Doing business with Chinese companies can be one of the most rewarding decisions you’ll ever make. The market is vast, the manufacturing capabilities are world-class, and the potential for growth is enormous. But let’s be honest—it can also feel like navigating a minefield if you don’t know what to look for.
Stories of overseas buyers getting scammed by fake suppliers or dishonest partners are, unfortunately, not uncommon. The good news? Most of these risks can be avoided with the right knowledge and tools.
In this guide, we’ll walk you through practical steps to verify Chinese companies, spot red flags early, and build successful—and safe—business relationships in China.
Why Due Diligence in China is Non-Negotiable
China’s business landscape is dynamic and highly competitive. While the majority of Chinese businesses are legitimate and reliable, the sheer size of the market means there’s also room for bad actors. Common scams include:
- Fake suppliers who disappear after an advance payment
- Counterfeit documentation such as forged business licenses
- Impersonation of well-known brands or factories
- Overpromising and underdelivering on product quality
The root of the problem often lies in information asymmetry. Many overseas buyers lack access to reliable, up-to-date, and verifiable data about Chinese companies. Without this, it’s easy to fall for a professionally built website or convincing sales reps.
Step 1: Start with Official Business Registration Checks
Every legally operating company in China is required to be registered with the local Administration for Market Regulation (AMR). This registration is public and can be accessed through the National Enterprise Credit Information Publicity System.
What to look for in a business license:
- Unified Social Credit Code (USCI) – a unique 18-digit identifier
- Registered capital – though not always fully paid-up, it indicates scale
- Legal representative – the person authorized to act on behalf of the company
- Business scope – confirms whether the company is legally allowed to conduct the business you’re engaging in
- Registration status – active, revoked, or in liquidation
If a company can’t or won’t provide its USCI, consider it a major red flag.
🔍 Pro Tip: Always cross-reference the business license with the official database. It’s not enough to have a copy—it must be verifiable.
Step 2: Dig Deeper with a Company Credit Report
A business license tells you a company exists. A credit report tells you whether it’s trustworthy.
Think of a credit report as a company’s financial and operational health certificate. It includes:
- Legal disputes and litigation history
- Shareholder structure and key management
- Financial performance (where available)
- Tax compliance, patents, trademarks, and more
For example, if a company is involved in multiple lawsuits or has a history of contract breaches, you’ll want to know before signing anything.
We offer a range of business credit reports, from standard due diligence to in-depth financial and tax versions, to help you make informed decisions.
Step 3: Verify Physical Operations
A common tactic among scammers is to use virtual offices or shell addresses. Always verify:
- Factory visits – either by you or a trusted third party
- Production capacity – ask for videos, live tours, or quality audits
- Employee presence – check through platforms like LinkedIn or local job posts
If a supplier avoids a site visit or can’t provide credible evidence of operations, proceed with caution.
Step 4: Check Intellectual Property and Certifications
Many scams involve counterfeit goods or unauthorized use of intellectual property. Before placing a large order:
- Verify trademark registration through China’s National Intellectual Property Administration (CNIPA)
- Ask for product certifications (e.g., CE, ISO) and validate them with issuing bodies
- Use our IP lookup service to confirm ownership and avoid legal issues down the line
Step 5: Use Third-Party Verification Services
If you’re not on the ground in China, it pays to work with a local partner who can verify companies on your behalf. This is where professional business intelligence services come in.
At ChinaBizInsight, we help international buyers:
- Retrieve official company documents
- Generate custom due diligence reports
- Conduct background checks on key personnel
- Provide notarization and apostille services for cross-border use
For instance, our Executive Risk Report helps you understand whether the people you’re dealing with have a clean track record—or hidden risks.
Step 6: Look for Consistency Across Channels
A legitimate company will have consistent information across:
- Its website and domain registration
- Social media (WeChat, Alibaba, LinkedIn)
- Trade platforms (e.g., Made-in-China, Global Sources)
- Government databases
Inconsistencies in contact details, company names, or business scope are warning signs.
Step 7: Understand Payment Red Flags
Be wary of:
- Requests for full payment upfront
- Payments to personal bank accounts
- Pressure to use non-traceable payment methods
Use secure payment channels like letters of credit (L/C) or escrow services for large transactions.
Step 8: Learn from the Best – Partner with Top Chinese Companies
One of the safest ways to enter the Chinese market is to partner with established, reputable companies. For your reference, we’ve compiled the 2025 list of China’s Top 500 Private Enterprises, which includes leading firms like Huawei, BYD, Alibaba, and JD.com.
📥 Download the full list here:
2025 China Top 500 Private Enterprises (Excel)
This list is a great starting point for identifying credible potential partners.
Final Thoughts: Trust, But Verify
The old Russian proverb rings especially true in international business: “Trust, but verify.” Chinese companies are no different from those in any other country—most are honest, but due diligence is your best defense against the few that aren’t.
By combining official data, third-party reports, and on-ground verification, you can significantly reduce your risks and build profitable, long-term partnerships in China.
If you’re ready to verify a potential partner, we’re here to help. Explore our Company Document Retrieval service to get started with confidence.