The low cost of manufacturing in China has been a strong attraction for the U.S. wood flooring industry in recent years, but there is serious risk associated with doing business there. It pays—often literally—to know what you’re doing when choosing a foreign business partner, according to industry experts. Here are some tips to keep in mind going in:

1. First, do your homework. Recognizance work is easy enough to do on the Internet, and a company’s supply chain is a good place to start, according to Ira Lefkowitz, president of Ark Floors, part of the A&W and Anxin brand and a single-source supplier in the U.S. “What has happened here in the U.S. is there are brokers who say they represent a factory but in essence they represent five or six factories and are putting a collection together,” he said. “The problem is if you have a complaint, you don’t know what factory to go back to. It’s a matter of knowing the chain you are doing business with.”

2. Look at what a supplier does in China and how long they have been in business, then look at their American customers, said Lukasz Piatek, sales manger at Elegance, a subsidiary of the multi-billion dollar conglomerate Yihua, which is traded on the Shanghai Stock Exchange and has operated in the U.S. for over a decade. “A North American presence brings peace of mind if something goes terribly wrong because it’s hard to take an overseas company to court,” he said.

3. The biggest issue facing suppliers today—both Chinese and domestic—however, is compliance with new Lacey Act and CARB regulations, so it’s critical to partner with a company that understands the new laws, according to Jim Gould, president, Floor Covering Institute. “There are some outstanding companies that understand the requirements not only for themselves to be compliant but with other information they need in order to make sure their customers are protected.”

4. Timing of the new regulations also makes it critical to connect with a company that is financially stable and has a good understanding of the U.S. market, Gould added. “You don’t necessarily have to have someone sitting in the U.S. but you have to know what you are going to do if you have a problem. If they have experience dealing in the U.S. that is going to resolve a lot of issues.”

5. Claims recourse is an important issue and should be dealt with up front, according to Bill Schollmeyer, vice president of sales, Johnson Premium Hardwood Flooring. Because Chinese companies are so production-oriented, they often offer no recourse for poor quality except discounts on future containers, he said. Having a representative in China makes a lot of sense but when you are dealing with any company there, integrity is a must no matter how many people there are on the ground, he added.

So how do you make sure your supplier has integrity? Pose certain questions and risk scenarios to them. For example, if samples don’t come on the container with the wood, ask if you can get additional terms on the container or don’t pay until the samples come. Nine times out of 10, you will be told no, so walk away from that manufacturer, Schollmeyer said.

6. Samples themselves are a big problem, said Anderson CEO Don Finkell. “Anybody can make a great looking sample but having the product consistently matching that sample container by container is a whole different deal,” Finkell said.

7. Quality and claim issues are one more reason to find a company that understands how Americans do business, so ask what percentage of sales a supplier has set aside for claims, and look for a company that is willing to do business over the long term—six months to a year. Written specifications on the products, a detailed purchase order that serves as a contract is also essential, suppliers said.

But essentially contracts with overseas suppliers really mean very little, so doing business with a Chinese company comes down to knowing the people. “The whole thing comes back to a company having integrity,” Schollmeyer said, “and I’ll go out on a limb and say there are just not that many of them.”

With the thousands of wood flooring companies in China, that may be a bit like finding a needle in a haystack, but business and people instincts really can make a big difference, according to Jeanette Lam, who launched San Francisco-based importer Struxtur as a private-label supplier for distributors and retailers, and marketer of the Hewn hardwood line. “I pay a lot of attention to the feel of the company,” she said.

8. Narrow down choices based on specific manufacturing capabilities that match your needs, access to raw materials—which most significantly affects pricing— and financial stability, Lam added. “Wood is a resource business so there should be a stable supply of raw materials. And we always look for mid-size manufacturers that have the specialized capabilities we need such as handscraping. Each company has its own advantages but nobody can do everything. We don’t like to deal with the very large manufacturers because that means their major focus is on the domestic [Chinese] business and they just cannot concentrate on our needs.”

9. U.S. suppliers and dealers also say lead times with Chinese manufacturers and direct importers can be problematic from a logistical point of view. Upfront payment terms, or a best-case term of 30 days, can add up fast at $50,000 per container along with inventory storage and processing. Foreign suppliers usually don’t support sales with point-of-purchase materials or brand names either, dealers said.

“There are a lot of disadvantages,” said Sean O’Rourke, vice president of hard surfaces at Cherry Hill, N.J.-based Avalon Carpet Tile and Flooring. “The only single advantage is price, and that is often offset by the carrying cost associated with inventory.”