In general, buyers prefer to do business with a powerful company. To some extent, the size of a company (i.e. the number of employees in this company) could show this company’s strength. Many Chinese merchants claim that they have hundreds of employees. Is that true? In this article, I’m going to show you how to verify the size of a company in China.
How to verify the number of employees in a Chinese company
The most effective way to know the number of employees in a company is to investigate how many people are insured in this company. According to Chinese laws, a company should buy social insurance for its official employees within 30 days of official recruitment. In short, the number of insured employees in a company equals the number of legally employed workers in a company in China.
Does the number of insured employees equal the actual number of employees in a Chinese company?
The answer is not necessarily. Normally, the gap between the number of insured employees and an actual number of employees will not be too large. According to Chinese policies, except for a few part-timers, companies should pay insurance for all the formal employees. But if you have opportunities to visit companies or factories in China, you may find out that in some Chinese companies, there is a large gap between the number of insured employees and actual employees, the reason is that:
1. This enterprise has many illegal employees.
2. This company hires a lot of temporary workers to pretend that it is a company with a large size to lie to you.
If a company has many illegal employees, then the company is likely to be fined by the Chinese government, or even be put on the list of dishonest companies. Doing business with a company like this, you will also take a lot of risks.
Here are two real examples from our clients.
河南贝邦进出口贸易有限公司 (Henan Bebon International Co., Ltd.)
On this company’s website http://www.bebonchina.com, it claims that it has about 1000 employees, as is shown in the picture.
However, we searched for this company in the Chinese government database and found out that the company has only one insured employee and is estimated to have less than 50 people in total, as is shown in the following picture. There is no doubt that this company is dishonest about its number of employees.
苏州艾易斯生物科技有限公司 (Suzhou ACE Biomedical Technology Co., Ltd.)
On this company’s website https://www.ace-biomedical.com/, it claims that it has 30 engineers, as is shown in the picture.
However, in the Chinese government database, we found that this company doesn’t have insured employees, as is shown in the following picture. This is commonly seen in small companies in China where there are only the founders.
In a legal, well-run company, the gap between the number of insured employees and an actual number of employees should not be too big. If you find out that there’s a big gap between the two numbers of a company in China, you have to be careful. Also, you need to check other information such as company structure & shareholders, intellectual property, related risks, customs registration information, business registration information, change records to avoid property loss. If you want to know more detailed information about a company in China, please contact us, we are willing to help you.