value? Have you searched the supplier name “+ scam” in the internet? Does the number on the supplier’s website link to the same factory? Does the email address of the supplier have the same URL as the website? Does the factory ask you to pay a non- Chinese bank? While these more “common sense” approaches are not sure bets to make sure a supplier is legitimate, it is still worth looking into the answers to these questions before doing a more in-depth factory inspection with a third party.

Supplier AuditA suppler or factory inspection is a vital component of choosing your business partner. All too often, we hear of companies getting burned by not doing their due-diligence prior to sending a costly purchase order. Quite frankly, any “scam” is costly in our opinion – no matter the size of the order.

As an international trade expert, LILLY + Associates International strongly recommends a full audit of the suppler, including the following line items:

1. Factory Inspection (Inspection of products, workers, facilities and general output. Can the supplier handle the quantities and complexities of the product?) 2. Quality Control Systems

3. Financial History

4. Social Compliance

5. Tax/Legal Issues

6. Compliance with International Labor Laws

7. Background of Supplier (Reputation in local and international marketplace, origin of ownership, years in business, etc.)

Stay Protected While Choosing a Factory in China

ExtrA PrOtECtiOn WhEn Wiring MOnEYWhen issuing payment, it helps to have additional validation from a trusted source before wiring the money. An on the ground partner at your origin can certify the products are of optimal quality and will also verify that the goods are being shipped before completing the transaction. Escrow accounts are highly recommended until the all aspects of the contract is met on either side.

We recommend that the company doing the audit of the factory and the inspection of the goods is a multinational company with offices in your place of business. You willensure, in a case of legal dispute that the auditor is withinlegal jurisdiction to hold that company accountable for any malpractice issues.

Should you have any additional questions regarding choosing a supplier in China, please call LILLY + Associates International at 305-513-9540 or visit our website at www.shiplilly.com. LILLY has helped their transportation customers stay protected when working with their China suppliers.