10 Key Questions Startups to Ask a Potential China Supplier

You’ve put your heart and soul into a new product, even got to the stage of developing a prototype. Now you need to find the right supplier to bring your product to life. This is a big step and a crucial one for any business, especially for companies that manufacture for the hardware industry.

With competitive price and timely delivery, T-Safety sincerely hope to be your supplier and partner.

Insight Solutions has helped over 120 US and European startups to find and evaluate suppliers. With our extensive experience, we’ve developed a series of ten key questions every startup must think about and ask when selecting suppliers.

And we post them here for you to have a quick reference. Think of it as a checklist, and you’ll have more confidence when selecting your suppliers.

1. How much do they know about your business?

This question can help you to determine why they are interested in working with you.

If the supplier has done their homework, they will be able to explain in detail why you are a good fit working with their organization.

We suggest you to ask more in-depth questions to verify their true understanding of your business. For example:

• How many small customers have they worked with over the past 3 years?
• What’s the average revenue and longevity engagement with these small customers?
• What similar product/project have they worked with?

Gain a basic understanding of their strengths to see if they bring the skills and experience to your business.

 2. How do you allocate resources to projects?

During your initial meeting, you may meet many good project team members and see a lot of good machines and learn about the company’s mature manufacturing processes. You are very excited and may even think that they can do almost everything for you.

However, you need to know the company’s internal resources allocation strategy clearly. Without such an understanding, you may become frustrated when you don’t get the support needed.

So, how should you verify future resources support? Here are some simple questions that may get you started:

• What is your capabilities in terms of xxx. Will they be used in my project?
• How many resources are employed to different projects?
• How large are the annual sales of your top 5 clients?

Be direct, get all the information you need up front, and never assume anything. Always ask questions to determine how important you will be to this supplier.

3. How do you manage new product projects re design and engineering support?

You have developed a cool product, and time-to-market is crucial to your success. When you select suppliers, verify if the supplier has an experienced team, a mature NPD process and systems in place to give you the necessary new production introduction (NPI) support.

Ask what lessons they have learned from past projects and what will be the specific NPI support solution for your project.

75% of the projects from Kickstarter failed to meet the first shipment date and part of the reason was they worked with an inexperienced supplier.

4. May I visit a few of your critical component suppliers?

Selecting a right contract manufacturer is not the final step for supplier selection.

Rather than relying on a contract manufacturer to do everything, it’s very important for you to visit a few key component suppliers to understand their capabilities and relationship with the contract manufacturer.

If your contract manufacturer won’t allow you to meet with their key suppliers, you need to re-consider working with them. It’s important for you to have full visibility into your supply chain.

5. Will you be transparent about all costs?

Everybody likes to receive good pricing but some suppliers may increase their pricing or add extra costs after you engage with them. That may be reasonable if there were major changes in design – what’s been quoted on at the beginning is quite different from the one which is finally manufactured.

However, with an open BOM (Bill of Materials) you are in a better position to have the supplier justifying the cost increase.

Sometimes, suppliers tend not to be transparent about the cost breakdown. They either want to hide some margin, or they don’t trust you. Nevertheless, it’s not recommended to rely on suppliers who are not willing to provide a breakdown of their BOM.

6. What’s the most challenging quality issues you’ve solved for a start-up?

Suppliers always say they have high quality standards and manage their quality control effectively.

In order to verify how they manage their quality issues, request an example of a difficult quality issues they ever solved. Evaluate what they did with what process and tools were used, who was in charge and ultimately what were the results.

It would be more efficient if you or your quality team meet directly with the team who was responsible for that case. That will help you to find out if their quality management system and personnel are professional and consistent.

7. Can you propose a project schedule?

Project schedules are a critical part for every business. We can see most of the hardware startups delayed the whole project schedule due to lacking of suppliers’ professional input.

By walking through their whole schedule proposal, you can verify if the suppliers can help you to anticipate technical and supply chain risks and if they are experienced in mitigating these risks.

8. How do you protect customers’ IP (Intellectual Property)?

There are thousands of companies outsourcing their manufacturing to China. The benefits in terms of price alone can be substantial. However, IP protection must be taken into account whenever you turn your IP over to any manufacturing partner, no matter where they are located.

Signing a Non-Disclosure-Agreement (NDA) is necessary but it’s not enough to completely protect you and your IP.

It’s always important to verify the integrity of a future manufacturing partner in a number of different ways.

Ask detailed questions on how they protect their clients IP. Ask to speak with current and past customers to see how their IPs are well protected. Ask to see if they have solid policies, processes, and systems in place to support IP protection.

9. How can I get net 60 days payment term?

Negotiating terms as a new client is always difficult.

