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Supplier Audit & Analysis

Many people seem to accidentally enter China versus choosing an intentional strategy. At some point it is important to do a ˇ°reality checkˇ± and put an honest analysis to what exists and how it can best serve a comprehensive China Strategy. If you have existing vendors in China, the recent tax changes have had a significant effect on their operations and their price structure. Let us evaluate this and other operational aspects to help provide a baseline for future goals.

Let us provide the following:
  1. Supplier capabilities:

    • Access to capital and scalability.
    • Legal structure, FIE (foreign invested enterprise), SOE (state owned enterprise), WFOE (wholly foreign owned enterprise).
    • Special permits or operational advantages (plating, CCC (China compulsory certificate, export quota's).
    • Information systems (ERP).
    • Quality systems and adherance
    • Approvals, ISO, TUV, QS.
    • Management structure and training capability.
    • Physical plant and access to facilities.
    • Vendor strategic plans.
    • Vendor supply chains and reliability.
    • Capacity utilization equipment, people, plant

  2. Vendor impact of recent VAT (value added tax) changes.

    • How is VAT rebated both percent and timing of rebate?
    • Is product directly exported or through a trading company?
    • Frequency of rebate applications?

  3. Examine alternative strategies related to each vendor. These would include but not be limited to:

    • Company owned trading company (FICE)
    • Purchases in RMB vs. USD
    • Value add of imported materials (bonded manufacturing)
    • Logistics management

  4. Examine operational strategies and opportunities.

    • Partial load consolidation, examine current practices.
    • Order frequencies and efficiencies available.
    • Opportunities to move supply chain value added to China and lower cost.
    • Shipping agreements.
    • Foreign exchange risks.
    • Review existing supplier agreemens and make suggestions.

PRI's China Supplier Ethics Policy in English and Chinese

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