Practical guide on how to verify chinese company?

Thanks to ecommerce, companies in US are able to sell products/service to China, a country you have not yet visited, you don’t speak the language, you are not aware if the legal systems are similar, you don’t know and don’t have the resource to know if the counterpart Chinese companies are real.

So we face a question: How can I check Chinese company? How to check the legitimacy of your Chinese buyers/partners? Are they a real company.

Some facts:

China don’t have a organization like BBB(Better Business Bureau) in US, where you could check the legitimacy and background of a Chinese company.

Chinese administration of industry and commerce is the governing body that in charge of company registration. However, they don’t have a nationwide website or database system that open to public to inquiry the authentication of Chinese companies.

Sourcing China blog recently published an excellent article, sharing how to verify Chinese company without visiting their premise. Here are some tips on their blog,just for chinese authentication:

1) Do they have company bank account

Only legally incorporated companies can have business bank account. If the Chinese company insist you to pay their personal account only, be cautious.

2) Visit local AIC websites

Even though the national AIC don’t have a nationwide system allow you to check the legitimacy of Chinese company. However, some(not a lot) local AIC do allow you to use their websites to check the legitimacy of Chinese company.

3) Websites and Email

If they don’t have websites, use public email account like 163, sohu, sina, it is negative.

4) Hongkong offshore company

Be cautions doing business with Hongkong company, but operates only in mainland China. They are shell company. Read this article to learn the risk.

Verification of a Chinese company

How the verification of a Chinese company should look like? What kind of information can be obtained through this process? Is it really an essential step, or can the whole process be skipped? We will answer these and similar questions below.

Usually, the whole process begins when we’ve finally find a suitable Chinese company. Many depend on when we made the first successful contact: if we simply received an e-mail offer, risk factor is higher than in the case in which we met our supplier during trade shows.

The most important thing that we will find out through verification process, is the type of a company and its scope of activities. Chinese companies, which are dealing in international trade, usually fall into two categories: these are either trade companies or manufacturing companies. Sometimes the former impersonates the latter, but a proper verification process will help to reveal the real identity of the company.

In many cases, the person who claims to represent the Chinese company has no legal title to do so. Therefore it is always necessary to find out, who is the legal representative of the company. As we say:chinese company credit.

Verification is helpful in revealing the physical address of the factory. It is important, if we want to proceed further and send someone to check our shipment. On the other hand, ISO 9001 certificate is awarded to a particular facility, not to the company as a whole. Companies which possess factories cannot be simply shut down overnight – it may happen though to some of the trading companies, especially after receiving our payment.

Through verification process, the authenticity of provided documents and certificates will be also checked. The rule is simple: the Chinese are able to forge everything, but the truth can usually be easily revealed.

If you want to know more about the most popular methods of fraud, documents necessary in the import process and during the custom clearance, please refer to our other guides.