Opinions, knowledge and resources from China Checkup's expert contributors

How Reliable is Alibaba Gold Supplier?

by Matt Slater January 24, 2014

How Reliable is Alibaba Gold Supplier

[Article updated 16 December 2014]

The global B2B sourcing platform Alibaba basically has two categories of sellers: Free and Gold. Free sellers usually pay no fees and undergo no checks before they are permitted to use the platform, so no-one in their right mind would source from them.

Gold suppliers pay a relatively substantial annual membership fee, and undergo a verification process that Alibaba calls 'Onsite Check'. This creates a sense of trustworthiness, but how reliable is the system in practice?

Alibaba Gold Supplier

Alibaba Gold Supplier is a large source of income for Alibaba. Suppliers wishing to be granted the icon on their profiles must pay an annual fee to Alibaba, in the region of 10,000 USD. That’s really all that the Gold Supplier status shows: that the supplier is paying money to Alibaba in order to have a logo placed on their profile. If that reduces the legitimacy of  Gold status in your eyes, then you likely have a healthy level of scepticism. Alibaba Gold Supplier is arguably more about money exchanging hands than it is about safeguarding the interests of buyers.

Having said that, this system does at least eliminate all of the lowest effort fraudsters and scammers. Because of Alibaba Gold Supplier, there is a basic selection pressure on suppliers to stump up some capital before anyone will take them seriously. However, you could also interpret this as meaning that the fraudsters who remain are the most dedicated ones.

Onsite Check

It would be wrong to claim that absolutely no checking or verification goes on at all for Alibaba Gold Supplier status. Gold status includes a service called ‘Onsite Check’, which involves someone going to the supplier’s production location and checking that it actually exists. That is the full extent of Onsite Check and Alibaba is upfront about this:

"The supplier’s company premises is checked by Alibaba.com’s staff to ensure onsite operations exist there." [source]

Despite this, we have come across clients who mistakenly believed that Onsite Check would in some way guarantee the quality of the deal, goods or company. In fact, Onsite Check merely shows that a minimum of something vaguely resembling a production site does exist at the location the supplier claims it does. It says nothing about how that supplier conducts it operations or how it interacts with clients.

 

Verify a China Company?

Order online & get peace of mind

Mainland China Company Verification Reports
Cost: from $129 USD
Turnaround: from 1 working day



 

As well as checking that the supplier's location exists, Alibaba also outsources confirmation of business registration record information for each Alibaba Gold Supplier, and this information is displayed on their profile. However, very little information is disclosed about who carried out the verification, using what methodology and when. We often find that the information displayed has since become out of date. Further, there have been serious issues in the past with these anti-fraud verifications becoming subject to fraud themselves (see section “The 2011 Alibaba fraud scandal” below).

Other Verifications

In addition to Onsite Check you may see the following verification services on Alibaba’s platform:

A&V Check

A&V Check is a verification carried out on Alibaba Gold Suppliers located outside of Mainland China, Hong Kong or Taiwan. Alibaba claims that it is carried out by a third-party but there is often no evidence presented on who the third party is. From this link it seems Alibaba themselves aren’t very clear what A&V Check stands for.

Supplier Assessment

This optional service is available to China-based Alibaba Gold Supplier customers and includes a verification by a well-known company such as TÜV Rheinland or Bureau Veritas. Alibaba Gold Suppliers who have chosen to pay for this option have downloadable assessment reports available on their Alibaba profile page.

The 2011 Alibaba Fraud Scandal

In February 2011, two senior executives at Alibaba Group resigned after the revelation of large-scale fraud surrounding the Alibaba Gold Supplier scheme. It came to light that around 100 members of Alibaba’s 5000-strong sales team where taking kickbacks in exchange for allowing fraudulent suppliers to skip the already meagre verification process. Due to this, large numbers of very low-quality or outright fraudulent suppliers were able to get the Alibaba Gold Supplier badge on their profiles.

That saga is now over (Alibaba blacklisted hundreds of suppliers), but it remains up to buyers to consider how much trust they want to place in the Alibaba Gold Supplier system in the future. Ultimately, the best policy is always to have the important information independently verified by a third party with no interest in the outcome of the verification. This way you can ensure that you’re seeing reliable information that you can make an informed decision with. Once a supplier has passed these basic checks, the next step is to arrange audits and independent visits. This process is up to the buyer and shouldn’t be left to organisations such as Alibaba who have a strong interest in the outcome.

To Verify an Alibaba Gold Supplier

No matter gold supplier or not, our company verification service can help you verify their company in a quick and easy way.




Matt Slater
Matt Slater

Author

Hi there, I'm Matt, the founder of China Checkup. Originally from the UK, I am now based in Brisbane, Australia.

Frustrated by the scarcity of concise, high-quality and timely information about Chinese companies, I setup China Checkup whilst living in Shanghai in 2013.

My team are proud that China Checkup's company verification reports have now helped thousands of clients from all corners of the world to do business in China more safely.

  

 


Related Articles

Make These 4 Checks Before Sending a China T/T Payment
Make These 4 Checks Before Sending a China T/T Payment
One of the most common ways to pay a Chinese supplier is to make a China T/T Payment, but it is not a method that comes without risk. We regularly see cases where Chinese suppliers request payments to individual accounts, third parties, offshore acco
Read More
List of Countries with Freight Trains from China
List of Countries with Freight Trains from China
In recent years freight trains from China have been capturing newspaper headlines by arriving in more and more countries. Perhaps there is no more striking example of this then when the first China to Spain cargo train returned to Yiwu having covered
Read More
China Phone Codes - An Introduction
China Phone Codes - An Introduction
With multiple international codes, hundreds of area codes and numbers of different lengths, making sense of China phone codes can be challenging. Determining if a Chinese phone number is a mobile or a landline, and knowing where in the country it is
Read More


Also in Safer, Better Business in China

Chinese Company Registration Status Terms Glossary
Chinese Company Registration Status Terms Glossary

by Matt Slater March 27, 2019

This glossary identifies the different Chinese company registration status terms that appear on official Mainland China company records.

If you are trying to find out if a Chinese company's registration has been revoked, cancelled or rescinded we hope the terms in this glossary will be useful to you.

Keep reading to find out about the various Chinese terms used to describe a company's registration status and get our English translations.

Continue Reading

Make These 4 Checks Before Sending a China T/T Payment
Make These 4 Checks Before Sending a China T/T Payment

by Matt Slater March 20, 2019

One of the most common ways to pay a Chinese supplier is to make a China T/T Payment, but it is not a method that comes without risk.

We regularly see cases where Chinese suppliers request payments to individual accounts, third parties, offshore accounts and offshore entities, rather than to their own Mainland Chinese corporate bank accounts.

Before sending a China T/T payment, pause and take a moment to make these 4 simple checks - they will help you ensure your payment is really going to the correct Mainland China entity.

Continue Reading

List of Countries with Freight Trains from China
List of Countries with Freight Trains from China

by Matt Slater February 25, 2019

In recent years freight trains from China have been capturing newspaper headlines by arriving in more and more countries.

Perhaps there is no more striking example of this then when the first China to Spain cargo train returned to Yiwu having covered a world record 16,156-mile round trip in 2015.

Read this article to learn about China's push for international rail cargo and find our which countries have already received freight trains from China.

Continue Reading