When reading our credit reports, you may have difficulty understanding the technical terms in them. This article will explain some of the technical terms that appear in our report.
Registered Capital & Paid-up Capital
The registered capital is just the figure that the company declares at will when registering, not the money that has been paid. According to Chinese policy, the registered capital can be paid off within 40 years. That means a large registered capital does not mean a financially strong company.
Paid-up capital is the money that the company has paid for the registered capital. It can indicate the financial strength of a company.
There is eight status of the operation in China, and what they mean respectively are shown in the following table.
|Status in Chinese Characters||Translation||Explanation|
|存续（在营、开业、在册）||Existing||The enterprise exists and continues to operate normally in accordance with the law.|
|在业||In operation||The enterprise is operating normally.|
|吊销||Revoked||The revocation of an enterprise’s business license is an administrative penalty imposed by the State Administration for Industry and Commerce on an illegal enterprise.|
|注销||Canceled||The business is canceled by the founders and thus the company no longer exists.|
|迁入||Moved in||An enterprise is in the process of moving into a new registered address.|
|迁出||Moved out||An enterprise is in the process of moving out of its original registered address.|
|停业||Suspended||An enterprise suspends its operations for some reason.|
|清算||Liquidation||An enterprise is on the verge of closing down. And its property, creditor’s rights, and debts are being counted.|
Number of Employees& Number of Employees Insured
In China, anyone who is an official employee must be insured by the company. However, the number of employees has estimated from the number of employees insured. To know the size of a company’s staff, the number of employees insured is an important indicator.
Example: A company named Henan Bebon International Co., Ltd. claims that it has nearly 1000 employees on its website.
However, after our investigation, we found that there is only 1 insured employee, which means there is only one official employee in this company (possibly its founder himself). So the company is exaggerating its size.
Import and Export Enterprise Code
If a company’s Import and Export Enterprise Code can be found, it indicates that the enterprise has import and export qualifications.
However, if the code cannot be found, there are two cases:
1. The enterprise is not qualified for import & export business.
2. The enterprise has only recently applied to the relevant departments, and the information hasn’t been updated in the digital database of the Chinese government.
Dishonest Persons Subjected to Enforcement
If a company or person still refuses to pay the money, he/she owes after courts’ enforced execution (especially when the company or person has the ability to do so), the company or person will be recorded in the Official List of Dishonest Persons Subjected to Enforcement.
Restraining Order on Daily Expenditure
Normally, when a company or person is listed as a dishonest person subjected to enforcement, almost at the same time it/he/she will receive a restraining order on daily expenditure. He or she cannot buy luxurious items, travel in first-class trains, or live in star-rated hotels.
Several cases of abnormal operation:
1. Abnormal registered address: The company cannot be contacted at its registered address. In this case, the company may be a small one, and in order to save costs, the company moved out from the original address. As long as the company reports its new address to relevant departments, it will change to normal.
2. Abnormal public information: an enterprise failed to fulfill the obligation of instant information disclosure in accordance with the law, such as failing to submit annual reports as required. In this case, once the information is supplemented in a timely manner, the abnormal records could be cleared.
3. Administrative punishment: if an enterprise conceals the true situation, practices fraud, evades the tax, or commits any other illegal actions, it will be given the administrative penalty. Under this circumstance, you need to be careful since it may be a dishonest company.
In all, if you still have trouble understanding our report, please feel free to contact us.