Top tips to verify Chinese companies and avoid scams

You can face real risks when working with companies in China. Many scams try to trick buyers from other countries. In 2022, the China Securities Regulatory Commission found 203 cases of information disclosure fraud by Chinese companies. Out of these, 94 cases involved financial fraud. Some scams were very big. One scam was a $12.3 million fake device scheme. Another was a $3.5 million money laundering case. To protect yourself, it’s important to verify Chinese company information before sending money or signing contracts. Careful checks help you avoid scams and keep your business safe.

Why Verification Is Essential

Common Risks

There are many risks when you work with Chinese companies. The U.S. and China do not always get along. Sometimes, new tariffs or rules appear quickly. These changes can hurt your business. You might have trouble getting supplies. You could lose access to some markets. Reports say about 67% of Chinese buyers may boycott foreign companies. This number is growing fast because people feel more loyal to their country. If you work with a Chinese company, you might lose customers. You could also face angry reactions from the public.

Legal problems can also happen. Many Chinese companies use Variable Interest Entities (VIEs). These structures help them avoid foreign investment rules. If you invest in a VIE, you do not own or control the company. You could lose money if contracts stop working. You could also lose money if managers do not act in your favor. Corruption is a problem too. You may be asked for bribes. Courts may treat you unfairly. Local governments can affect judges. You may not get fair legal help. Delays and favoritism for local companies can slow your business. These things can make your costs go up.

Tip: Always check the company’s legal structure. Ask for clear papers before you make any deals.

Types of Scams

You need to watch out for several scams when working with Chinese companies:

Fake companies pretend to be real suppliers. They use old or fake business licenses. After you pay, they disappear.
Some suppliers ask for big payments before sending goods. Once they get your money, they stop talking and never send anything.
Scammers sometimes send emails with new bank details. If you pay to the wrong account, you lose your money.
You might get poor quality or wrong goods. Some buyers have even received bags of sand instead of products.
The “Big Order Scam” tricks you into visiting China for fake deals. You spend money on travel and lose time and cash when the partner disappears.
During the pandemic, many suppliers sent fake certificates or bad products. This made checking quality even more important.

You can avoid these scams by checking company details. Make sure to check product quality. Use safe ways to pay.

Verify Chinese Company

Checking a Chinese company before you do business can help you stay safe from scams and big mistakes. You can use some easy steps to see if a company is real and safe.

Check Business License

First, look at the company’s business license. Every legal company in China must have one. Go to the National Enterprise Credit Information Publicity System (NECIPS) at www.gsxt.gov.cn. This website lets you search by company name or Unified Social Credit Code (USCC). You can see if the company is open, what it does, and other key facts. If you want to check the company’s website, use the BEIAN system at beian.miit.gov.cn to look for the ICP license.

A real Chinese business license has many things on it. Here is what you should find:

Component	Description
Unified Social Credit Code (USCC)	Unique 18-digit identifier for all official dealings.
Company Name	Official registered name in Chinese.
Legal Representative	Person who can act for the company.
Registered Capital	Money promised by owners.
Date of Establishment	When the company started.
Business Term	How long the company can operate.
Registered Address	Official address.
Business Scope	List of legal business activities.
Company Type	For example, LLC or WFOE.
Registration Authority & Status	Shows if the company is active, cancelled, or revoked.
Official Seal	Stamp with special marks to prevent fakes.

Tip: If the license is missing details or looks strange, or if the company will not show it, do not trust them.

Confirm Physical Address

You need to make sure the company has a real office or factory. Some scams use fake addresses or rent small rooms just for paperwork. To check the address, do these things:

Look up the address on NECIPS or the business license.
Ask the company for papers that show the address.
Use online maps like Google Maps or Baidu Maps to see if the address is real.
Ask for a live video tour or a video call at the company’s place.
If you can, hire someone local to visit the address.
Search for the address on business sites like Tianyancha or Qichacha.

Watch for these warning signs:

The company cannot prove it has a real office or factory.
The address on the license is not the real place.
The address is used by many companies or shell companies.
The address is linked to a cancelled or stopped license.

Note: If a company will not prove its address or makes excuses, do not trust them.

Review Financial Standing

You want to work with a company that is strong and can do what it says. In China, most companies do not share their financial statements with everyone. This is normal and does not mean they are hiding something. Still, you can ask for audited financial reports or bank letters. You can also check the company’s registered capital and how long it has been open.

Some good places to check money facts are:

Qichacha and Tianyancha for company registration, credit ratings, and financial reports.
The State Administration for Market Regulation (SAMR) for tax and financial filings.
Manual Company Verification Reports for more facts about how the company works and its staff.

If the company will not share any money facts or gives unclear answers, be careful.

