How to Verify Chinese Companies (13 Free & Paid methods): Legitimacy, Quality and Capability
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How to Verify if a Company in China Is Legitimate
There are many ways to verify if a Chinese company is legitimate. But did you know that just because a company is legally established in China does not mean that it is reliable?
In this chapter, I will introduce 6 methods to verify the legitimacy of a Chinese company. These 6 methods vary in difficulty for you, the first two are newbie-friendly. The last four will help you identify illegitimate Chinese companies. (Identify the different levels of legitimacy of Chinese companies).
Method 1: Whois.com – Find Out When a Chinese Company Started Its Business
Quick question: Do you believe an Alibaba supplier’s claim of when the company was founded?
Chinese companies like to embellish the years they have been in business, and buyers often have no way to tell the truth.
Whois.com is an excellent tool for a quick check.
You can simply enter the company’s website you want to check, and then you can see when their domain was registered.
Usually, the domain will be registered when they start their business, sometimes even a little earlier than their company establishment.
Pros of Method 1:
- You do not need the Chinese name of the company to perform a search.
- Whois Domain Lookup tool is free
- This method is simple and quick (compare to the other methods we’ll cover next)
Cons of Method 1:
- The date of domain registration is not equal to the date of company establishment. (You can only have a rough estimate of how long they have been in business)
- You can’t tell whether this company registered the domain from scratch or purchased an existing old domain with whois. (For example, a company founded in 2020 could buy a domain registered in 2006 to create their company website.)
Method 2: Archive.org: Learn About Your Chinese Supplier’s Business Scope History
Archive.org, also known as the Internet Archive or Wayback Machine, as its name suggests, archive.org records every change of all websites in the world.
So what’s the help for verifying Chinese companies?
With the Internet Archive, you can find out:
- How long this Chinese company has been operating (when was the earliest record of the website?)
- How this Chinese company’s business has changed ( Web content changes records)
- Whether the domain name of this company has been transferred (as a supplement to method 1)
Pros of Method 2:
- You only need the URL of the Chinese company to check them on archive.org
- archive.org is a non-profit charity and does not charge any fees for its services (you may consider donating to support them)
- If you want to verify Chinese suppliers, archive.org lets you know more details than whois.com.
- Easy and quick (compared to the Chinese company verification methods I’ll introduce next)
Cons of Method 2:
- All records on archive.org are based on the vendor’s website, which means that they are not necessarily objective.
- For the purpose of verifying Chinese suppliers, you cannot know whether a supplier is reliable through its website
Method 3: Verify if the Chinese Company Is Registered or Not
The best way to verify if a Chinese company is legally registered, or to verify their business license, is to check on the National Enterprise Credit Information Publicity System (NECIPS).
NECIPS is an enterprise information database launched by the General Administration of Market Supervision in February 2014 to improve China’s business environment credit system.
Verifying the business license of a Chinese company
A business license in China includes the following information:
- Unified social credit identifier (18-digit USCI number)
- Company name (Chinese)
- Company type
- Legal representative
- Business scope
- Registered capital
- Founding date
- Operating period
- Registered address
I know some companies photoshop the founding date or business scope on their business license to make them look more reliable or more like a factory.
If your Chinese supplier sent you their business license and you wish to verify it. You can search in NECIPS by entering the USCI number or the Chinese name of the company.
Pros of Method 3:
- The National Enterprise Credit Information Publicity System is operated by the Chinese government with reliable information.
- Searching on NECIPS is free.
Cons of Method 3:
- You need to contact the Chinese company to complete the NECIPS search (ask them for their business license, USCI number or Chinese name of the company)
- In November 2021, the National Enterprise Credit Information Publicity System (NECIPS) launched a real-name system. That means you need to provide your legal name and ID number to continue using NECIPS.
- The NECIPS system is very slow and cannot be opened occasionally; when you make a few more clicks, you will be considered as attacking the system, and your access will be denied.
Method 4: Check What Lawsuits the Chinese Company Has Been Involved In
Just because you find the company’s information on NECIPS, or you have verified that their business license is genuine, doesn’t mean you can trust them.
In fact, it is so inexpensive and easy to register a company in China that you can pay about $100 and wait two weeks to own a Chinese company. You don’t even need to spend money to rent an office.
Having said that, checking their business license will not protect you from losses if you encounter a professional scammer or a Chinese supplier who is not operating in good faith.
Alternatively, you can look up a company’s litigation record through China Judgements Online. If a company has committed fraud or received payment for goods but did not ship them, you can find it on China Judgements Online.
Pros of Method 4:
- China Judgements Online has the most comprehensive database of judgement announcements in China
- China Judgements Online is free
Cons of Method 4:
- Just like other government websites, the response time of China Judgements Online is sometimes slow because of the huge number of visitors.
- You must sign up with your mobile number before using China Judgements Online.
- Some judgments will not be available on China Judgements Online if the parties believe they violate personal privacy or business secrets
Method 5: Check the Defaulted Executee List (A National-Level Blacklist)
If a company is taken to court, that company is not necessarily at fault. You will need to check the detailed case records of this company to get the real facts.
