Due Diligence
7
January 2015

3 Ways Suppliers Fake a Chinese Business License

Through the process of carrying out company verifications China Checkup receives a wide variety of documentation from our clients. Such documents include invoices, contracts, taxation documents, ISO certificates and business cards; however the most commonly received and also the most frequently forged is the Chinese business license.

In this article we explain some of the reasons for this and reveal how and why suppliers forge their Chinese business license.

What is a Chinese Business License?

Simply put, all companies registered in Mainland China must have a Chinese business license to legally operate in the country.

To learn more about the license you can read our article "China Business License: An Introduction".

The design of the Chinese business license varies slightly from province to province and has undergone many changes in recent years, however nearly always includes the following key information:

  • Registration Number
  • Official Company Name
  • Company Type
  • Registered Address
  • Legal Representative
  • Registered Capital
  • Date of Establishment
  • License Expiry Date
  • Business Scope
  • Registration Bureau

Why Do Suppliers Forge Their Chinese Business License?

There are many reasons why a supplier may fake their Chinese business license, but typically it is because they are either not officially registered or want to mislead potential customers about some details of their company.

Another scenario is that the document is being supplied as part of a scam in order to make an outright fraudulent activity appear legitimate.

As the Chinese business license is written entirely in Chinese characters many Chinese companies would assume that it would be difficult for foreign customers to verify.
Fortunately, users of our company verification services find this not to be the case.

How a Chinese Business License is Faked

As documents are nearly always sent electronically these days, making a forgery is as simple as finding someone with some basic photo editing skills, so it is important that you check Chinese certificates are legitimate.

Here at China Checkup we regularly encounter and have categorised 3 different types of forged Chinese business license, namely:

1. Selective Adjustments

The company is a genuinely registered business and has a Chinese business license, but has something they want to hide.

This usually applies to the numbers given on the license, such as those used for “Date of Establishment” or “Registered Capital”. Knowing that foreign customers will be able to read the numbers on the license some adjustments are made to present the company in a better light.

Typical examples might be as follows:

  • Adjusting the Date of Establishment year from 2014 to 2004 to make the company appear to have a longer history
  • Adding zeros to the Registered Capital from RMB 10,000 to RMB 10,000,000

2. Outright Forgery

A supposed ‘company’ wants to appear to be a legitimate business registered in Mainland China, even though they are either registered elsewhere or not at all.

In such cases we find that either some or all of the key details have been modified in order to pose as a legitimate company.

Examples we have seen of this have included:

  • Using another company’s Chinese business license but modifying the official Chinese company name
  • A complete forgery of a Chinese business license using a blank template
  • Fictional Chinese business licenses prepared using templates that contain English text

3. Assuming the Identity of a Real Company

We have also seen cases where a customer has been provided with a genuine Chinese business license, but just not for the ‘company’ they think they are dealing with.

This might happen if the ‘company’ simply believes you won’t be able to read or verify the document. In more extreme cases however, it may be a sophisticated scam seeking to assume the identify of a reputable business.

Because Chinese companies are always registered with a Chinese name but for international trade use an English name, these can be difficult cases to deal with as on initial review it appears that the company is registered.

Out of Date Chinese Business License

This article wouldn’t be complete without mentioning that sometimes we receive a Chinese business license that upon verification is found not to be 100% accurate, but we don’t judge to be forged.

When this occurs it can just be the case that the company has carelessly provided our customer with an old version of their business license, or that the hard copy of their Chinese business license hasn’t yet been updated.

It is quite normal that during a company’s lifetime they may need to make changes to their registration, such as appointing a new Legal Representative or extending the Business Scope.

However, we strongly suggest our clients to verify the Chinese company’s most up to date business registration.

Some changes might look minor but knowing that a company’s Legal Representative has been replaced, Registered Capital reduced or Business Scope changed will empower you to ask the right questions.

Company Verification Services

Whether you have a copy of their Chinese business license or not, China Checkup’s highly skilled team of researchers are able to help you efficiently and accurately verify Chinese companies.

We are experienced in identifying the issues outlined in this article and complete each of our verification reports with great care and attention to detail.

Further reading