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Checklist for Due Diligence on Overseas Manufacturers  and Suppliers 

While sourcing and outsourcing manufacturing overseas is a widespread practice of businesses to operate with low heavy asset investment, it is also an area with the risk of intellectual property infringement, fake production, non-consistent quality and unstable supply. Businesses need to have proactive risk management in place, including a pre-contract check on the manufacturing partners and suppliers. The assessment should include the legitimacy status, competency and commitment.



Here is a checklist for conducting due diligence on manufacturers and suppliers:

  1. Business legitimacy: Obtain a copy of their business licence and, if possible, check with the local government agency on the legality of the business;

  2. Competency:

    • Operation scale: what resources and facilities does the business have to meet the demand of your business growth?

    • R&D and prototyping capabilities: Do you need it to have R&D capabilities? Does it have prototyping capabilities?

    • Production capacity: Does it have the spare production capacity for your orders? for hong long?

    • Experiences in supplying to reputable businesses: Has it worked with any reputable company before? When and for what? And what is the outcome?

    • Export capabilities: Can it export directly to you or via an export agent?

    • English capabilities: Does it have dedicated staff who will work on your project and can communicate in fluent English?

    • IP protection measures: Does it have its IP? How does it guarantee to protect your intellectual property?

    • Quality control and international accreditation: Has any international quality standard body accredited the business?

    • Legal issues: Does the business have any past or current legal issues? Will it affect your business? What is the implication?

3. Commitment:

  • Why are they interested in working with you? Is your business vital to their business? Do they work with your competitors? What are the terms and conditions in their contract?

For assistance with business due diligence in China, Vietnam or India, don't hesitate to get in touch with our service team: service@cnbeyond.com.au

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