How to vet a Chinese supplier before the first payment

Why the check comes before the money

In foreign trade the money and the goods travel towards each other with weeks in between. First the deposit — its share is fixed in the contract — then production, then loading, then the journey to your warehouse. By the time you first see the goods, the payment has passed through several banks and is sitting with the supplier.

That gives you a simple rule. A check is worth what its absence would cost, and it is done before the transfer. Afterwards it is not a check but an investigation: the money is abroad, and you have nothing left to hold.

Step one: establish that the company exists

Every company registered in mainland China holds a business licence — 营业执照. It is the single document proving the company legally exists, and a Chinese counterparty treats a request for it as routine. It carries the registered name in Chinese, an eighteen-character registration number (the unified social credit code), the date of incorporation, the registered capital, the legal representative, the registered address and the activities the company is permitted to carry out.

Ask for a scan and read it line by line.

1. The name in ChineseThis is the name that counts. The English name in the email signature has no legal standing and can be anything at all — the contract and the payment details have to carry the name from the licence.
2. The date of incorporationA company registered three months ago cannot have the decade of manufacturing behind it that the presentation describes.
3. The registered capitalAn indirect signal, but a useful one: production ties up money in premises and machinery. Put the declared figure next to the scale of the plant you are being told about and see whether the two belong to the same story.
4. The permitted activitiesThe licence sets out what the company may do, and it separates manufacturing (生产) from wholesale and trade (批发, 贸易). If manufacturing is absent and you are being promised an in-house factory, that is a contradiction, and it needs an explanation.
5. The registered addressWrite it down. You will need it at step three, when you compare it with the address of the workshop.

Scans get forged. An image somebody sent you is a reason to keep checking, not the result of the check: the data has to be matched against the Chinese state registers — and those are in Chinese.

Step two: check the right to export

A business licence lets a Chinese company trade inside China. Selling abroad in its own name is a separate step: import and export has to sit inside the company’s business scope, the company has to be recorded with customs as a consignor of export goods, and it has to be registered with the tax authorities before a declaration can be filed. A manufacturer that has only ever sold to Chinese wholesalers has had no reason to do either, so a real factory can turn out to have no export rights at all.

For you this is not paperwork trivia. Without that registration the company cannot file the export declaration under its own name. The goods then have to move as an agency export, filed by a company that does hold the right. Since October 2025 that filing has to disclose who actually produced and sold the goods, so shipping on somebody else’s documents no longer works. Your import file has to hang together — contract, invoice, export declaration, transport documents, all naming parties that can be tied to one another — and a gap there is expensive to explain at the border.

Buying through a company that holds export rights is a normal arrangement, not a trap. It simply has to be designed into the deal from the start, rather than discovered after the deposit has gone.

Step three: work out whether you are talking to a factory

A trading company is not worse than a factory. Some hold stock, some handle the export documents a workshop cannot, some are simply easier to deal with in English. The problem is a different one: paying a middleman’s margin while believing you are buying at the factory price. The same goods can be quoted at two very different levels, and the difference is the margin you cannot see.

These are the points that separate the two, and you can test every one of them from your desk:

• The product rangeA factory makes a narrow group of things. A catalogue running from furniture through electronics to textiles belongs to a trading company, whatever the homepage says.
• The answer to a technical questionAsk about the material grade, the tolerances, the tooling, the minimum quantity for a change to the design. A factory answers from its own shop floor; a middleman goes away to check with colleagues.
• The address on the licence and the address of the workshopA manufacturer has both, and the two should lead to each other: same company, an industrial district, not a floor in a city-centre tower. Ask for the plant address, put both into a map, and ask what explains the distance between them if there is one.
• The names on the documentsThe name on the business licence, on the packaging, on the product certificates and on the bank account should be one name. A mismatch is worth running down — it tells you who makes the goods and who receives the money.
• Willingness to show you the shop floorA factory walks you through the shop floor, on site or on a live video call, and points the camera where you ask it to. A refusal, whatever reason is given for it, is a finding in itself.

Step four: order the sample so that it means something

A sample proves that the company can make something like your product. It does not prove that the batch will match it, and that gap is where the most painful losses sit.

For a sample to mean anything, the requirements go in writing before it is made: the material, the weight, what is in the box, the marking, the packaging. The approved sample is then written into the contract as the reference, and the batch is compared against it at the factory warehouse before loading — not on arrival at yours, once the goods have crossed two borders.

A supplier happy to send a sample within the hour but unwilling to make one to your specification is showing you a shop window, not a production line.

Step five: verify the bank details before the transfer

Money is not lost only at a fraudulent factory. There is a separate route: substituted payment details. The method is simple. One side’s mailbox is compromised, and at the right moment an email arrives saying the bank has changed, please pay this account instead. It looks entirely ordinary — same thread, same signature, same turns of phrase as every message before it.

The defence here is procedural rather than technical. Bank details come from the signed contract, not from an email. Any change to them is confirmed on a different channel: by voice, with a person you have already spoken to, on a number you had before the change was announced. And the beneficiary name has to match the company in the contract. A payment to an individual “as a favour to the factory” is not a shortcut — it is money gone with nothing to claim against.

An account held outside mainland China, in Hong Kong for instance, is not a warning sign in itself. It does change who receives the money and under which law, so it belongs in the contract, agreed in advance rather than announced by email the week the payment falls due.

Where checking on your own stops working

Everything above you can do yourself. It costs time and attention, and nothing else. Past that point come the things that cannot be established from a laptop in another country.

The first is language. The state registers, the court records and the tax history exist in Chinese, and machine translation is at its weakest exactly where the wording is legal. The second is presence: that the workshop exists and is running, that the machines are the ones you were shown, that the boxes in the warehouse hold your batch and not somebody else’s — that is established by standing there. The third is business context: how the company is regarded in its own industry, what it has been sued over, whether it has quietly changed hands. None of that appears in an email thread.

That is the line at which a check is bought rather than done. The first four steps are worth taking in any case: they bring the contradictions out before the conversation reaches money.