Interesting and helpful post by Jacob Yount, entitled, Be Aware of these Red Flags in China Manufacturing. The post lists out and explains the following seven red flags that should alert you to the potential for problems down the road:

1.  Unbelievably good pricing. If a manufacturer is quoting you prices considerably lower than other potential suppliers, you have “found a supplier who has misunderstood the inquiry or who doesn’t know how to quote.”

2.  Quick agreement to tight delivery time.  See number 5 below.

3.  “We’ve never done this before.” Yount rightly describes this as “a typical answer in China whether in manufacturing or if you’re in a restaurant ordering a dish without heavy garlic.” This is really another way of warning you to watch out.

4. “It’s difficult. ” Yount describes “It’s difficult” as worse than “we’ve never done this before” as it usually starts “after the sampling is underway or worse, after mass production commences” and he remind that “the Chinese way of breaking bad news isn’t to directly tell you but it’s to give foggy hints and hope you proactively fill in the blank.”

5. No questions asked and no arguing. According to Yount, a supplier who does not have questions is usually “a supplier who is not thinking about the project. This leads to incorrect quotes and a lot of invested time going down the wrong path.” I really like this one because my firm’s China lawyers are always saying the same thing about Chinese companies that sign whatever OEM Agreement we give them. Our concern when that happens is that Chinese company is either not very savvy or simply does not care much about violating agreements. We like Chinese companies that come back to us with thoughtful proposed changes to the OEM Agreement we sent them.

6. Keeps ignoring a specific request. “If you keep asking the supplier to confirm a specific request and they are confirming and commenting on everything but that specific request, that is not a good sign. They see what you are asking, but they either do not understand it or they understand and cannot do it. A non-confirmation is not a confirmation.”

7. Updates are few and far between. Usually this means “there is some bad news they are saving up to give you at the end.”

Any other ones?

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.