Due Diligence
Supplier due diligence checks, before you order, that the company exists, holds its licences and fits your project: licences, litigation and reputation, shareholders and a short interview in Chinese. It helps avoid scams and identify the real decision-maker.
Also called
- Supplier background check
- Company verification
- Supplier verification
- Know your supplier (KYS)
Why verify a supplier’s background before placing an order?
- Avoid scams
- Making sure you are really dealing with the factory owner
- Identifying the real decision-maker
- Checking that your project matches the manufacturer’s actual capability
Before placing an order with a supplier, it is critical to know who you are dealing with. You might have had a direct contact with a 'sales manager' on an Internet platform or even met someone at a tradeshow. This is not enough. Very often your contact would not at all be employed by the factory and therefore would have little control over the production schedule and results for orders.
LPI helps you uncover what stands behind an online showcase of a potential supplier. We allow you to take an informed decision based on a complete overview of a potential supplier.
Due Diligence services include :
- All company licenses verifications and declared activity
- Research any potential law prosecutions, reputation issues on official governmental and public local databases
- Shareholders names
- A brief interview in Chinese to check the facts
- Suitability for your project
Due Diligence: at a glance
- When
- Before any payment to a new supplier
- How
- Official local databases and a short interview in Chinese
- Checked
- Licences, declared activity, shareholders, litigation, reputation
- Price
- On quotation
What does it cost?
Audits are quoted case by case, according to the factory size and the scope of the audit.
See prices and termsHow due diligence runs
- IdentityWe find the company’s registered name in Chinese and its unified social credit code.
- Licences and activityRegistration, capital, declared business scope and status are checked in official databases.
- Shareholders and linksOwners and related companies are identified, to see who really decides.
- Litigation and reputationCourt cases, administrative penalties and public reputation issues are searched.
- InterviewA short call in Chinese checks the facts and the fit with your project.
- ReportA summary of findings and red flags, and our opinion on the next step.
What to send us
- Supplier name as it appears on its documents
- Address, website or platform page
- Any licence or certificate the supplier sent you
- Bank details it asked you to pay to
What due diligence cannot tell you
- Whether the factory can make your product: see the initial factory evaluation or the technical audit.
- Information the authorities do not publish. To check a supplier yourself first, read how to verify a Chinese supplier.
Supplier assessments compared
Due diligence tells you who the supplier is; the audits tell you what the factory can do and how it works. Choose according to the stakes of the relationship.
| Assessment | How | The question it answers | Best for |
|---|---|---|---|
| Due Diligence | Desk research in local databases and a short interview in Chinese | Does the company exist, hold its licences, and who decides? | Any new supplier met online or at a trade show |
| Initial Factory Evaluation | Factory visit, shorter scope | Can this factory make my product to my requirements? | One-off order |
| Technical Audits | Factory visit, full scope | Is the quality system strong enough for a lasting relationship? | Regular supplier, strategic product |
| Social Audit | Factory visit, records and interviews (SA 8000 reference) | Are working conditions acceptable? | Brands exposed on ethics, retailer requirements |
| Environmental Audit | Factory visit, from basic evaluation to ISO 14001 audit | Does the factory manage its environmental impact? | CSR policy, regulated processes (chemicals, dyeing, coating) |
Frequently asked questions
What does due diligence check?
Licences and declared business activity, lawsuits and reputation issues in official local databases, shareholder names, a short interview in Chinese and the fit with your project.
Is my contact really the factory owner?
Not necessarily: a “sales manager” met online or at a trade show is often not an employee of the factory. Due diligence lets you check this and identify the real decision-maker.
Do I also need to audit the factory?
Due diligence establishes who the supplier is, not how good its production is. For that, choose the initial evaluation or the technical audit depending on the stakes.