5 Steps to Verify a Chinese Business License (+Video)
Many importers ask us how to verify a Chinese business license whether a supplier is an authorized one or not. Many importers claim that they had partnered with such a supplier who never delivered the product, and sometimes they got scammed by paying money to an unregistered company.
It is advised to make a proper inquiry on the Chinese supplier you will partner with before starting any business. In this article, you will get to know how to check whether your supplier is an authentic entity registered with authorities or not, who is claiming to have Chinese Business Licenses.
How does a Chinese Business License look like?
A company receives an official certificate & copy when a Business license is issued to it. Therefore, every authorized company should provide a copy of their business license. The copy and certificate both contain the same information regarding the business license.
An authorized supplier will happily share a copy of the license. If the supplier does not provide a copy of the license, then there’s something wrong.
The local branches of the AIC issue business license certificates, so they look the same throughout Mainland China. There may be some changes depending upon the location.
Which information is on a Chinese Business License?
The business license is useful to determine a company’s authenticity as it provides basic information about the company.
The image that is shown above states important information; it includes data as listed below:
- 18-Digit Chinese Business Registration Number.
- Company’s Official name.
- Entity type.
- Official Address.
- The Legal Representative
- Registered Capital
- Date of the establishment.
- Expiry Date.
- Business scope.
If you receive a business license copy from a supplier, it usually looks like this:
I have translated here the important things into English, as all the business licenses are issued in Chinese.
Understanding the information on a Chinese business license
Here are some important points that you should learn to understand the information written on the Chinese Business license correctly.
18-Digit Chinese Business Registration Number
In October 2015, China introduced a unified system known as a 3-in-1 business license. It consists of the organization code, old business license (15-digits), and tax registration certificate.
The new registration number referred to as ”Unified Social Credit Code” consists of 18 digits, break down as:
|1st digit||2nd digit||digit 3-8||digit 9-17||The last digit|
|registration authority||entity type||registered region||organization code||check digit|
Company’s Official Name
If you are working with a supplier in China, it means that you are working with a Chinese-owned domestic company.
An important fact, influencing the official name of a company. Let’s say that a Chinese-owned company wants to register with the administration of commerce & industry; it has two choices:
- To apply for a Chinese name.
- To apply for both an English & a Chinese name.
Most companies decide to register with only a Chinese name. That’s why most of the English company names you see on different platforms are unofficial, like The Canton Fair on Alibaba.
This is a common practice in China, although it may sound worrying. You just want to verify the company’s business license, so it’s not a problem.
When inquiring about a company’s authenticity, keep in mind as the company name is registered in Chinese, so if you want to verify its business license, you need to know its Chinese name.
Ask your supplier about the Company’s Chinese name if you don’t know it.
Always check the Business scope on the Business License before starting to do business with a Chinese supplier.
The business scope consists of a list of the categories in which the License holder is permitted to do business with clear instructions. A company is only allowed to take part in those categories stated on the license.
The Chinese Government follows a strict policy when registering the business scope. The authorities reject that scope defining a wide variety of business categories.
Moreover, the registered company can also face legal issues if they get found operating in businesses outside of their scope.
The defined business scope on the China Business license specifically tells about what the company is legally permitted to do. Let’s say it may include such categories as “no trade of items subject to license approval” and “sale of mechanical equipment with parts.”
If you see that the products you require are not mentioned in the business scope, the company will not legally provide them. So, you should not deal with such a supplier.
Verify a Chinese business license key points
Are you considering doing business in China? Ask your Chinese supplier about its business license; if your supplier is authorized, he/she will provide you with a business license as every authorized business company in China has a license issued by the government.
The business license allows you to verify whether your supplier is registered or not as it contains the Official and basic information regarding the company.
The official business licenses are only available in the Chinese language. You can check it by using the verification service.
Why is it important to verify a Chinese Business License?
If you want to do business in China, always request a copy of the business license from the company you want to do business with. And if they refuse to do so, say Goodbye.
Every business license in China is issued by the local branch of AIC, which is proof that this company is registered and operates legally in the listed categories.
The business license is proof that you are dealing with a verified supplier in a Utopian world. You have to be very careful, as the shady suppliers can use today’s technology to create false information and prove them a verified supplier. This is exactly what they do, some common falsifications are:
- using a common name that is not verified in China.
- Changing the date of foundation (to hide that the company was recently inaugurated).
- Increasing the amount of registered capital (to show a powerful financial position).
- Extending the expiry date (to hide that the business license is not valid anymore).
- Adding business categories to the business scope (for example, ‘manufacturing’ to impact).
China National Enterprise Credit Information Publicity System (NECIPS)
How do I get a business license in China?
As mentioned earlier, business registrations are operated by local branches of the AIC. Companies’ official registration records are uploaded into a database, known as China’s (NECIPS) National Enterprise Credit Information Publicity System by these authorities.