Research Legal History

Checking a company’s legal history helps you find risks. You can see if the company has been in court or owes money. Start by searching China Judgements Online, which has lots of court records. You can also use China Court Trial Online to see trial videos and more facts.

Steps to check legal history:

Search for the company on China Judgements Online.
Look for any lawsuits, unpaid debts, or court judgments.
Ask the company for proof of a clean legal record.
Talk to a legal expert if you find anything odd.
Make sure your contract has protection rules, like NNN, and register your trademarks in China.

Tip: If you find lots of lawsuits or legal problems, do not work with that company.

By following these steps, you can check Chinese company details and lower your risk of scams. Careful checks help you build trust and keep your business safe.

Identify Real Manufacturers

Factory vs. Middleman

It is important to know who you are working with. Some companies make products in their own factories. Others buy from real manufacturers and sell to you. This changes the price, quality, and how much control you have.

Here is a table that shows how they are different:

Aspect	Real Manufacturer	Trading Company
Business License	Includes production/manufacturing scope	Mainly trade or import/export scope
Production Facilities	Has operational production lines	Usually no production lines, office only
Export Records	Direct export records available	Often lacks direct export records
Pricing and MOQ	Competitive pricing, higher minimum order quantity	Higher prices, accepts smaller orders
Customization Capabilities	Offers OEM/ODM, flexible customization	Limited or no customization
Certifications	Holds factory certifications (ISO 9001, CE, FDA)	Usually lacks factory certifications
Location	Located in industrial zones or manufacturing hubs	Offices in major cities, not in factory zones

Tip: Always ask for the business license. Check if it says the company can manufacture. If they cannot show a real factory or production line, they might be a middleman.

Verify Production Capacity

You need to know if the company can fill your order. Some companies say they are big, but they are not. China makes a lot of things, like steel and cement. Some factories are huge, but others are very small.

Here are steps to check if a company can make enough products:

Ask for photos or videos of the factory and workers.
Visit the factory or pay someone to check it for you.
Look at audit reports about the machines, staff, and what they make.
Talk to the managers about how they handle big orders.
See if the company has ISO certificates or test reports.
Use QR codes or online numbers to check documents.
Watch out for missing details or unclear answers.

If a company cannot show proof of its production, you could get bad products or wait a long time. Careful checks help you pick a good partner and avoid problems.

Cross-Reference Information

Online Presence

You can find out a lot about a company online. Start by looking for the company in official business lists and government sites. These include NECIPS, BBB, and local Chambers of Commerce. Use KYB tools to check company details with trusted sources. This helps you make sure the company is registered and has the right licenses.

Here are steps to check a company’s online presence:

Search for the company’s website. Check if it looks professional and has clear contact details. Make sure the information is current.
Look up the company’s address on Google Maps. See if it matches a real business place.
Check the company’s social media pages. Regular posts show the company is active.
Find the company and its leaders on LinkedIn. Real workers and posts help build trust.
Read what customers say on Google Reviews and Trustpilot.
Watch for warning signs like bad websites, missing contact info, or no social media.

Tip: If you see fake websites or strange reviews, be careful.

Trade Shows and Memberships

Trade shows and business groups can show if a company is real. Real companies often go to trade fairs and join business groups. You can check if a company has been to big trade shows like the Canton Fair or is part of industry groups.

Go to trade show websites to see who is listed as an exhibitor.
Ask the company to show proof they went to trade shows before.
Look for badges or certificates from business groups on the company’s website.

If a company goes to trade shows and joins groups, it is more likely to be real and serious.

Reviews and Testimonials

Customer reviews and testimonials tell you about a company’s reputation. Check feedback on sites like Google, Yelp, and Trustpilot. Read both good and bad reviews to get a fair view. Look for patterns in what people complain about or praise.

Good reviews often talk about certain products or services.
Watch out for fake reviews that sound the same or come all at once.
Ask the company for references from old customers.

Note: Honest reviews and real testimonials help you know if you can trust the company. Always check feedback from more than one place before you decide.

Secure Transactions

Safe Payment Methods

You must keep your money safe when working with Chinese companies. Do not pay the full amount at the start. Use safe payment methods to lower your risk. Escrow services keep your money until you get your goods. Letters of credit from banks protect both sides. These ways make sure you pay only when the supplier does what you agreed.

Tip: Never send money by wire transfer to a personal account. Always use business bank accounts in mainland China or Hong Kong.

Here are some safe ways to pay:

Use escrow services for your first deal.
Pick letters of credit for big orders.
Pay a small deposit, then pay the rest after checking the goods.
Do not use cash, Western Union, or cryptocurrency.

Double-Check Payment Details

Always check payment details before you send money. Scammers may change bank details to steal your money. You can spot fake suppliers by checking their business records and legal representatives. Make sure the factory is real. Visit the company or use a third-party inspection to confirm.