A more direct way to verify a Chinese company is to check if they’re on the national court list of defaulted executees. So what is a defaulted executee? It refers to a person who has the ability to perform but does not fulfill the obligations determined by the legal documents in force.
For example, a company was sued by a buyer for not delivering the goods according to the quality and time specified in the contract, and the Chinese court ruled that the company was in breach of contract and needed to pay compensation. If this company refuses to pay compensation, it will be listed as a defaulted executee.
Simply log on to the China Execution Information Disclosure Network to check this national blacklist. If your candidate company or business owner is on this list, you should not hesitate to avoid working with them.
Pros of Method 5:
- This national credit blacklist is pretty straightforward, and basically any company with a name on it you should avoid.
- The China Execution Information Disclosure Network is free to use.
Cons of Method 5:
- The companies on this blacklist are all legally registered. Scammers that cannot be traced will not be recorded here.
- You will not be able to access all case records. Certain cases will not be released for reasons of privacy and business confidentiality.
Method 6: Consider Company Verification Services in China
For reasons such as server location and information security, it can be very difficult for overseas buyers to find out information about Chinese companies through the Chinese government’s database.
As an importer, if you are preparing an important project and have candidate suppliers (either found from Alibaba or other B2B sites), consider using a Chinese company verification service for due diligence to reduce risk and save time.
Pros of Method 6:
- Save time. You can get the due diligence report of your candidate company in 1-2 days with the help of the China company verification service.
- Comprehensive information. You can access more in-depth information about a Chinese company through our company verification service.
Cons of Method 6:
- Service fees are not cheap. Typically each company verification report costs between $100-$200. Each report covers the background check information for one company.
How to Check the Quality Level of Chinese Suppliers before any order
The ultimate goal of finding a manufacturing company in China is to produce products of reliable quality at a competitive cost.
You can get an impression of whether the cost is competitive by contacting the supplier, but the quality of the product is not something you can tell by looking at the samples alone.
Based on my experience working with Chinese suppliers, I must remind you that the quality of a large shipment can be completely different from the quality of the sample you received.
In this chapter, I will share a few tips for you to verify what product quality you will get before working with any Chinese supplier.
Method 7: Use Amazon to Get an Idea on the Product Quality of Your Chinese Suppliers
You may be wondering: “Amazon is an online retailer, but I’m looking for a Chinese manufacturer. What’s the point of going to Amazon?”
The truth is, Chinese sellers account for 38% of Amazon’s top brands as of December 2021, according to Marketplace Pulse. Many of these are DTC(direct-to-consumer) brands from Chinese manufacturers, meaning these Chinese factories are selling on Amazon directly under their own brands.
Let’s take a look at a real-life example. There is a drone company in Guangzhou that is very famous, and the Guangzhou government invites their company to perform drone shows during traditional Chinese festivals.
The name of this company is Ehang, which is also their brand name.
If you were to create a drone brand, would Ehang be a good fit as your manufacturer? Let’s try out our company verification method with Amazon.
First, go to google (yes, not Amazon), and search for “site:amazon.com ehang”, you will find all the information about Ehang on amazon.com.
There is a listing for EHang Ghost Drone in Amazon, with a total of 70 review ratings and an average score at 3 out of 5. Honestly, the rating doesn’t look very good.
If you read the terrible reviews carefully, you will find that customers are dissatisfied not only because there is no technical support but also because there are problems with the product’s primary functions.
Coming back to the previous question, if you are looking for a drone manufacturer in China to start a private label, is ehang the best choice for you?
After the above company verification process, I think you already have your answer, at least in the field of civilian drones they are not your best choice. In fact, Ehang has now entirely shifted its direction towards commercial drones.
Pros of Method 7:
- With Amazon you can get an idea of the product quality of a Chinese company before working with them
- Amazon reviews are a valuable resource for you, letting you know what product issues you should be looking out for
Cons of Method 7:
- Not all Chinese manufacturers sell on Amazon, which means you probably won’t find their information.
- Sometimes the DTC brand of a Chinese factory is not the same as their factory name, you need to dig deeper into the trademarks they own.
Method 8: Verify What Product & Quality Management System Certifications Your Chinese Suppliers Have
If you’re looking for Chinese suppliers on Alibaba, you must be familiar with the page design where suppliers put their various certificates on the homepage.
When we source manufacturers for our clients, product or quality certificates are also one of our major considerations, but in our experience, most of the time you can’t trust the suppliers regarding which certificates they have.
Alternatively, HUACI Sourcing team usually uses the State Administration for Market Regulation website to verify what products or quality system certifications a Chinese company has.
You can find out if a Chinese company has the following certifications with this database:
- Compulsory product certification (e.g. CCC certification in China)
- Management system certification (e.g. ISO9001)
- Voluntary industrial product certification (e.g. product energy efficiency certification)
- Food and Agricultural Product Certification
Pros of Method 8:
- The certification information is from the Chinese government database, not uploaded by the suppliers themselves.
