Verification30 Oct 20266 min read

How to check a Chinese supplier before you send a deposit

The deposit is the moment your risk starts. Three public records — the licence, its credit code, and any court judgments — settle most of it in ten minutes; a factory visit is $299 and only worth it after those come back clean.

Three public records settle most of the question about a Chinese supplier before you send a deposit: the business licence, its 18-digit credit code, and any court judgments against the company. The desk work takes about ten minutes and costs nothing. A factory visit is a separate decision, at $299, and only worth it once those three come back clean.

The deposit is the moment your risk starts. Before it, you are a buyer with options. After it, you are a creditor with a delivery date. Almost everything worth knowing about a Chinese supplier can be established before that transfer, and most of it takes a morning rather than a factory visit.

Start with the licence, not the catalogue

Every company in China has a business licence, and its registered scope is public. Ask for a photograph of the licence and check three things on it: the company name, the 18-digit unified social credit code, and the registered scope.

The name matters because the company you are talking to is often not the company you think. A salesperson writes from a trading company’s domain while quoting a plant they buy from, and the name on the contract will be whichever entity is convenient at invoice time. The credit code lets you pull the company record from the national credit registry and see whether the entity is still active, how much registered capital it carries, and whether it has been moved to the abnormal-operations list.

The registered scope is where the factory-or-trader question usually answers itself. A scope reading wholesale and retail of building materials; import and export of goods is a trading company, whatever its website says. A scope reading manufacture of ceramic tiles; processing of stone is a plant. Neither is automatically better. A good trader consolidates six suppliers and handles consolidation well. But if you are paying for factory pricing, you should know which one you are paying.

The ten-minute factory test

Before spending $299 on an audit, spend ten minutes on the product itself. Photograph the item and reverse-search it on 1688, the domestic wholesale platform. You will usually find the same photographs under a dozen listings, and one of those sellers is the plant while the others are resellers. The domestic price you see there is also a useful number: it tells you roughly where the floor sits, before export packing and margin are added.

Then look at what the factory photographs actually show. A plant that makes a product has raw material coming in and waste going out. A tile factory has pallets of green body and a kiln. A furniture plant has a cutting floor, an edge-banding line, and a corner full of offcuts. If every photograph is of finished goods on a rack, you are looking at a warehouse, not a workshop.

What the visit is for

An audit is not a scoring exercise. It answers four questions that no document can settle.

• Is the line running? A plant with idle machines is either short of orders or short of staff, and both change your lead time. Photographs of a line in production, with date and time visible, are worth more than any certificate.
• Who does the checking? Look for a QC bench, gauges, a colour light box, and someone whose job is to reject things. If quality control is “the operator checks his own work”, you will be the one finding the defects, at destination.
• How much is subcontracted? Many plants assemble rather than make. That is normal, but you should know which process leaves the building, because that is where the specification usually drifts.
• Who is actually in charge? Meeting the owner once is worth a month of emails. It also tells you whether the salesperson you have been dealing with can commit to anything.

Court records are public, and nobody checks them

Chinese court judgments and enforcement records are searchable by company name. Two searches are worth running on any supplier taking a deposit above a few thousand dollars: judgments where the company is a defendant, and the list of judgment debtors who have failed to comply. A plant with a cluster of unpaid-supply disputes is telling you something about how it treats customers with less leverage than you have.

This is also where a company’s registered capital becomes useful. Registered capital is a promise, not money in the bank, but a company with registered capital of RMB 100,000 taking a USD 40,000 deposit is a different risk from one with RMB 50 million and fifteen years of filings.

What a video call cannot do

A live walkthrough is genuinely useful, and we run them. But understand what it proves. It proves the building exists and that someone can walk around it holding a phone. It does not prove capacity, because a phone shows one bay of a shed. It does not prove that the goods you saw are the goods you will get, because a camera cannot tell whether the sample was made on the same line.

Use the video call to test the supplier’s willingness and their ability to answer an unexpected question. Ask them to walk to the packing area, or to the raw material store, or to show you the mould for your part. A plant that can do that on request without a rehearsal is usually a plant that knows its own floor.

The four things that should stop you

• The bank account name does not match the company name. This is the single most common route for deposit fraud. There is no legitimate reason for a factory to ask you to pay a personal account or a third company, and every reason for you to refuse.
• The price is far below the cluster. A quote 30% under everyone else is not a negotiation position. It is either a different specification, a different material, or an order that will not ship.
• Nobody will name the plant. If the supplier will not tell you which factory makes the goods, you are buying from a trader who is protecting a margin, and you cannot audit what you cannot name.
• The certificate belongs to someone else. ISO 9001 and product certificates carry a company name on them. Check that the name on the certificate is the name on the licence, and that the scope covers your product.

None of this requires being in China. It requires asking for documents that a real supplier already has, and reading them rather than filing them. Where it does help to have someone on the ground is the part between the documents: standing on the floor, asking the question the salesperson did not prepare for, and telling you what the answer actually meant.

If you want that done for a supplier you have already found, it is $299 per factory, quoted before anyone travels, with the parts that worried us left in the report.