Steps to verify payment details:

Check the supplier’s business license and financial health.
Only send money to real business bank accounts.
Ask for product samples before you pay a lot.
Visit the factory or office if you can.
Use third-party inspection services.
Work with sourcing agents who know the area.
Talk clearly about payment terms.
Do not pay near big Chinese holidays.

If payment details change, call the supplier using a trusted phone number.

Use Formal Contracts

A strong contract keeps you safe. Make sure both sides have the right to sign. Use the full Chinese legal name and the legal representative’s name in the contract. The contract should list the price, quantity, quality, and deadlines. Write the contract in both English and Chinese if needed.

Key points for a good contract:

Use simple words and do not use unclear terms.
Add the company chop (seal) to make it legal.
Say that Chinese law and courts will be used.
Make sure everyone agrees without being forced.

Note: Always ask a local legal expert to check your contract. This step helps you avoid mistakes and keeps your business safe.

Due Diligence Steps

Request References

You should always ask for references before trusting a Chinese company. Good companies can show proof of their good reputation. Start by asking for credit reports from trusted agencies and bank references. These reports show if the company pays bills on time. They also show if the company handles money well. Ask for records about lawsuits to see if there are legal problems. You can also check business licenses and tax certificates.

Talk to past customers, especially those from your country. Ask them about product quality, delivery, and how the company communicates. Try to find suppliers with repeat customers. This means they have earned trust over time.

International trade organizations suggest these steps:

Check the company’s registered Chinese name and business number.
Make sure the person you talk to has the right to speak for the company.
Look at financial information and who owns the company.
Get references from suppliers, customers, and even competitors.
Check if there are any legal disputes or compliance problems.

Order Samples

Ordering samples helps you check product quality and if the supplier is honest. You can ask for a small sample order before buying a lot. When you get the sample, see if it matches what you need. Use a trusted delivery service like SF Express to check the supplier’s address and if they are real.

Samples let you test the product yourself.
Getting a sample shows the supplier is real.
You can find problems early and avoid bigger risks.

If the supplier will not send samples or makes excuses, be careful.

Third-Party Verification

Trusted third-party services can help you check a company’s background. These services look at business licenses, legal records, and certifications. They also visit factories and check who owns the company. You can use services like China Checkup, Chinaimportal, and Verify China. These groups help importers, lawyers, and sourcing agents find safe partners.

Service Name	Key Features	Users
China Checkup	Legal checks, site visits, certificate checks	Importers, compliance teams
Chinaimportal	License checks, product audits, bank details	US, EU, AU importers
Verify China	Credit reports, annual reports, patent info	Risk analysts, businesses

Third-party verification gives you extra confidence. You can avoid scams and pick partners with a strong record.

If You Suspect a Scam

Reporting to Authorities

If you think a scam is happening, act fast. First, collect all your records. Save emails, contracts, payment slips, and messages with the company. Keeping these things helps you show proof.

You should tell the right authorities about the scam. Here are some important groups to contact:

The Ministry of Public Security in China deals with business fraud.
INTERPOL’s National Central Bureau in Beijing works with police worldwide.
INTERPOL’s General Secretariat helps with global crime cases.
Regional police groups like AFRIPOL, ASEANAPOL, GCCPOL, and Europol help if the scam is in more than one country.
National police forces such as the Hong Kong Police Force’s Anti-Deception Coordination Centre and Singapore Police Force’s Anti-Scam Centre also fight business fraud.

You can also ask the Chinese Embassy or your local Chamber of Commerce for help. If you paid with PayPal or Western Union, file a complaint there. These steps help you get support and may stop the scammer from tricking others.

Tip: Always write down every step you take. This makes it easier to explain your case to the authorities.

Seeking Legal Help

If telling the authorities does not fix things, you may need legal help. Many foreign businesses find legal cases in China slow and expensive. You should know what you can do:

Try to talk with the company first. In China, people often try to solve problems by talking.
If that does not work, try mediation or arbitration. Arbitration in places like Hong Kong or Singapore is usually faster and easier than court.
If you must go to court, be ready for a long wait. Chinese courts can take 12 to 24 months or even longer.
Collect all your proof, like contracts, emails, and payment slips. You may need certified translations.
Legal actions can include asking for your money back, ending the contract, or getting penalty fees.

Note: Stopping scams before they happen is best. Always use strong contracts, check suppliers well, and do not pay large amounts upfront. Getting your money back is possible but can take a long time and is not always sure.

You can keep your business safe by doing some simple things. Always check Chinese company details before you work with them. Make sure their license is real and the address is correct. Look at their money and legal records. Use safe ways to pay and sign proper contracts. Ask for references from other people. Order samples to test the products. If you pay attention and do your homework, you can avoid scams. Careful checking helps you find good partners and stay safe.