Many successful e-commerce sellers who sells their own products turn to China for their sourcing and manufacturing solutions. But given the competitiveness of the online market, they aren’t overly willing to share information about their sources with other sellers and it would be understandable if you felt confused about how to find your own reliable supplier. Without hopping a plane to China and checking out the facilities yourself, how do you know if you are dealing with a legit operation?
The best way to find a legitimate source is by knowing how to identify the illegitimate ones. Luckily, there are a few steps you can take when examining potential sources that can help insulate you from scams and potentially fraudulent transactions and set you on a path towards dominating the online marketplace.
1) Search for the supplier
Open up your favorite search engine, type in the name of the company and add “+ scam.” Replace “scam” with “dishonest,” or “fraud.” Try a few different combinations and see if you uncover anything. Other business that have had bad experiences with them often try to warn others by talking about it online.
While conducting this search, check out the company’s profiles on sites like Alibaba and Global Sources. These B2B sites often have a verification process or include important details like import data, the number of years a company has been in operation, and the number of employees in each department. The more actual data you can uncover about a supplier, the better.
2) Check for a business license
In China, all legal businesses need to register with the Chinese government in order to receive a unique business registration number. If they are unable to give you one, it’s best to avoid dealing with them. To verify any number they do offer, contact the State Administration for Industry and Commerce. This is the governing body for commerce and foreign trade in the People’s Republic of China.
3) Phone them
Scam artists do not supply legit information when registering their “company” online. If you are not located in the same area, it can be hard to verify the address they give so test the phone number. Call the telephone number listed and ask for their registration number and their business license number.
If the only number they provide is a mobile number, be wary. A phone number that isn’t tied to a physical location could be a sign of a scam. Landlines in China follow this format 86-10-3333-3333. 86 is the country code. The following two digits, in this case 10, is the area code and the remaining digits are the phone number. Knowing this information can help you identify if the number provided is even located in China.
4) Ask for references
While you have the company on the phone, ask for references. Check the company’s financial trustworthiness by asking for bank references and check up on their supply record by asking for customer references.
5) Get a product sample
When you have a sample in your hands you can investigate the quality and see if it is truly what you are after. Requesting a sample not only lets you verify quality, it can also help you verify the legitimacy of the company as a whole. If you have to pay for your sample, ask to wire the money directly to the company’s bank account. A company that is unwilling or unable to provide the details for this transaction is not likely that serious or interested in doing business with you.
6) Conduct background checks
Use third party authentication services like GloBis or China Checkup to check all the available information on a potential supplier including things like business scope, shareholders, and financial records. Again, the more transactional data you are unable to uncover, the more you are able to learn about them and their business practice.
It is up to you to make sure that you don’t get cheated by a scam artist. Sometimes people are incredibly good at running their game which means you need to be even better at running defence. Do not be afraid to ask questions and verify the answer. If the company is legit, they will understand why you are pushing so hard and be more than happy to supply you with relevant information. If something seems off to you, it probably is. First and foremost trust your gut.
7) Facebook Groups
There are many facebook groups with Amazon sellers who have banded together to report bad and scam Chinese whole sellers. If you find the name of your supplier is in any of these groups, reach out and ask if someone in the group has had any experiences and find out exactly the reasons before you decide to use the particular whole seller.