Both parties are new to each other. The best way to initiate the process is to first provide the new supplier with sufficient financial background information of your company. Ask for their internal payment terms, credit line policy and approval process. Understand what you can do to achieve better payment terms step by step.

This will also help you to do the cash projection more accurately.

10. Have you plans to move production to a lower-cost region?

Some manufacturing suppliers for products such as cables, batteries, plastic injection, metal, etc. are planning to move their mass production to inland China provinces, or to lower cost countries to reduce their labor and facility cost. The facility and production transfer generally takes 8 months to 1 year.

Sometimes your contract manufacturer will remain in China but relocate their sub-suppliers to a lower cost region. You need to ensure a healthy and secure supply chain network and verify all these details before signing an agreement with contract manufacturer.

Manufacturing products for the hardware industry is difficult, especially for startups. You may lack direct connectivity to offshore manufacturing suppliers and have limited experience on the “when” and “how” to successfully scale-up production of physical product solutions.That’s why it’s important to understand and manage suppliers effectively.

With the above 10 questions, you have a good start at finding a manufacturing partner that can help in your success.

Sourcing products from China can provide your business with significant cost savings, scalability, and access to a wide variety of products. However, partnering with the right Chinese manufacturer is crucial to ensure product quality, reliability, and overall success. Asking the right questions before entering into a business relationship is key to mitigating risk, aligning expectations, and building a sustainable partnership.

In this article, we’ll explore 10 essential questions you should ask before partnering with a Chinese manufacturer, ensuring you make informed decisions that lead to long-term success.

Table of Content:

• What is Your Company’s Background and Experience?

• Can you send me your business document?

• What Are Your Quality Control Processes?

• Can You Provide Samples of Your Products?

• What Are Your Minimum Order Quantities (MOQs)?

• What is Your Production Lead Time?

• How Do You Handle Product Customization?

• Which markets and countries are you supplying?

• What Are Your Payment Terms and Conditions?

• How Do You Address Product Defects and Returns?

1. What is Your Company’s Background and Experience?

When considering a partnership with a manufacturer in China, it's essential to first evaluate their background and experience. The manufacturer's history will tell you a lot about their expertise, reliability, and ability to meet your business's needs.

Key Points to Address:

• Years in Business: How long has the company been operating? A long-standing manufacturer is likely to have more refined processes and better quality control.

• Product Focus: Does the manufacturer specialize in your specific product category? A manufacturer with expertise in your industry can often deliver higher quality products.

• Client Portfolio: Who are their major clients? This can indicate the manufacturer’s credibility and market standing.

• Export Experience: Ask about their experience exporting to international markets, especially your own country, to ensure they’re familiar with the necessary certifications and regulations.

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2. Can You Send Me Your Business Documents?

Before entering into a formal partnership, it's critical to verify the manufacturer’s legitimacy by reviewing their business documents. A trustworthy manufacturer should be transparent and provide you with these documents upon request.

Documents to Request:

• Business License: Ensures the manufacturer is legally registered and operating within China.

• ISO Certifications: If applicable, this shows that the manufacturer follows international standards for quality management.

• Factory Certifications: Look for specific certifications like CE, FDA, or RoHS that demonstrate compliance with regulations in your target market.

Verifying these documents helps you avoid partnering with fraudulent companies, ensuring your investment is protected.

3. What Are Your Quality Control Processes?

Quality control is one of the most critical aspects of product manufacturing. Before finalizing your partnership, ensure the manufacturer has a robust quality control process in place.

Important Considerations:

• In-House vs. Third-Party Inspections: Does the manufacturer have internal quality control teams, or do they work with third-party inspectors?

• Inspection Points: Ask if inspections occur during key stages of production, including pre-production, during production, and final pre-shipment checks.

• Certifications: Are they ISO certified for quality management? This indicates a high level of commitment to quality.

You can also consider hiring a third-party inspection agency or a sourcing agent to independently verify product quality.

4. Can You Provide Samples of Your Products?

One of the best ways to evaluate a manufacturer’s product quality is by requesting samples before placing a large order. Sample testing can help you determine if the manufacturer can meet your specific standards and expectations.

What to Ask:

• Sample Availability: Does the manufacturer provide samples, and what are the costs involved?

• Customization: Can the samples be customized to match your specific requirements, including materials, dimensions, and branding?

• Lead Time: How long will it take to produce and deliver the samples?

• Quality Evaluation: Once you receive the samples, test them rigorously for durability, performance, and compliance with your market’s standards.

Always remember that receiving high-quality samples doesn’t guarantee consistent production quality, so combine this with a thorough quality control plan.

