China Factory Audit

FIC Logistics customer service staff received a VIP customer's urgent investigation request On February 15, 2016, asking us to investigate the enterprise information of a Chinese supplier (A). We completed the investigation in two business days and sent the results to the customer, who was very shocked and thought it was fortunate to have the said enterprise investigated, or else it would fell into a very passive position and lose a lot of money. The VIP customer was going to pay the advance money to this supplier (A) and establish cooperation. It was found that Supplier A was closely linked with the Supplier B (see the following picture), with which the VIP customer had a lot of economic disputes.

This is the case: The customer had been working with a supplier B in Ningbo, China for two years before 2016 and it produced mascots and accessories for the said customer. According to the contract signed by the two parties, before production of each batch of products, the customer would pay a deposit of 40% to supplier (B). The final order was two containers of goods. The customer did not receive the sample sent from supplier B until and goods were produced, packaged and shipped because it was on a holiday. The customer, upon the receipt of the goods, found that the mascots were of the wrong color, so the customer immediately called supplier B to return and remake the goods. However, supplier would like to offer a discount of 30% for the finished goods as it discovered that the returning and remaking cost could account for 60% of the residual payment. The customer rejected and pointed out that the goods would not be saleable. The two parties failed to reach a consensus and the goods were abandoned and then auctioned by the customs later. Supplier B did not refund the customer's deposit.

The customer received another promotion email from another supplier, namely supplier A in Ningbo two months after the incident. Its products and prices were very attractive and the customer did not find any problems in a site visit, so it was ready to establish cooperation and pay the deposit. Fortunately, the customer learned lessons from the previous mistake and was very cautious, they asked us to investigate this supplier A since we provide free invetigations for VIP customers.

Based on our investigation results, the customer called supplier A and asked about its relationship with supplier B, the person in charge had to hang up the phone as he found that it was impossible to justify himself. According to customer’s speculation, suppliers B deliberately entrusted supplier A to take the initiative to contact the customer, deliberately lower prices to attract customers, intending to cheat the customer of the deposit to make up for their losses.

Throughout the incident, supplier B did not admit their mistakes and bear the corresponding responsibility of returning the deposit and they held a grudge and attempted to revenge, such behavior was very unethical, and such suppliers should also be punished. We are here to appeal to all Chinese suppliers to operate in good faith and to take responsibility instead of discrediting made in China and the Chinese people lose.