- You can search for free in this China company certification database
Cons of Method 8:
- You need to know the Chinese name of the company you are investigating.
- If you do not speak Chinese, there is no way to pass the site’s anti-bot verification.
Method 9: Conduct a Factory Audit in China
Well-known retailers like Disney, Walmart, and Adidas require factory audits to verify candidate companies before working with them.
On-site factory audits provide insight into the supplier’s capabilities and capacity that cannot be discovered through remote company verification.
Professional factory audit service checklist includes:
- Employment and Labour Practices
- Facilities & Working Environment
- Quality Control System
- Communication, Documentation Control
- Complaints Handling
- Incoming Raw Materials Inspection
- In-Process Quality Control
- Finished Production Inspection
- Finishing and Packaging
- Non-Confirming/ Rejected Materials
So if you have solid requirements for the capacity and capability of your Chinese company, you may consider using a third-party factory audit service to do further verification.
Pros of Method 9:
- On-site factory audits can tell you more about a supplier than remote company verification.
Cons of Method 9:
- The typical cost of a one-day factory audit in China is $200-400
How to Verify the Capabilities of Chinese Suppliers (Factory or Trading Company)
Most buyers tend to work directly with factories, even though a trading company is often better suited as their supplier.
Instead of going into the pros & cons of working with a factory or a trading company, we will cover how to verify the capabilities of a Chinese company. And also how to check whether a Chinese company is a manufacturer or just a middleman.
Method 10: Verify the Chinese Companies’ Business Scope on their Business License
In China, a company needs to go through a series of approvals to become a manufacturing company, which is reflected in its business scope. If you want to know whether a Chinese company is a factory or not, the most straightforward way is to look at their business scope.
The business scope of a manufacturing company will include the Chinese words “生产” and “制造“, meaning “produce” and “manufacture“. You can confirm it’s not a factory if there is no such wording.
Simply download the latest version of Google Translate app to your phone (IOS or Android), then open the app and click the “Camera” button to translate the business license copy from your supplier.
Pros of Method 10:
- Compared with method 3 (NECIPS company verification method), method 10 is more friendly to buyers who do not speak Chinese
- Among the many ways to tell whether a Chinese company is a factory or a trading company, Method 10 is one of the easiest.
Cons of Method 10:
- You don’t know if the business license sent by the supplier is the original one without tampering
- If the photocopy of the business license is not clear enough, Google Translate cannot recognize it
- Just because a Chinese company is a manufacturing company doesn’t mean that the sku you are buying is produced by them. Oftentimes, a factory will also buy products from other companies that they don’t specialize in
Method 11: Check How Many People in This Chinese Company Are Covered by Social Insurance
When sourcing a supplier in China, you may be interested in how many employees the company has – after all, a bigger company usually means more reliable and safer to work with.
However many times the information you get from the internet about the size of a Chinese company is very vague and misleading. As an industry insider, I must tell you that there is only one indicator you need to look at, and that is the number of people who are covered with social insurance.
Because Chinese labor law requires all employees to participate in social insurance, therefore the number of people participating in social insurance in a company basically equals the number of employees in that company.
Pros of Method 11:
- The most reliable indicator of the size of a Chinese company
Cons of Method 11:
- In a few cases, the company’s employees are covered by social insurance but not under the same company name.
Method 12: Find Out What Patents Your Suppliers in China Have
Some importers never work with trading companies because they feel that these middlemen bring no value to the project but drive up the price.
However, there is another type of trading company that stands out in the market because they invest in their R&D and have product patents that no factory has.
A quick way to verify the R&D capabilities of Chinese companies is to visit the website of the State Intellectual Property Office of China.
Type in the full name of the Chinese company you need to check in the Applicant field to see all the patents they own.
The most exciting part is that you can drill down to a particular patent and see if a company’s R&D direction is relevant to the project you are working on.
Pros of Method 12:
- By analyzing the patent portfolio, you can find out what a company’s main product categories are
Cons of Method 12:
- Some companies register patents in the owner’s personal name, so you can’t check the records with the company name
Method 13: Identify What Kind of Employees Your Chinese Suppliers Are Hiring
Another solid way to tell if a Chinese company is a factory or a trading company is to visit major Chinese job boards – and see what kind of people they are hiring.
The logic is simple – if it’s a manufacturing company, then they’re definitely hiring workers. Trading companies, on the other hand, are basically only hiring sales and procurement staff.
You can also use this tactic to figure out if a trading company has its own design and R&D team, by seeing if they have product design and engineer openings.
Pros of Method 13:
- This is a high-end technique for verifying Chinese companies. Basically, your candidate company will not have the sense to manipulate, which makes the verification results reliable.
Cons of Method 13:
- Some factories prefer to recruit offline, so you won’t find their job listings on job boards
- There are many job boards in China, which increases the difficulty of collecting information.
If you have read the entire article…
I hope you enjoyed my guide on how to verify Chinese companies and suppliers.
I would like to remind you that not a single vendor verification method can guarantee that there is no risk.
If you would like to learn more about our China company verification services to reduce the risk, feel free to drop us a line.