Including your supplier, you can find a company’s registration and business records through NECIPS’s website. This information is reliable and accurate as it is uploaded here by the official authorities.
How do I verify a Chinese business license?
Here you will see how the actual verification process is done using the NECIPS database. You need to do proper verification of your suppliers using these two pieces of information:
- 18-digit business registration number.
- Company name in Chinese (to make sure that you have the record of the right company).
In this example, I will show you how to verify the registration record of the company Tencent Technology (Shenzhen) Co. Ltd, one of China’s biggest technology companies. The NECIPS website is only operational in the Chinese language, but you don’t need to know any Chinese to verify the license.
Have a look at the following steps:
Step 1: Go to the website of the National Enterprise Credit Information Publicity System (NECIPS)
The first step is to visit the website of the NECIPS: http://www.gsxt.gov.cn
The landing page will look like the following image:
Step 2: Enter the 18-digit business registration number
After reaching the website, you need to type your suppliers’ business registration number. You can find this number on the copy of the business license the supplier has sent you. In the case of Tencent, the business registration number looks like this: 9144030071526726XG.
Step 3: Solve the puzzle
Before you start the search, the system will ask you to solve a simple puzzle. It can be anything like a word puzzle, marking differences between two images, or in this case, dragging a piece of the puzzle to the right place.
Step 4: Select the search result from the list
Once you solve the puzzle, you will see the search results appearing. If you have typed the correct business registration number, only one result should be displayed.
As you can see in the picture given below, the company that appears in the search results matching our number is indeed Tencent (腾讯科技（深圳）有限公司). To view all the information about Tencent, you now need to click on the search result.
Step 5 – Cross-check the information with that on your supplier’s business license:
The result appearing now is the official registration record of Tencent.
# If you are cooperating with a relatively small supplier who has too many lawsuit records, then we suggest you not to cooperate with him.
What is the Definition of a Chinese Supplier Scam?
A dishonest supplier is the one who intentionally deviates from an agreement. And although cheating can be of many types, the most common scam is a major difference in the product’s quality.
For example, you have agreed upon the best quality, but you do not receive the quality that you were promised. According to a study, Chinese suppliers earned an enormous $396 billion last year alone from trade on supplying faked goods.
Other examples of commonly reported frauds include:
- Fake company fraud.
- New bank account fraud.
- Paper tiger fraud.
In all of the cases mentioned above, the objective is simple; to mislead you to get a better deal or simply take your money. Thus, the message is very clear, be wary of whom you are dealing with.
The 3 Ways to Avoid Chinese Fraud Suppliers in Advance
So, what is the danger zone? And, when should you exactly get suspicious and move on to approach the next supplier?
Let’s say you have asked the supplier for several documents to verify, but your supplier makes up all kinds of excuses to not show them. In this case, common sense will probably tell you that something is getting wrong.
Given here, I have listed three common situations, which happen quite commonly in China. If you come across any one of these situations, your alarm bells should start ringing.
#1. They claim that They Can Do Everything
A lot of Chinese suppliers will tell you that they can manufacture any product you want, which is not possible. We all know that most companies can just offer their service in some of their specialized products, mainly their core business.
Chinese are afraid to say no, so they will try to get the deal in any case, or maybe it’s your money they want without delivering any product. So, if you hear your Chinese supplier saying: “surely, no problem. We will do it for you”. You should get cautious at that time.
A good way to verify this is to ask a friend to call on that same supplier to make a completely different product. If the answer is yes, you will know what you should do.
#2. Pushing You To Rush
You will find many Chinese firms pushing you to close the deal quickly and transfer a prepayment instantly. They will often be doing this as they don’t want you to inquire about them. Or at least, not before you have sent the initial allowance.
When this is the case, you should be careful too. It is quite possible that once you have transferred the payment, you will somehow never receive your products. So, if you feel that you make your decisions quickly, you should be very alert.
There’s one thing to keep in your mind that a good supplier is mostly overloaded with work, and therefore, it does not need to rush you regarding pre-payments.
#3 Tentative to Show a Business License
A lot of Chinese companies are unwilling to provide their business license at your request.
But they will never forbid to show their license while saying: ‘’sure, any problem, we will send it to you.’’ But then, you will never actually receive it.
If you have the same case, surely something is not right. Every authorized & registered Chinese company has a business license, which states its important information. Therefore, it should be no problem for them to share these basic details with you.
So, if a company refuses to show their certificate, you can judge that there must be a reason to hide these details. They are probably afraid that you will cross-check the information on the license with the information stated on your contract or statement.
No matter what reason they are telling, if they are unwilling to share the basic details, it is a clear sign for you to move on to the next supplier.
Whatever the business, all companies in China need to have a business license with the government’s (AIC). Because of this license, companies in China are officially registered and can operate legally.
The business license allows you to verify that the company is legit and not a scam.
In this article, I have explained how you can verify a Chinese business license by yourself in 5 simple steps. Verifying the business license is very important and just a basic step.