How to Verify Chinese Supplier’s Legitimacy? – 7 Methods
Many importers ask us how to verify Chinese supplier whether a supplier is an authorized one or not.
When you verify a potential Chinese supplier, you basically look at two things:
- Is the supplier capable of producing the products you want to buy?
- Is the Chinese company a legitimate business in good standing, not a fraudulent or near-bankrupt business?
This article provides simple and effective strategies to answer how to verify a Chinese company.
How to Verify Chinese Company?
1. Use Search Engines and Chinese Supplier Directories
When you browse the Chinese wholesale website, go through all their policies (returns, damage, out of stock) and make sure their contact details and physical address are posted on the website.
Open Google or Bing and search for “[company name] + scam,” “[company name] + dishonesty,” and a few variations. Other distributors and retailers who have had bad experiences with Chinese wholesale suppliers often try to leave their mark online about it.
When searching for a supplier’s company name, you’ll find profiles they’ve created on several B2B directories, including Alibaba, Global Sources, Hong Kong Trade Development Council, and more.
These places are a great place to start by checking reviews, getting references and asking questions, but beware of affiliates who are just trying to sell themselves. For example, look at how long the supplier has been operating (preferably doing business with a supplier that has been in the market for at least 2-3 years).
Also, many B2B marketplaces often offer verification services, like one from Alibaba, so it makes your life easier when you’re deciding whether you can trust a certain supplier. Likewise, Global Sources also checks important data on suppliers such as start date, number of employees in each department, factory ownership, sales, brand names, and more.
Also, by googling, you may also see information such as whether the supplier has attended a trade show recently, which is a good sign that you are dealing with a reputable Chinese wholesale supplier. Renting a booth and attending a show can be seen as an investment in acquiring new customers. Repeated attendance at trade shows also means that suppliers are serious about cultivating relationships with customers.
2. Do a Factory Audit (or at least pretend)
Tell potential suppliers that you will audit their factories before placing any purchase orders, after which you will request an inspection of their production before authorizing shipments. Bring it up right away at the first meeting or email. If the supplier refuses or starts making excuses that it’s not a good idea, that’s a red flag!
A factory audit is the right tool to verify Chinese supplier’s claims about their production capabilities. Most quality control companies and some purchasing agents can audit factories against a checklist that matches your needs. Prices in major production areas range from $200 to $900(If need, you can contact us).
3. Check Chinese Business License
Check Chinese license is a good way to verify Chinese companies online. Chinese suppliers must register with the Chinese government and obtain a unique company registration number. If your supplier cannot provide a unique 18 digit Chinese business registration number, it is too risky to continue dealing with them. To verify the registration number, please visit the local administrative government website or contact the local industry and commerce bureau.
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.
The China company 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):
How to Check Chinese Business License Numbers?
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. It is a good way to verify financial transaction with Chinese supplier – Make Good Use of Databases (NECIPS)
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.
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 Chinese 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 Chinese supplier with registration record – 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.
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:
The landing page will look like the following image, and translate it into your language.
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: 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 4 – 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.
4. Make a Call to Verify Chinese Company
To avoid being tracked by law enforcement, most scammers do not provide real online registration information. For example, they will provide false business addresses, phone and fax numbers, or persuade buyers to contact them only on their mobile phones.
Make a call to the landline of the Chinese supplier and ask for the company registration number and business license number. If the provider only has a mobile number, not a landline, an alarm should go off in your head. In China, people can buy hundreds of mobile phone numbers without any restrictions. That’s why scammers almost always use mobile numbers instead of landlines.
5. Use Money Matters
When we get to the topic of money, when it comes to payment, tell your potential Chinese supplier that you want your product to be picked up from their address by your local agent and they will pay cash on delivery. See if they allow it. Scammers will never agree, but real legitimate suppliers will.
Also, TT, Western Union, MoneyGram are the most common payment methods in China, but good providers also accept PayPal. Always be cautious about using an untraceable wire transfer service with a provider you don’t know – it’s high risk and prone to fraud.
6. Visit the Company or Factory in Person
This is the best way to verify Chinese supplier – you won’t know much about an organization unless you visit in person. You can also discuss your product, price, quality inspection and delivery time expectations face to face. You can’t visit every potential supplier you can think of, so go through the steps outlined in this article and narrow down your options before you decide to hop on a plane to visit their office or factory in person.
7. Ask for Suppliers’ References
If you doubt a Chinese supplier’s legitimacy, you can ask for references before sourcing the Chinese manufacturer. An easy way of verifying Chinese supplier is through references. Through suppliers’ reference letters, you can easily appraise the quality of output from their business. The previous customer reviews can also tell you about a supplier’s capacity to give you quality products.
You can also contact their previous customers and enquire about the service providence from the Chinese manufacturer.
Note: In most cases, they will refuse to give you client testimonials. Many good manufacturers want to keep their customer lists private (unless they work with a well-known big box retailer) for fear that competitors will try to reach customers and drive down prices.
Example of Verify Chinese Supplier/Company
Well stated. Indeed, scammers attract a consistent flow of inattentive buyers. The higher the number of inexperienced buyers, the greater the presence of scammers.
If a buyer progresses to the point of consulting the business register, they are already exhibiting prudence. Over the past two months, we have encountered three instances where potential buyers didn’t perceive this as necessary:
1. A buyer discovers a “good price” supplier and proceeds to place an order. The supplier demands 100% prepayment through Western Union, with payments divided into installments. Subsequently, after receiving the funds, the supplier inflates the price by 250%. Seeking assistance, the buyers reached out to us. Upon investigating the “company,” we uncovered an English-only website with a fabricated address. The telephone call was redirected through a call forwarding service, and once we suggested a meeting, the calls went unanswered. Financial Loss for the Buyer: $9,000.
2. A European buyer contacts a local company and enters negotiations for a product. All aspects seemed satisfactory, leading the buyer to specify the component as binding for a new project. However, when we proposed meetings with local suppliers and factory audits, the buyer declined. We ventured to the stated “headquarters” address in Shenzhen and discovered an abandoned office. Building management disclosed that the tenant had been absent for nearly a year, with a lawsuit filed due to substantial unpaid rent and utility charges. In this instance, the buyer incurred no direct financial loss but expended two months’ effort, causing project delays.
3. Another European buyer intended to order electronic components and enlisted the assistance of a close Chinese acquaintance at the ABC company (a genuine name!). The acquaintance provided a list of QQ and mobile phone numbers—no address or company name. When we cautioned the buyer on the pitfalls and the necessity for meticulous handling, he grew irate, insisting that this was the “Chinese way of doing business.” We respectfully disagreed.
Naturally, the aforementioned instances do not characterize Chinese companies as a whole. However, both parties play a role, and these fraudulent entities seem to continuously attract overseas buyers who, to put it mildly, are not naive. Verifying whether a Chinese company genuinely exists at its claimed location is a relatively inexpensive measure, facilitated by a local office. Neglecting this step might lead to grave consequences.
For a basic Chinese supplier verification, I would opt to send an economical package via SF Express first, observing if successful delivery is achieved.
Verify Chinese Supplier Conclusion
In this article, I have explained how you can verify Chinese supplier by yourself in 7 steps.
The best way to reduce fraud (whether you are trading online or offline) is for buyers and sellers to conduct proper due diligence and research before entering into any transaction. Validate the process carefully and you’ll know how to find out if a Chinese company is legitimate.
Finally, once you have established a good working relationship with a reputable Chinese supplier, don’t forget to keep track of the standards they are working on by doing regular quality checks on the supplier.