Factory mechanic and manager problem solve on a factory floor.
New businesses often source from factories overseas. Learn the right questions to ask and what to look for so you select your manufacturing partner with confidence — Getty Images/ TommL

When it comes time to bring your product to market, working with an overseas manufacturing partner is often less expensive and more competitive. New businesses often source from factories overseas to keep costs down until sales start coming in. But, finding the right partner a continent away can be tricky. Here are some things to consider as you research and vet overseas manufacturing partners.

[Read more: How to Find a Factory to Manufacture Your Product]

Know where to look

There are plenty of online directories that provide a wealth of information about overseas factories. In Asia, Alibaba is your best bet. Other directories include Oberlo, AliExpress and Indiamart.

These directories will return dozens, if not hundreds of results for you to sort through. Make use of filters on Alibaba that allow you to make sure each manufacturer is qualified. Gold suppliers are those that pay for their Alibaba membership; verified manufacturers have been visited by a third-party company or Alibaba representative; and the trade assurance badge is a free service that protects your order, from payment to delivery. You can also use a filter like SA8000, which ensures working conditions at the factory are humane.

Depending on the type of product that you are manufacturing, you may want to look outside of Asia to find the right partner. Mexico, for instance, has become a strong manufacturing partner for the automobile, aviation and aerospace, medical device, apparel, and consumer product industries. MFG.com is one online directory that helps businesses find manufacturing partners in Mexico.

If you’re not confident in your research abilities, there are U.S.-based sourcing agents who can help. Try working with a partner like Gembah, TreadGlobal, or Sourcify to find the right factory for your needs.

See the business scope part of their license, which will be a list of categories that the business is legally permitted to operate in. If you think they’ve sent a fake license or if you don’t want to ask the company for their license, you need to find the company’s registration record.

BigCommerce

Vet your potential partners

Of course, it would be reassuring if you could visit the factory in person. In lieu of that, you’ll have to do some careful vetting to make sure the factory is the right fit for your business.

Start by asking for references. See if each manufacturer has had experience working with similar American companies and if they are willing to connect you with a few of their clients. If they can’t, that could be a red flag. Try to connect with at least two clients per manufacturer to ask questions about the manufacturer’s communication, quality standards and timeliness.

Next, ask to see a copy of the factory’s business license. This will allow you to verify their legitimacy and avoid scams. “See the business scope part of their license, which will be a list of categories that the business is legally permitted to operate in. If you think they’ve sent a fake license or if you don’t want to ask the company for their license, you need to find the company’s registration record,” explains BigCommerce. Keep in mind you may need to hire a translator to make sure their license is aboveboard.

Finally, do an audit of the factory’s online presence with records of trade shows or conferences. See if the factory has a legitimate website, and run a Google search with the factory name plus the word “fraud.” While this is not the only method of research, it is a starting point that can help surface bad experiences past clients may have had.

Ask questions

Before you sign any agreements, ask questions to set expectations with your manufacturing partner and understand if they are equipped to handle your business. Find out how much it costs per product, as well as any minimum order quantity requirements. Ask about sample pricing so you can verify that the quality is to your standard before spending your entire budget. Get an estimate on the factory’s turnaround time so you can plan your inventory management and reordering cycles. And, make sure you know ahead of time if the factory subcontracts out to other partners.

[Read more: 3 Companies Share Their 'Made in the USA' Success Secrets]

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Published September 29, 2021