How to check a Chinese supplier before you pay a deposit

The deposit is the moment you have the least protection and the most to lose. Once money leaves your account for China, getting it back is slow, expensive and sometimes impossible. A few checks before that point can catch common problems: a supplier that is not who it says, a trading company posing as a factory, or a scammer who has swapped the bank details on a real invoice.

Do them in this order. Each one is cheap compared with the deposit.

1. Get the business licence and the Unified Social Credit Code

Every Chinese company has a business licence. China introduced the Unified Social Credit Code in 2015, with a transition period for existing entities, and registered entities are issued one: 18 characters, unique across China, one code per entity, kept even after the company is closed. The State Council plan that set it up splits it into five parts: the registering department, the type of entity, the region of the registering office, the organisation's own identifier (characters 9 to 17) and a check character (character 18).

• Ask the supplier for a clear photo or scan of its business licence. The code is printed on it.
• Ask for the company's full registered name in Chinese. The English name is often a translation and is not what is registered.
• A real supplier sends this without fuss. Hesitation is a red flag in itself.

2. Look the company up in China's official register

China's National Enterprise Credit Information Publicity System (gsxt.gov.cn) is the official register search, run by the State Administration for Market Regulation. Search by the Chinese name or the 18-character code. The site is in Chinese, so a browser translation tool helps.

Check what is registered against what you were told. Under China's registration regulations, these are the registered details:

• Name. Does it match the licence, the contract and the bank account exactly?
• Type of entity and status. You want a company that is existing and operating, not cancelled or revoked.
• Business scope. Does it include making the product, or only trading it? A trading company is not a problem in itself, but you should know if you are not dealing with the factory.
• Address. Is it the address you will see on the video walk-through?
• Registered capital. Treat it with care: under the 2021 regulations it is generally a subscribed figure, the amount the owners have committed, not necessarily paid in, so it is not proof of money in the bank.
• Legal representative. The person who legally acts for the company. Note the name.
• Date established. A company set up last month claiming 15 years of export experience needs explaining.

Then look at the records the regulations require companies to publish:

• Annual reports. Companies must file one each year between 1 January and 30 June. Missing years are a warning.
• The list of enterprises with abnormal operations. Under the 2024 regulations a company is put on it for not publishing its annual report on time, or not publishing information the regulator ordered by the deadline. Being on it is a warning.
• The serious illegal and dishonest list. Publishing false information or hiding the true position is treated differently: the regulator orders a correction and fines the company, and in serious cases puts it on this list and can revoke its business licence. Being on it is a serious warning. Check both lists, because a company can be clear of one and on the other.

3. Match the bank account to the company

This check guards against one of the most painful losses: paying the right invoice into the wrong account.

• The beneficiary name on the bank details must match the registered company name exactly, the same company you checked above.
• Be wary of a personal account, an account in a different company's name, or an account in another country or region than the company. If there is a reason (some groups invoice through a related company), get it explained in writing, check that company too, and make sure the contract names it.
• Confirm the bank details by phone or video call to a number you already hold, not one in the email that sent them.
• Treat any change of bank details as a possible scam until proven otherwise, even if the email looks like it comes from your usual contact. The Australian Signals Directorate's guidance on business email compromise is to have a clear, consistent process to verify payment requests and account changes before acting on them.
• For a new supplier, consider sending a small amount first and confirming it arrived before sending the rest.

4. Do a live video walk-through

A live video call, which you direct, is the cheapest site visit you will ever do. Photos and a pre-recorded factory video can belong to anyone.

• Book it at short notice, and keep it live. Ask the person to start outside so you can see the gate, the sign and the street.
• Ask to see the business licence on the wall. Chinese regulations require it to be displayed in a prominent place at the premises.
• Walk the production line for your product: the machines for cutting, bending and welding wire or sheet, finishing, packing.
• Ask to see your product, or one very like it, being made now, and the raw material stock.
• Ask to see finished goods packed for another customer (they should hide other brands) and the warehouse.
• Ask who you are speaking to and their role. Note whether they know the product or only the sales script.

If the address on the video does not match the registered address, ask why. A second, newer site can be fine. A vague answer is not.

5. Order samples, and pay for them

• Pay for samples. It shows you are serious and it puts no deposit at risk.
• Ask for the sample to be made from production materials, not hand-finished as a showpiece.
• Measure it against your spec, test it on a real BBQ, and keep one as your signed golden sample. See sample looked great, bulk didn't.
• Check the sample came from the address you saw, where the courier paperwork shows it.

6. Protect the payment

• Pay a deposit, not the full amount, and the balance only after a pre-shipment inspection passes. The pre-shipment QC checklist covers what to inspect, and deposits and cash flow covers planning the payments.
• Put the deposit, balance trigger, spec, inspection and what happens if it fails in a written contract or purchase order, signed by the company you checked, with its registered name and code.
• For larger orders, ask your bank about a letter of credit, where the bank pays against agreed shipping documents rather than on trust.
• If you buy through a marketplace that offers payment protection, keep the payment inside the platform and read its terms on what is covered and for how long.
• Pay in a way you can trace: a bank transfer to a company account, never cash or a payment app to a person.

Red flags

• Will not share the business licence, or the name on it differs from the contract or the bank account.
• The company is cancelled, revoked, recently set up, missing annual reports, or on the abnormal operations list or the serious illegal and dishonest list.
• Bank details in a personal name, or a different company's name, with no written explanation.
• A late email changing the bank details, especially one that says it is urgent.
• Will not do a live video call, or only shows a showroom.
• A price far below everyone else for the same spec.
• Pressure to pay the full amount up front, or to pay today.
• Will not put the spec and payment terms in writing.
• Email from a free email account, or a domain one letter off the company's usual one.

If something goes wrong

If you think you have paid a scammer, contact your bank immediately: the sooner it acts, the better the chance of stopping or recalling the payment. The Australian Signals Directorate also asks businesses to report cybercrime to it, and to change passwords and warn anyone affected if an email account was compromised.

Decision rules

• If the licence, the register and the bank account do not all name the same company, do not pay until they do.
• If the supplier refuses a live video walk-through, do not pay a deposit.
• If the bank details change, stop and verify by phone before paying anything.
• If the order is large relative to your business, use a letter of credit or an independent inspection, or both.
• If it is your first order with a supplier, start smaller than you would like.

Common mistakes

• Checking the English name online instead of the registered Chinese name in the official register.
• Treating registered capital as cash in the bank.
• Accepting a factory tour video someone else could have filmed.
• Paying a changed bank account because the email came from the usual address.
• Paying the full amount before production because the price was good.
• Doing all the checks once, then skipping them on the next order when the bank details "change".

Common questions