When it comes to importing products from China, verifying the legitimacy of a potential supplier is crucial. It is important to ensure that the supplier is capable of producing the desired products and is a legitimate business in good standing. This article provides simple and effective strategies to help importers answer the question of how to verify a Chinese company’s legitimacy.
The article will cover various aspects of verifying a Chinese supplier’s legitimacy, including what to look for and how to conduct research. By following the strategies outlined in this article, importers can ensure that they are working with a trustworthy and reliable supplier.
Key Takeaways
- Verifying a Chinese supplier’s legitimacy is crucial for importers.
- Two important factors to consider are the supplier’s capability to produce desired products and the legitimacy of the business.
- This article provides simple and effective strategies for verifying a Chinese company’s legitimacy.
How to Verify Chinese Company?
1. Use Search Engines and Chinese Supplier Directories
When looking for a Chinese wholesale supplier, it is essential to go through their policies, including returns, damage, and out of stock items, to ensure that their contact details and physical address are posted on their website. It is also essential to conduct a thorough online search using search engines like Google or Bing by typing in the company name followed by “scam” or “dishonesty” to check for any negative reviews or comments from other distributors and retailers.
Chinese wholesale suppliers often create profiles on several B2B directories, including Alibaba, Global Sources, and Hong Kong Trade Development Council, among others. These directories are a great place to start by checking reviews, getting references, and asking questions. However, it is crucial to beware of affiliates who are just trying to sell themselves. It is advisable to do business with a supplier that has been in the market for at least 2-3 years.
Many B2B marketplaces offer verification services, such as Alibaba, which makes it easier to decide whether to trust a particular supplier. 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.
Repeated attendance at trade shows 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 and cultivating relationships with them.
2. Do a Factory Audit (or at least pretend)
Verifying Chinese supplier’s claims about their production capabilities is essential, and a factory audit is the right tool for the job. It is advisable to tell potential suppliers that you will audit their factories before placing any purchase orders. If the supplier refuses or starts making excuses that it’s not a good idea, that’s a red flag!
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.
3. Check Chinese Business License
Checking 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. It is too risky to continue dealing with a supplier who cannot provide a unique 18 digit Chinese business registration number. To verify the registration number, one can visit the local administrative government website or contact the local industry and commerce bureau.
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 China company business license is useful to determine a company’s authenticity as it provides basic information about the company.
To verify a Chinese supplier’s business license, one can use the National Enterprise Credit Information Publicity System (NECIPS) database. Companies’ official registration records are uploaded into this database by local branches of the AIC. The information is reliable and accurate as it is uploaded by the official authorities.
4. Make a Call to Verify Chinese Company
Most scammers do not provide real online registration information to avoid being tracked by law enforcement. For instance, they will provide false business addresses, phone and fax numbers, or persuade buyers to contact them only on their mobile phones.
It is advisable to 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, it is a red flag. 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 it comes to payment, it is advisable to 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.
Example of Verify Chinese Supplier/Company
In order to avoid fraudulent Chinese suppliers or companies, it is important to take necessary steps to verify their existence. Three examples of potential scams have been encountered in the past two months, each resulting in varying levels of financial loss and wasted effort for the buyers involved. While these instances do not represent all Chinese companies, they do highlight the importance of taking precautions when conducting business with unfamiliar entities.
One common tactic used by scammers is to demand 100% prepayment through Western Union, with payments divided into installments. After receiving the funds, the supplier may inflate the price by a significant amount, leaving the buyer with a substantial financial loss. In one instance, a buyer lost $9,000 due to this type of scam. To avoid this, it is recommended to thoroughly investigate the company before making any payments. This includes checking for an English-only website or a fabricated address, as well as attempting to schedule a meeting or visit to the company’s location.
Another way scammers may attempt to deceive buyers is by providing false information about their location or business. In one example, a European buyer entered negotiations with a local company and specified a component as binding for a new project. However, when the buyer declined offers for meetings and factory audits, it was discovered that the “headquarters” address in Shenzhen was actually an abandoned office. While the buyer did not incur a direct financial loss, the two months’ effort expended on the project led to delays.
Finally, some buyers may enlist the help of a Chinese acquaintance to order electronic components, only to receive a list of QQ and mobile phone numbers with no address or company name. Neglecting to verify the existence of the company in this situation could lead to serious consequences. It is important to be meticulous and take necessary precautions when conducting business with unfamiliar entities.
To verify the existence of a Chinese supplier or company, a basic method is to send an economical package via SF Express and observe if successful delivery is achieved. This is a relatively inexpensive measure that can provide valuable insight into the legitimacy of the company. By taking these steps and remaining vigilant, buyers can avoid falling victim to scams and conduct business safely and successfully with Chinese suppliers and companies.
Verify Chinese Supplier Conclusion
Some Samples of Supplier Audits
To verify a Chinese supplier, conducting supplier audits is a crucial step. This involves thoroughly checking the supplier’s facilities, processes, and quality control measures. Some samples of supplier audits include:
-
Quality Management System (QMS) Audit: This audit assesses the supplier’s QMS and ensures that it meets international standards such as ISO 9001.
-
Social Compliance Audit: This audit evaluates the supplier’s compliance with social standards such as working conditions, child labor laws, and environmental regulations.
-
Product Testing Audit: This audit ensures that the supplier’s products meet the required quality standards and specifications.
By conducting these audits, buyers can ensure that their Chinese suppliers are legitimate and meet their quality requirements. It is important to conduct regular audits to maintain a good working relationship with the supplier and to ensure that they are continuously meeting the required standards.