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Why most factories refuse to give customer references

  • Ideally, a manufacturer should be capable of giving legitimate customer references. It would be a strong sign of reliability, and a great marketing tool.


    In my mind, they should show a list of foreign customers to their prospects and say “throw your dart three times at random on this list, and we will give you the full contact information of these customers” (the same way Fred Wilson does).


    Unfortunately, it never happens this way. A reader just asked me why the Chinese factory he contacted only gave him a few company names, with no contact information. That made it impossible for him to check whether these importers really worked with that factory, and whether they were happy about it.


    From my observations, it is common for buyers to ask for names of reference customers, but factories are always reluctant to give the full contact information.


    There are different explanations.


    In some cases the references are fake. They never worked for those big-name customers, and they hope you will not be able to check whether there really is a business relationship.


    In some cases the references are real, but not positive. Maybe these importers are pissed off and are looking for another supplier right now!


    In some cases the references are real and positive, but the factory is afraid of losing these customers. There are several reasons for this: 
     You might be an agent, a trader, or a competitor’s employee, trying to establish a relationship with those customers. 
     The manufacturer might have promised to your customers not to disclose any aspect of their business, including product design and pricing… But also the very fact that they are one of their suppliers.


    And in some cases they just don’t know the contact information. The factory might not be the direct supplier of the oversea customer. There might be a trading company in the middle. In this case, you probably don’t want to do direct business with that manufacturer. If they are not used to dealing directly with importers, you are running high risks.


    The only way to have an idea of who is producing for whom is to tour the factory’s packing department. You will see brandnames on labels and on shipping marks. But, once again, they might not be in a direct relationship.


    Asking the salespeople or looking around in a showroom will not give you any reliable information.


    We are touching an important point here. Why are importers sourcing in China and other developing countries running such high risks when they launch production in a new factory? Because of the lack of transparency. 

    Ironically, importers are the ones who want to keep their supply chain in the dark, for fear that their competitors copy their product and make their manufacturer too busy… It is part of the game!