Before doing business with Chinese suppliers, the most important thing is to do a background check on the target companies.
Then how to verify whether a Chinese company exists for free online? You can check it from the following aspects with China’s National Enterprise Credit Information Publicity System.
Ask Your Chinese Supplier for a Business License
Firstly, you need to ask for a business license from your Chinese supplier and check whether the business license is real or fake.
Check online. You can click the link http://www.gsxt.gov.cn/index.html to enter the homepage of National Enterprise Credit Information Publicity System (or 国家企业信用信息公示系统).
Input the company’s name, click the search button, choose the targeted company, then you can get the business registration information of the company.
If the information matches that on a business license, then it means the supplier offers you a real one.
You should also cross-check the information in this system with what your supplier tells you in emails or on its websites from the following aspects:
In order to boast about their size, some companies tend to exaggerate their number of employees. What we need to search is the company’s insured employees instead of the meaningless staff number shown on the company’s website. Because in China, a regular employee should be insured in accordance with the law. Following is a typical example：
A company named Henan BeBon Iron& Steel Co., Ltd. (or 河南贝邦钢铁有限公司）exaggerates its staff scale on website.
The company claims that it has 1000 staff, however, when we searched the information on National Enterprise Credit Information Publicity System, the regular employees of the company are just 39.
This picture is about the social insurance information of the company from the website mentioned above. It shows that the company’s insured employees are 39.
Registered Capital & Paid-up Capital
The registered capital is just a figure that the company claims freely at registration. It is not the amount of money that has been paid. And in China, the registered capital can be paid off within 40 years. So, the registered capital can not indicate a company’s financial strength.
Paid-up capital is the money that has been paid, so it can prove whether a company is financially strong or not. The following example is a real case we encountered.
Example: Shandong Tianzhan Fitness Equipment Co., Ltd.( 山东天展健身器材有限公司)
Shan Dong Mbh Fitness Co., Ltd. (山东迈宝赫健身器材有限公司)
Though Shandong Tianzhan Fitness Equipment Co., Ltd. with more registered capital, through our comparison in many aspects, we find that Shan Dong Mbh Fitness Co., Ltd. with less registered capital and more paid-in capital has stronger comprehensive strength. If you want to know more about this case, please read this article: How to Check A Chinese Company’s Overall Strength: A Real-case Study.
Some companies are just trading companies but claim that they are manufactures and have factories. Take Zhengzhou Olive Electronic Technology Co., Ltd. as an example.
The company claims to be a specialized manufacturer. So how to tell whether the company is lying or not?
1. Check the industry information on the company’s business license. The industry is not manufacturing.
2. Business scope. By checking the business scope on the business license, we found out that the company is not qualified for production since manufacturing is not included in the business scope.
In China, a company’s address must be consistent with the information in its business license, or it is illegal. It also needs to be updated if the address changes. Here is a real case where a company lied to its international clients.
This is the address on the website of Changzhou Victory Machinery Co., Ltd. which is different from that in its business license.
In this case, you need to ask the company for an explanation to avoid problems that may arise in subsequent cooperation. Because after our investigation, neither of the addresses belong to this company, which makes the cooperation with the company risky.
If you want to verify a company for free, National Enterprise Credit Information Publicity System (or 国家企业信用信息公示系统）is a good choice. However, if you still have problems in verifying with this system or want to have more professional verification, please feel free to contact us.