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How to verify Chinese Company

China is the world’s largest exporter and trade nation. Since 2009, it has been the world’s largest exporter of goods. The manufacturing of goods in China is not surprising as more businesses make their products there. Also, China’s manufacturing industry and suppliers suffer from scams.

Although many skilled manufacturers are located in China, you should be careful when sourcing there. Dealing with untrustworthy or unprofessional Chinese firms caused some imported goods to be substandard or lost money. It is a good idea to do your research before depositing your money at a factory.

Why is it necessary to Verify Chinese Suppliers

If you see a Chinese manufacturer on the internet, you may be doubtful regarding its legitimacy. Even though his firm may appear to be reputable, you need to be cautious of scams. It is important to verify suppliers there if you are going to do business there. You should always verify who you are working with before committing to any project.

10 Ways to Verify Chinese Suppliers

Are Chinese suppliers legitimate? Can they produce the items you’ve ordered? Listed below are some essential points to remember when assessing a Chinese company.

1. Check the Business License

When conducting due diligence on a Chinese supplier, the first step is to verify the business license. Checking the company’s legitimacy helps you avoid scams. If you check a supplier’s business license, you need to focus on the “Business Scope.” It’s the simplest and most direct way, and your supplier can’t counterfeit it. Manufacturing and producing are the words a factory’s business statement requires, while a trading company’s statement will not include those words. China’s business license certificate is issued in Chinese. How can you participate if you can’t read Chinese? It can either be done by a friend or by a freelancer.

2.Verify and Search Tax Registration Number

The Chinese government has introduced an 18-digit registration number for businesses. Companies have adopted this change across Mainland China. The 18-digit code is known as the “Unified Social Credit Code” and went into effect at the end of 2017. There are eighteen numbers in this list, all of which are significant. They are listed below.

  • The first number= is usually a nine that represents the registrar authority (AIC).
  • The second number= classification of the entity (like a corporation, partnership, or sole proprietorship.)
  • From the third through the eighth number = registering region (highest administrative division, associated city, etc.)
  • From the ninth to seventeenth numbers = organization code (old tax identification number)
  • The eighteenth number= check digit

3.Search and Check The Customs Records

You need to visit the Customs District of P.R. China’s website. The official website is http://credit.customs.gov.cn/. You must enter the company name or the Unified Social Credit Code. You can access all the information you need about business licenses, taxation records, Customs certificates, and credit records online.

4.Check the Chinese company’s website

You have to check the website if you discover that it is an older version of a business license. The company’s record can be accessed at http://gsxt.gov.cn/index.html by entering the company’s name in Chinese or by entering the unified social credit code. On your business license, you will find the Unified Social Credit Code in the upper right corner. To enter a search, you must click the name of the company you want to search for. On the records page, you will find all the information you need in Chinese. You can translate it using Google Translate.

5. Check the Value Added Tax (VAT) Invoice

To spur manufacturing and export activities, the Chinese government offers a rebate on many exports. But to do this, a VAT invoice must be issued, and a factory can only issue such an invoice. You need to get an invoice with a VAT rate of 17% from your factory contact. If the supplier refuses to accept the offer, it may be a commercial enterprise or a scammer. In case your offer is accepted, you can request a high-resolution scan of the VAT invoice. You can then verify that the Chinese business license matches the Chinese company name.

6.Check Supplier’s MOQ

Manufacturing factories are always ready to accommodate large orders since they require the same amount of energy and time regardless of their size. Small orders will result in a loss for the factory. Therefore, they have a minimum order quantity requirement. There are often higher MOQs at factories than at trading companies. You should be aware that the minimum order requirement is not negotiable if you deal directly with the factory. Nevertheless, the trading company will accept a negotiation.

7.Check the Products Catalogue

Generally, factories cater to a particular type of product. If the supplier’s catalog has many kinds of products, then it’s probably a trading company. As an example, a fabric factory would be a maker of fabrics. In a trading company, different kinds of cloth are made.

8.Check the Factory Auditing Reports

Multinational companies audit Chinese manufacturers before working with them. A facility’s quality can be checked, audited, and inspected in depth by more prominent brands. Make sure you see these audit reports before you begin working with the company. The name and details you have in hand should match the name on the audit report. If they do not send an audit report, there is a high risk of trading companies.

9.Check the Certification

The vast majority of ISO 9001-certified companies are factories since this certification is not available to all businesses. Trading companies do not require it since they do not need it. However, some trading companies manage to gain this certification. They all specialize in a single product category and maintain strong relationships with their factories, together with outstanding customer service. Although prices will be similar to those of factories, working with them will seem no different.

10.Check Where Supplier Is Located in China

You probably don’t know it, but every single product manufactured in China has a unique manufacturing area. As an example, you could look at Electronic products. Shenzhen, in Guangdong province, is the leading producer of electronic products. As a result of this city’s extensive network of electronic component suppliers. Furthermore, you need to check a factory’s location on Google map or Baidu maps.

