Lost deposits, failed orders and copied products rarely come out of nowhere. In our experience, they almost always come with early warning signs. The problem is that those signs are easy to miss when a supplier is friendly, quick to reply and offering a great price.
Here are the five red flags we see most often before China sourcing goes wrong, what each one usually means, and what to do when you spot one. If you are following up with suppliers you met at the Canton Fair or HKTDC this season, check them against this list before you pay a deposit.
The rule of thumb: one red flag is a reason to ask questions. Two or more is a reason to walk away.
Red flag 1: a price too good to be true
What you see: a quote far below every other supplier for the same specification, often 20 to 30% under the rest.
What it usually means: the saving has to come from somewhere. Usually that is cheaper materials, skipped production or testing steps, or a supplier who plans to win the order now and raise the price later, once you are committed.
What to do: ask for a full cost breakdown (materials, labour, packaging, overheads and margin) and compare it line by line with your other quotes. A genuine supplier can explain why they are cheaper. If they cannot, the difference will show up in your goods.
Red flag 2: no visit, no video call
What you see: there is always a reason you cannot see the factory. The manager is travelling, the line is being upgraded, a visit "is not convenient this month".
What it usually means: you are often dealing with a trading company presenting itself as a factory, or a factory that plans to subcontract your order to someone else. Either way, you do not know who is actually making your product.
What to do: insist on a live video walk-through of the production floor, not pre-recorded footage. Better still, send someone on the ground to visit before you place the order.
Red flag 3: the bank details don't match
What you see: the payment request is for a personal account, an offshore company, or a company name that is different from the one you have been dealing with. Or new bank details suddenly arrive by email.
What it usually means: at best, poor financial controls. At worst, invoice fraud, where a hacked or spoofed email account swaps in the fraudster's bank details. This is the red flag that costs buyers the most money, because once the payment is sent it is very hard to recover.
What to do: only pay into an account in the registered company's name, and always confirm any change of bank details by phone, using a number you already had, not one from the email.
Red flag 4: nothing agreed in writing
What you see: the samples were perfect, but the supplier is reluctant to sign a contract with specifications, tolerances, delivery dates and penalties. Everything stays "no problem" and vague.
What it usually means: they want room to change materials or quality once production starts. Without a written standard, a substitution is not a breach. It is just "the same as the sample", in their view.
What to do: put the specification, quality standards, delivery dates and your inspection rights into a signed contract before you pay anything. For product designs, add an NNN agreement (non-disclosure, non-use, non-circumvention), which is designed for China and is more useful there than a Western-style NDA.
Red flag 5: pressure to pay now
What you see: a demand for full payment up front, or urgency such as "the price goes up tomorrow" or "we can only hold this slot today".
What it usually means: urgency is a sales tactic, not a business reason. It can signal cash flow problems, or a supplier that does not expect you to come back for a second order.
What to do: stick to a deposit and balance structure, commonly 30% up front and 70% before shipment, with the balance released only after an independent pre-shipment inspection passes. A good supplier will accept that.
What to do if you spot a red flag
- Pause before paying. A deposit is much easier to hold than to recover.
- Ask direct questions. A genuine supplier will answer clearly. Evasion is an answer too.
- Verify independently. Check the business licence and registered scope, confirm who owns the factory and who you are really dealing with.
- Get someone on the ground. A factory visit answers most of these questions in a single day.
Frequently asked questions
Is a low price always a red flag?
No. A lower price can come from genuine efficiency or a smaller margin. It becomes a red flag when the supplier cannot explain it with a clear cost breakdown.
Is it a problem if my supplier is a trading company?
Not always. Many trading companies add real value. The problem is when a supplier presents itself as a factory and is not, because you lose control over who actually makes your product.
What should I do if a supplier changes their bank details?
Do not pay until you have confirmed the change by phone, using a number you already had, not one from the email. Only pay into an account in the registered company's name.
How many red flags are too many?
One red flag is a reason to ask questions. Two or more is usually a reason to walk away.
How to Find a Reliable Manufacturer in China
Our step-by-step guide to finding and verifying suppliers, so you spot the red flags before you pay a deposit.