With those Chinese suppliers information websites like Alibaba etc., you could find almost 99% of the Chinese factories names there, but those information won’t assure you that it is a reliable factory that can delivery shipments to what you expected. What we do:
For OEM product, we will first sign confidential agreement both with clients and the potential factories to ensure no factory in China will copy the design or ideas from our clients. Then:
1.Check the factory’s location, see if it is in the area of the matured industry of this product category.
2.Check the factory production facilities, their necessary testing equipments, their existing quality control system.
3.Check factory’s technical/R&D department capabilities for how quick they can come up with new designs, improvements and problem solving solutions.
4.Check the number of their sub suppliers, and how do they manage them.
5.Check factory organization chart, workers turn over rate, working hours, payment level etc.
6.Check factory’s export experiences in quantity and quality to see if they understand western clients requirements.
7.Do reference check for factory’s financial situations.
2. Price Negotiation/Evaluation
Cheaper is better? No, we find you the balance point between most competitive price and your expected quality level. In the above “ Find the Right Factory”. We have already paid attention to what kind of factories will provide us with the most competitive quotations, for example, their locations reveal whether they can find more price competitive suppliers of accessories and parts in that area, and their production facilities and number of their sub suppliers can discern how many additional government tax and sub supplier’s profits have been included in their quotations, but actually those can be avoided etc., and:
1. We are familiar with the market price of raw materials, like plastics, metals;
2. We know how factories mark up their quotations;
3. We ask factory to break down their quotation with BOM cost , expense, tax, profit etc. and we get the quotations for key components cost from other suppliers directly;
4. We cross check the quotations for the same products from at least 10 selected factories.
5. We are familiar with the Chinese government’s export tax rebate policies, for various categories, the tax rebate rates are different, and usually these tax rebate should be returned to importers, etc.
After going through the above exercise, we can verify whether the quotation from the factory is reasonable or still has some space for negotiation.