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Be Cautious as an Outsourcing Buyer

There are ways to avoid being taken in by manufacturing companies overseas, whether in China or elsewhere. One of the most important elements to avoid being hurt in a deal is to take it slowly so you can do the necessary research on the manufacturers before submitting any money or signing a contract.

Although you may feel honoured if a factory owner invites you to visit his country and to examine his factory, you should not simply drop everything for a quick trip to accept his offer. There are preliminary items which should be taken care of before making the examination trip overseas. A visit to the manufacturer's facilities is a good idea but only after you feel confident about him through your research. Save the funds you would have put into travel until after you do most of the following items.

Before going for such a visit, get the manufacturer's registration number so you can search for more information about his firm. You need to always deal with the company rather than with an individual. In other words, all paperwork that the company provides should be in the company name, not in the name of a private individual. This also applies to any funds that you may later send; they should be in the name of the company, not in the name of a person in that company.

A background check may be difficult but not impossible. Getting a list of satisfied customers can be a beginning step. Check with his competitors if you can find them. They will give slanted information. Still, it may help you determine any weaknesses that he has.

An actual company should have a landline. Get that number and try it. If the company only gives you a mobile telephone number, it is risky to do business with them. Likewise, if you try his landline number and cannot get through, consider other factories.

Negotiate details of any prospective contract before actually signing any agreements. This is to be sure that the manufacturer is able, and even experienced, in producing the type of items you want him to make. A good practice is to ask for a sample of a similar item which the factory has already produced for another buyer. Your examination of something that the company actually made can reveal a lot about its quality.

Negotiate the prospective financial scheme of a contract you propose with the company. Determine how much money is required up front and the payment schedule for the balance owed. Get details concerning the return of damaged or poorly-made items the company sends to you.

If you decide to use his services, be cautious about sending payment. A good and secure escrow payment system such as PayPal is the better way to pay as you have evidence of payment. If you transfer money through a bank, be sure the account you are transferring to is in the company name, not an individual's private account. If the manufacturer insists on receiving money into a private account, it would be wise to reject him as a business partner. Find another factory to deal with.

If the company asks you to send money to another country than where their factory is located, get the reason. It could be that they are part of a larger firm which handles all the finances in their home office. It could also be, however, that there is fraudulent activity involved. You need to feel secure about any such situations.

Should you find that fraud seems to have occurred, it is best to keep all correspondence and records of payments. Report the situation to related law enforcement authorities. At the same time, try communicating with the manufacturer for any explanations he may offer.

As a last resort, consider a lawsuit against the manufacturer. If you cannot reason with him, allow the laws of the countries involved deal with the problem.

Many overseas manufacturers are quite honest and upright. Do not quickly accuse them of fraudulent activity. Some of the problems may be due to misunderstandings. Give the factory the opportunity to explain his side of the problem before getting legal action underway.

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