Questions to Ask Potential Manufacturers

Reference: This article is from Foundr – by Nathan Resnick from Sourcify – built with resources to help founders and entrepreneurs improve their business.

We’re all eager to cut straight to the chase when initially contacting potential manufacturers. However, do your best to avoid the, “how much?” question upon first interaction, and truly get to know the quality and legitimacy of their service by asking the following:

  • What companies have you worked with in the past? – The purpose of this question is to both strike up a natural conversation and gain additional information beyond their response. If they mention several brands you’re familiar with or know on a personal level, reach out to them directly for a quick review. Don’t be fooled by some fraudulent “name dropping” and go straight to the source for validation. Additionally, don’t be turned off by companies you’ve never heard of. Do your research, as they could be the next big thing.
  • Can my company review your business license? – While this might sound a bit intrusive for an introductory email, we assure that it is both legal and expected from foreign manufacturers. Depending on their location, you may need further assistance translating and ensuring its legitimacy, but it’s a great way to determine credibility nonetheless. Once you’ve acquired this information, you can then search their work history via their online records.
  • Do you have a minimum order quantity (MOQ)? – This is an essential question to determine your compatibility with this manufacturer from the start. If their minimum does not serve your business model and there’s no room for negotiation, don’t waste your time and move on. Keep in mind that minimums will vary significantly depending on product.
  • What is your average turnaround time? – Although this will be difficult to answer without producing a prototype first, it’s best for you and the manufacturer to get on the same page so you can start planning for the future. Time is always of the essence when talking business.

Keep in mind that there’s always a possibility you’re contacting a non-native English speaker who’s using online translators to read your emails. With that in mind, keep your messages brief and simple.

It is also wise to number each question so they can reply easily with a yes/no or a simple numeral answer. Making their job easier will increase the chances of maintaining a positive relationship with your new manufacturer overseas.

After getting thorough responses to these essential questions, it is safe to move onto the more pressing financial issues:

  • Do you charge for samples? – Note that this question isn’t phrased, “How much do you charge for samples.” Many manufacturers won’t charge if you’ve proposed a large enough order for them to justify a freebee, or simply come across as a genuine buyer in the midst of needy and overwhelming clients. Always be concise and strategic with your wording to avoid being charged any additional fees. Also, factories will often refund sample costs once your order size hits a certain point.
  • What is your standard production pricing? – It is in your best interest to ask the cost of a specific amount of products to gage how the manufacturer discounts higher quantities. You can then negotiate pricing and discuss with your team about your projected sales and profit margins. This is also a great time to bring up packaging, and whether or not it’s included in the cost.
  • What are your terms of payment? – This question will determine how you and your company will budget moving forward. Most manufacturers will require 30% paid upfront and 70% once production is complete. All payments are typically complete before product is shipped. The more production runs you go through with a factory, the better payment terms you’ll get.

You may have some hesitation when starting to source overseas, as you weigh the potential risks in your head. Needless to say, you’re putting a great amount of trust into a source you’ve never met to provide your company with the products you’ve been tirelessly working to develop. However, with the proper research, this could be the most financially sound decision your company will make.

That being said, it cannot be stressed enough the importance of keeping communications open with your manufacturer. Request notifications as soon as production begins as well as updates throughout the process. If possible, find additional contacts with a similar or higher position at the factory in the event that one contact is unresponsive. Weekly communication is mandatory, but strive for daily conversations if you’re uncertain or curious about any aspect of your order.

Email will likely be used most frequently, but it’s also important to use other methods of communication such as WhatsApp, Skype or WeChat to maintain conversation throughout the week. WeChat tends to be the most popular among Chinese manufacturers, as it’s literally their go-to social media platform. WhatsApp has also recently been blocked in China. However, be mindful of the time differences when dealing with manufacturers overseas, as you’ll inevitably have to be patient when awaiting a critical response.