Do I need regular credit reports for existing Chinese suppliers?

Yes, it is essential to obtain credit reports from China suppliers regularly. It is recommended to regain it every 1-3 years.

The longer the cooperation lasts and the larger the order amount, the more important the supplier's operating status cannot be ignored.

Many people think that verification is only needed for the first cooperation and that it will be completed once, but the company is alive, and industrial and commercial information, shareholders, operating status, and litigation situations change every day. The information you saw at the beginning only represents that point of time.

According to my experience, if there is a problem with a long-term supplier, it is generally these three situations. The first is the deterioration of business conditions. The company is still shipping normally, but the number of social security people in the annual report is decreasing, revenue is declining, and new administrative penalties are beginning to appear. These are early indicators of the decline of business operations. When you find that delivery dates are unstable and product quality fluctuates greatly, it is often a step too late.

The second type is subject change. The legal representative, shareholders, registered address and even company name have changed, especially the transfer of control. The new boss's operating style and willingness to perform contract may be completely different from the original. It is not uncommon for a China factory to cut off orders from old customers after it is acquired.

The third type is risk externalization. The supplier itself is still normal, but something goes wrong with the supplier's affiliated company or external guarantee object, and if it is involved in litigation or equity freezing, your order and payment will be exposed to risk.

In actual cooperation, I suggest using different time intervals for verification according to the importance of suppliers.

Core suppliers with large annual purchases will be reviewed every six months to a year;

General suppliers once a year. If it is a one-time small purchase, it is enough to obtain a credit report before placing an order.

The trigger condition is actually more important than the fixed cycle. The other party requests to change the collection account, proactively adjusts payment terms, replaces the salesperson who connects with you, news of concentrated risks breaks out in the industry, and frequent delays in delivery begin. When encountering these situations, you have to re-check immediately no matter how long the last time you checked.

Suppliers company credit reports focus on increments. Whether there are any new entries in the "Change Records" column in the report, whether the business status is normal, whether the annual report is submitted on time, whether there are any new administrative penalties, lawsuits, or execution records, and whether there are any abnormalities in the affiliated enterprises. Compare this report with the previous report side by side. The changes are what you need to ask clearly.

In order to ensure the stability of product supply and the safety of payment, in addition to obtaining credit reports, order tracking, quality random inspections, and regular video calls cannot be spared.