A polished website, an impressive Alibaba profile, and a responsive English-speaking sales
representative can make a Chinese supplier appear credible. None of those things, however, establishes that the supplier is a properly registered company, operates from the address it claims, or actually manufactures the products it sells.

Before entering into a significant transaction, a buyer should verify the supplier’s legal identity and operating status.

Start With the Supplier’s Chinese Legal Name

The most important piece of information is not the supplier’s English trade name. It is the company’s complete Chinese legal name.

Chinese companies frequently use English names that are not registered anywhere. An English name may be a loose translation, a brand name, or simply a name selected for overseas marketing. In some cases, multiple companies use nearly identical English names.

The buyer should therefore request:

• The supplier’s complete Chinese legal name
• A copy of its current business license
• Its Unified Social Credit Code
• Its registered address
• The name of its legal representative
• The name of the entity that will sign the contract
• The name of the bank-account holder receiving payment
• These details should match one another. Differences are not necessarily evidence of fraud, but they require an explanation.
  

Review the Business License

A Chinese business license contains important identifying information, including the company’s Chinese legal name, Unified Social Credit Code, registered address, legal representative, registered capital, date of establishment, business term, and approved business scope.

Registration information can also be checked through China’s National Enterprise Credit Information Publicity System, which is maintained under the State Administration for Market Regulation.

The registration record can help answer basic questions:

Does the company legally exist?

• Is its status listed as active?
• When was it established?
• Has its registered address changed repeatedly?
• Does its business scope relate to the products it claims to manufacture?
• Has it been listed for abnormal business operations?
• Has it disclosed annual reports as required?
• A valid registration does not prove that a supplier is financially sound or operationally capable. It does establish the identity of the company that should be investigated further.
  

Confirm the Company Is Actually Operating

A registered company may have little or no meaningful business activity. Some suppliers are trading companies operating from small offices. Others outsource all production. In more serious cases, a registered entity may be dormant, financially distressed, or operating from an address different from the one shown in public records.

Operational verification may include:

• Calling independently verified telephone numbers
• Checking the registered and operating addresses
• Reviewing current photographs or video of the facility
• Conducting a site visit
• Confirming the number and type of production lines
• Reviewing staffing levels and production schedules
• Checking utility capacity where relevant
• Speaking with customers, logistics providers, or other references
• Verifying whether employees and equipment belong to the contracting company or to another entity
• Theobjective is not merely to prove that a factory exists. It is to establish the relationship between that factory and the company taking the buyer’s money.
  

Check Ownership and Related Companies

A supplier may be part of a larger group, controlled by an individual who owns several related companies, or closely associated with an export company, Hong Kong company, or separate manufacturing entity.

Understanding the ownership structure can reveal:

• Whether the contracting company owns the factory
• Whether assets have been placed in another company
• Whether the supplier recently changed shareholders
• Whether the same owners operate businesses with litigation or regulatory problems
• Whether the company receiving payment is related to the company signing the contract

China’s revised Company Law took effect on July 1, 2024, together with implementing rules concerning registered capital. Registered capital remains useful information, but it should not be treated as equivalent to cash in the bank, net assets, or funds available to satisfy a claim.

Match the Contract to the Correct Entity

Once the supplier has been identified, the contract should use the supplier’s exact Chinese legal name. The company stamp, or “chop,” should also correspond to that entity.

A common problem arises when one company negotiates the transaction, another signs the purchase agreement, a third operates the factory, and payment is requested to a fourth company’s bank account. That structure may have a legitimate explanation, but the buyer should understand and document it before paying.

At a minimum, the buyer should know:

1. Which entity is legally responsible for performance?
2. Which entity owns or controls the factory?
3. Which entity receives the buyer’s funds?
4. Which entity owns the relevant tooling and intellectual property?
5. Which entity has assets that could satisfy a claim?

Verification Is Only the First Step

Confirming that a supplier is a real registered company is necessary, but it is not the same as completing supplier due diligence. A full review may also cover litigation, administrative penalties, customs status,
certifications, export history, ownership, financial distress, manufacturing capabilities, subcontracting, intellectual-property risks, sanctions exposure, and the supplier’s ability to perform the proposed transaction.

The key lesson is simple: do not conduct business solely with an English name, a website, or a salesperson. Identify the Chinese legal entity behind the transaction and verify that the company you are paying is the company capable of delivering what it promised.