Verify a Chinese Factory: License, Capital, and Visit

Every registered Chinese company holds a business license, yingye zhizhao in Chinese. This document is issued by the State Administration for Market Regulation. It bears an 18-character unified social credit number, unique to each company. An organized company transmits this document without hesitation: it is displayed on its premises and required for every procedure, from bank account to customs. A supplier that hesitates or sends an unreadable photo should be treated as a warning signal.

A scan is easily falsified: the document is only as valuable as the number it contains, to be verified on an official source, as detailed below. Request the license together with the proforma invoice, then compare the two: the invoicing company name must exactly match the registered name. A difference, even of one character, must be explained in writing.

The license can be read in minutes and delivers decisive information: registered name, legal representative, date of establishment, registered capital, business scope, address, and validity period. Start with the date of establishment. A company created a few months ago that claims years of export experience must explain itself. Also verify that the legal representative is indeed the one signing your documents.

The registered capital should be read with caution. Since the 2014 company law reform, this capital is subscribed: partners announce an amount, without obligation to pay it in full. A factory showing several million yuan therefore proves nothing about its cash flow. The figure retains some usefulness: the filed annual report indicates the actual amount paid, and a sharp gap between announced and paid raises questions. Then there is the business scope, which lists authorized operations. Look for manufacturing and sale of your product category. A scope limited to trading indicates a trading company, not a factory. Certain products also require a production permit, to be checked separately.

The national enterprise credit publicity platform, gsxt.gov.cn, publishes information declared by each company: capital, legal representative, shareholders, registered changes, annual reports, and administrative sanctions. Search by name or, better, by the unified social credit number on the license. The site is austere and mostly in Chinese; our Chinese-speaking team queries it daily. Commercial services like Qichacha or Tianyancha reuse these official data and present them more legibly, with change history and related companies.

Then cross-check the history. An address that changes often, a legal representative replaced repeatedly, shareholders who come and go: these are signs to clarify before paying. Also consult the published judgments database, China Judgements Online, and the lists of companies under enforcement. A factory sued for unpaid invoices poses a real risk to your production continuity and your deposit.

Many companies present themselves as factories while they trade. This is not illegal, and an acknowledged trading company can sometimes be useful. The problem arises from disguise: you think you are dealing with the producer, but an intermediary buys elsewhere and resells, with its margin and no control over the process. The business scope gives a first answer. The address completes the information: an industrial zone suggests production, an office floor suggests trading.

The bank account often settles the doubt. The payment beneficiary must be the company named on the license and on the proforma. A deposit requested to a personal account or to a third-party company is a serious warning sign: in case of dispute, you no longer know who to take action against. This pattern recurs in many sourcing fraud cases. Demand a written justification, and suspend all payment as long as the inconsistency remains.

The license gives a registered address, which is not always the production address. Nothing replaces a day on site: lines matching your product, machines running, actual workforce, quality control stations, mold condition, component stock. Also look at what is displayed: the name on signs must match the license, and the certificates hung must be in the company's name. A factory that refuses any visit deserves a written explanation.

When travel is impossible, two solutions serve as a visit. The first: a live video call, at local time, without editing, from workshops to loading docks; ask the operator to show on screen a point you choose. The second: entrust the visit to a trusted third party, who documents what they see. Our Chinese-speaking team in Guangzhou travels throughout Guangdong province, including Dongguan, Shenzhen, and Foshan, and sends a report with photos.

A valid license says nothing about your product's compliance. Depending on the category, require the corresponding documents: production permit, recent test reports from a third-party laboratory, certificates applicable to the target market, such as CE marking for the European Union. Check three points on each report: the issuer, the tested product, and the date. A report in the name of another company, or covering a similar product, does not cover your order.

Finish with references and the sample. Ask for contacts of export customers of comparable size and question them about lead times and dispute management. Compare the received sample to the specifications, piece by piece, then freeze a reference sample signed by both parties. These pieces, added to the verified license, form a solid file before the first deposit.

Sorva is a brokerage and sourcing firm. Our Chinese-speaking team in Guangzhou checks each factory before any introduction: business license and unified social credit number verified on official registers, company history, consistency between license, proforma, and bank account, then factory visit in Guangdong when the case warrants. You receive a clear report: what is confirmed, what remains to be monitored, and questions to ask the supplier.

In most cases, you pay no fees: you open a file, we negotiate the goods for you, and we take a volume commission, deducted from the ex-works value. Our interest is aligned with yours: compliant production, at the negotiated price.