Checking the Supplier: The Company First, Then the Goods

Two things can go wrong before your money is safe: the company might not be what it claims, and the goods might not be what you ordered. Most buyers only check the second, and only after paying. This page covers both checks, in the order that actually protects you — company first, goods second, money last.

The company check takes about twenty minutes and costs nothing. The goods check costs a few hundred dollars and is the single best-value thing you can buy in this trade.

Start with the public record

Every mainland Chinese company appears in public registration records: founding date, registered capital, legal representative, business scope, and often the number of staff on social insurance. This information is not hidden and you do not need permission to look at it.

Several tools read this data. Tianyancha, Qixinbao and AiQicha are the well-known ones and mostly charge. The official National Enterprise Credit Information Publicity System is free but slow to update and awkward to use. RiskBird sits in between: most of what you need is free and the interface is workable.

Whichever you use, you need the supplier’s real registered Chinese company name. The trading name on their website is often not it. Just ask — a legitimate supplier gives it without hesitation, and hesitation is itself informative.

Company age against claimed experience

This is the fastest lie to catch. A supplier says “we have fifteen years in this field” and the record shows a company registered two years ago.

Sometimes there is a real explanation. Businesses restructure, and an owner may have run an older company before registering a new one. So check the legal representative’s other companies. If an older entity exists under the same person, the experience claim holds up.

If there is no older company and no other entity, treat the claim as false and price the risk accordingly. A company registered eighteen months ago has not been through a downturn, a quality crisis, or a bad year. That does not make it dishonest, but it does mean the stability you are counting on has not been tested.

There is a worse version. If the older company was cancelled after disputes, legal trouble or tax problems, and the same person has registered a fresh entity, you are looking at a reset rather than a track record. Ask directly what happened to the previous company.

The legal representative

The record shows who legally controls the company. Two patterns are worth reacting to.

An elderly registered owner. If the legal representative is in their seventies and clearly not the person you have been dealing with, this is often a relative’s identity used for registration. The practical consequence matters: if the company disappears with your deposit and you sue, you are suing an elderly person with no assets. A judgment you cannot collect is not a remedy.

A representative who appears on many unrelated companies. One person listed across a dozen entities in unrelated industries usually means a registration service rather than a real operator.

Neither pattern is proof of fraud. Both change what happens if things go wrong, which is exactly what you are trying to find out before you pay.

Litigation records

Court records are public and they are the most direct signal available.

Look at the type of case, the amount, and whether the judgment was carried out. A single labour dispute at a factory of two hundred people is normal. Several unpaid-goods cases in two years is a pattern.

What matters most is the combination of an unpaid debt and a company that cannot be reached. If a court announcement records that a company owed money and could not be contacted for service, that company has already demonstrated exactly the behaviour you are worried about. That is not a risk to price in — it is a supplier to exclude.

Also check whether judgments were actually performed. A company that lost a case and paid is more trustworthy than one that lost and did not.

What a bad record looks like

An example makes the pattern concrete. Search a supplier and the record returns a sales contract dispute: another company sued them over roughly 86,000 yuan of unpaid goods, the court could not reach the defendant, and a public announcement was issued scheduling the hearing.

Three separate signals sit in that one entry. They took goods and did not pay. They then could not be contacted. And the matter reached the point of a court announcement rather than being settled quietly.

Any single item might have an explanation. Together they describe a company that stops responding when money is owed — which is precisely the behaviour that would leave your deposit stranded. There is nothing to negotiate here and no price that makes it worthwhile.

Insured employee count

This field is underused and tells you a lot.

If the count is zero, there are two possibilities. Either the company has no real staff and is a shell, or it has staff and is not paying their social insurance.

The second is illegal in China. It is also common, because enforcement is largely complaint-driven. Suppliers who do it cut a real cost, which is part of why their quotes can undercut everyone else’s.

You can still work with such a company, but understand what you are buying. A business that will not cover its own employees’ basic protections is not obviously going to hold the line on your product specification when margins get tight. There is also a tail risk: if the practice is caught, fines or disruption land on the company that is making your goods.

A count of several dozen employees, stable over time, indicates a real operation of the size it claims.