5. What Are Your Minimum Order Quantities (MOQs)?

Minimum order quantities (MOQs) dictate how much you need to purchase from the manufacturer in a single order. Understanding the manufacturer’s MOQ is crucial for inventory planning and budget management.

Points to Consider:

• MOQ Levels: What is the standard MOQ, and can it be adjusted for smaller or first-time orders?

• MOQ and Pricing: Often, manufacturers offer lower prices per unit for larger orders, so find out how the MOQ affects your cost structure.

• Scalability: Is the manufacturer capable of scaling production as your business grows? Ensure their MOQ remains aligned with your capacity as you expand.

Finding a manufacturer whose MOQs align with your initial production needs is key to avoiding excess inventory or overspending.

6. What is Your Production Lead Time?

Production lead time is another critical factor that impacts your supply chain. It’s essential to know how long the manufacturer takes to produce your order and whether they can meet urgent or large-scale requests.

Considerations:

• Standard Lead Time: How long does it typically take for the manufacturer to complete an order of your size?

• Seasonal Variations: Be aware of Chinese national holidays, like Chinese New Year, which can delay production timelines significantly.

• Rush Orders: Can the manufacturer expedite production in case of urgent orders? If so, what are the additional costs?

• Capacity for Scaling: Ensure the manufacturer has the production capacity to accommodate increased order sizes as your business grows.

Clear communication about lead times will help you avoid delays in launching or restocking your products.

7. How Do You Handle Product Customization?

Many businesses require customized products to differentiate themselves in the market. Before partnering with a manufacturer, ensure they have the capability to handle your specific customization needs.

Customization Options:

• Product Design: Can the manufacturer work with your design specifications or suggest improvements?

• Packaging and Branding: Can they provide custom packaging that aligns with your brand’s identity?

• Customization Costs: What are the costs associated with customization, and how do they affect the overall price and lead time?

• MOQ for Customization: Some manufacturers may have higher MOQs for customized products. Clarify these requirements upfront.

Having a manufacturer that offers flexible and efficient customization services is essential for maintaining your brand’s identity and meeting market demands.

8. Which Markets and Countries Are You Supplying?

A manufacturer’s experience in supplying international markets can tell you a lot about their understanding of export regulations and product standards. Ask about the regions and markets they currently serve.

Key Insights:

• Target Market Experience: Do they have experience exporting to your country or region? This ensures they’re familiar with your market’s regulatory standards.

• Certifications: Ensure the manufacturer holds the necessary certifications for exporting to your country, such as FDA approval for the U.S. or CE marking for the EU.

• Market Adaptability: How adaptable are they in meeting the specific needs of different markets, such as labeling, packaging, and legal compliance?

This question can help ensure a smooth import process and compliance with local regulations.

9. What Are Your Payment Terms and Conditions?

Before partnering with a manufacturer, it’s crucial to have a clear understanding of their payment terms. This will help you manage cash flow and minimize financial risks.

Important Details:

• Payment Methods: What payment methods does the manufacturer accept? Common options include wire transfers, letters of credit, and escrow services.

• Payment Milestones: Clarify whether the payment is split into milestones, such as a deposit, progress payments, and final balance upon delivery.

• Currency Considerations: Understand the currency in which you’ll be paying and the potential impact of exchange rates on your budget.

• Financial Protection: Consider using trade assurance or escrow services to protect your payments and mitigate risk.

Clear payment terms help build trust and ensure smooth financial transactions throughout the partnership.

10. How Do You Address Product Defects and Returns?

No matter how robust the quality control process, defects can still occur. It’s essential to know how the manufacturer handles defective products and returns to avoid costly disputes.

Questions to Ask:

• Defect Reporting: What is the process for reporting product defects, and how quickly do they respond to such issues?

• Product Replacements: Does the manufacturer offer replacements, and who covers the associated shipping costs?

• Returns Policy: Is there a formal returns policy, and how are defective or non-compliant products handled?

• Warranties and Guarantees: Does the manufacturer provide warranties on products? If so, what is the duration, and what is covered?

Having a clear understanding of how defects and returns are handled helps protect your investment and maintain customer satisfaction.

Conclusion: Partnering for Success

Partnering with a Chinese manufacturer offers immense opportunities for businesses looking to source high-quality, cost-effective products. However, success hinges on asking the right questions upfront. By addressing these 10 critical areas, you can ensure that your partnership is built on a solid foundation of trust, reliability, and mutual understanding.

About Smart Win

Smart Win is your trusted sourcing agent in China, with over 30 years of experience in helping businesses find reliable manufacturers. We specialize in supplier sourcing, price negotiation, quality inspection, and logistics management, ensuring a seamless experience from start to finish. Our team is committed to helping you find the perfect manufacturer to meet your needs while ensuring high-quality products at competitive prices.

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