 

11.Search Google for Warnings

To check warnings, you can use Google or Bing and search for any variations of “[company name] + scam,” “[company name] + review,” etc. Many distributors and retailers who have experienced bad service from China wholesale suppliers try to follow up on the internet. Almost all B2B marketplaces, such as Alibaba, provide verification services to their users. You can use it to determine if you can trust a specific supplier much simpler.

FAQ

1.How do I know if a Chinese company is legitimate?

When dealing with Chinese companies, it is common to need to verify the legitimacy of the company. This is especially true if you use B2B portals like Alibaba.com. Verifying the registration of a Chinese company is essential. You should examine the company’s registration details to ensure that their presentation matches their qualifications. You should be aware of their registered capital.

2.How do I find information about a Chinese company?

Using the registration number of a Chinese company, you can easily search the internet for information on the company. The information you can check includes an address, registered capital, and the scope of the business. Furthermore, the registration proof is indicative of how legally the company is registered in China. Many methods can be used to find the registration number of a company.

The National Enterprise Credit Information Publicity System lets you search for a company by its registration number. You can view virtually all the company’s information on that page, including the company’s business scope and date of incorporation. To know if the company is reliable, you should compare the information in the system with the information you receive from your supplier.

3.How can we determine whether a company is legitimate?

Through the registration number, you can find out more about a company. If a Chinese company fails to keep its contract, having a registered company gives you the assurance that you can take legal action. To verify the legality of your company’s documents, you should follow the steps below.

4.How can I verify the manufacturer of a product?

Verifying a Chinese supplier can be done in many ways. It’s worth mentioning one that works well. You will have to travel directly to China to meet a supplier. Moreover, you can check the Verification Report for China-based companies. There are dozens of websites for finding out about Chinese companies.

5.What is the best way to verify China’s product quality?

Choose the manufacturers that you like best after getting an RFQ and ask them for a sample of your product. Generally speaking, manufacturers don’t get it right the first time, so don’t be concerned if your sample differs slightly from your prototype. The final sample may need to be fine-tuned a few times before you’re satisfied. You and the manufacturer can also work together through this process. In this way, you both feel comfortable and able to work together.

6.What is the process for getting a business license in China?

The Chinese government operates a company registration system. The AIC in China requires a license for every company in Mainland China, regardless of size or type of business. The relevant authorities require companies in Mainland China to obtain a business license to register. Companies often apply to the administration for industry and commerce (AIC) in their local area. As soon as they are granted a license, the company will receive a certificate.

7.What is the best way to check if a company is legal?

In Chinese imports, some importers are eager to identify whether they are dealing with a factory or a trading firm. If you want to confirm the manufacturer, you can check the following:

  • Verify the capitalization of the supplier
  • You should check the license for your business
  • Be sure to check the Value Added Tax (VAT) invoice
  • You can check the certification of ISO 9001
  • Make sure the manufacturer has a good reputation
  • Ask for samples and verify the address where they came from.

 

How Leeline Sourcing help you to verify Chinese company

Chinese markets present a lot of opportunities, but they can still be challenging to penetrate. If you are a foreign company, you should ask for help from local experts. You can verify China’s manufacturers with the help of Leeline sourcing. Leeline is committed to providing you with complete satisfaction in the following ways.

Audit of the whole factory

To produce good quality products, Leeline ensures finding the best Chinese factories. The company verifies each supplier’s credentials before giving you the list of suppliers. Representatives from Leeline are highly knowledgeable and know where to find quality manufacturers. Using a Leeline factory audit is a guarantee that you will be dealing with high-quality Chinese suppliers.

Performing due diligence

Whenever you sign contracts or make payments in China, Leeline ensures that the company or supplier you are dealing with is trusted and reliable. They see it as your insurance plan against fraud and deception.

Obtain product samples

Leeline asks for product samples before ordering from suppliers. By doing so, they determine if the product meets their standards. Furthermore, they verify supplier addresses by calculating how they are listed on samples.

Performing a product audit

Leeline visits the factory to ensure the quality of the product. Before moving to final production, they inspect your product carefully.

Leeline Sourcing provides sourcing solutions to medium-scale and small organizations. The company always stands by its customers and provides them with the best customer service.

 

Final Thoughts on Verifying Chinese Companies

In China, every company must obtain a business license from the government (AIC). These licenses allow Chinese companies to officially operate and register in the country. You can verify the legitimacy of the company with the business license. However, verifying the license is only one step in the due diligence process. Verifying your supplier is possible through sourcing agents in China. It is recommended to work with a reliable sourcing agent like Leeline Sourcing. These sourcing agents can provide you with complete protection for your shipment.

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