Business scope tells you factory or trader

The registration lists what the company is set up to do, and the wording separates manufacturers from middlemen.

Scope containing manufacturing or production and processing means the company is registered to make things. Scope limited to wholesale, retail, or trade brokerage and agency means it buys and resells.

Neither is disqualifying. A good trading company with stable factory relationships can save you real work, especially across multiple product categories. What you should not accept is a trading company presenting itself as the factory, because then every answer about production capability is second-hand.

The deeper treatment of that distinction, including what to ask once you suspect it, is in the guide to telling a factory from a trading company.

The registered address

Addresses fall into three rough groups and each implies a different scale.

An industrial park or factory zone address is consistent with real production. A commercial office building address suggests a trading or service operation with money to spend on premises. A residential address — “Room 502, Building 3, XX Community” — means a small operation.

Residential registration is not illegal everywhere and is not automatically a problem. Most Chinese apartments run 90 to 150 square metres, which supports perhaps five to twenty people. So it tells you the ceiling on their capacity, and it tells you they are saving money on premises to compete on price.

For a small order where price matters most, that can be a reasonable trade. For a large order with a tight deadline, a supplier who cannot absorb a setback is the wrong choice regardless of quote.

Then check the goods

Company checks tell you who you are dealing with. They say nothing about whether the cartons contain what you ordered. That needs someone physically opening boxes.

A third-party inspection in China typically costs a few hundred dollars a day. Against a container worth twenty or fifty thousand, that is the cheapest insurance available in this trade, and the buyers who skip it are almost always the ones who can least afford the loss.

There are three points where inspection can happen.

Pre-shipment inspection is the default because of when it lands: after production, before you pay the balance. That timing is the entire point.

Inspect before the balance, not after

This single sequencing decision is worth more than the inspection itself.

If you pay the balance and then inspect, you have not inspected — you have found out. The supplier has your money and no reason to prioritise your complaint. If you inspect while still holding the balance, a bad report becomes a negotiation you are winning rather than a loss you are absorbing.

Say it plainly in the terms: final payment falls due after a passed inspection. A supplier confident in their production has no reason to object. One who resists it is telling you something before you have spent anything, which is a cheap warning.

How that fits into the wider structure of deposits and balance triggers is covered in the guide to paying Chinese suppliers, and the mechanics of each trigger point — before shipment, against a bill of lading, or against telex release — are set out in the guide to deposit terms and cargo release.

Keep the inspector independent

The inspector must not be the person who found your supplier.

If your sourcing agent selects the factory, manages production, judges quality and resolves disputes, there is no independent check anywhere. That is not an accusation about any particular agent — it is a structural problem. Nobody should be marking their own work when the sum involved is a container of goods.

Book inspection separately, pay for it yourself, and let the report come to you first. If a supplier or agent objects to an inspector you appoint, that objection is more informative than any report would have been.

What to look for when choosing between service providers is covered in the comparison of sourcing companies in China.

Writing a brief the inspector can use

Inspection reports disappoint when the brief was vague. “Check quality” produces a report saying quality was checked.

Give measurable things. Exact dimensions with tolerances. Specific colour references rather than “dark blue”. The function to test and how many units to test it on. What the carton and label must say. Which defects you consider critical rather than cosmetic.

Send an approved sample to the inspector where possible. A physical reference settles arguments that photographs cannot.

And state the sampling standard, because “we checked a few” is not a result. Most inspections use AQL sampling, which sets how many units to pull from a batch and how many faults are acceptable. Agree the level before the visit rather than debating it after.

The order these checks go in

Sequence matters as much as the checks themselves.

Run the company check before your first payment. It costs nothing and it is the only stage where walking away is free.

Run the inspection after production, before the balance. Both parts of that are load-bearing.

Get the bank details confirmed by voice, on a number you already had, before every payment where the details are new or changed.

None of this is complicated. It is just done in the wrong order by most buyers, which is why the losses cluster where they do.

Common questions

The short version

Check the company before the first payment, check the goods before the balance, and confirm bank details by voice every time they change.

The company check is free. The inspection costs a few hundred dollars. Between them they prevent nearly every expensive surprise in this business, and both have to happen before the money is gone rather than after.