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

What are China Abnormal Business Operations?

by Matt Slater October 17, 2017

What are China Abnormal Business Operations?

China Abnormal Business Operations is a status given to Chinese companies by the Administration of Industry and Commerce.

As the name indicates it is issued when the company's operations are irregular and they are not meeting their reporting duties.

The presence of abnormal business operations status may indicate that a Chinese company is experiencing financial difficulties or is poorly managed.

What are China Abnormal Business Operations?

In China "abnormal business operations" (企业经营异常) is a status applied to a company's registration record when they are deemed to have irregular business activities by China's company registration bureau, the Administration of Industry and Commerce (AIC).

The phrase came into being in 2014 following the AIC publication of Order 68, the "Interim Procedures of Business Abnormal Operation Directory Management" (企业经营异常名录管理暂行办法).

This order was issued with the aim of encouraging Chinese companies to perform their reporting obligations such as submitting an annual return and keeping their registration details up-to-date.

4 Types of China Abnormal Business Operations

As defined in Article 4 of Order 68, there are 4 circumstances in which a company is given the status of abnormal business operations:

1. Failure to Submit Annual Return on Time

As is common business practice in other parts of the world, Chinese companies are required to report their business performance on an annual basis.

In China the financial year operates from 1 January to 31 December and companies have until the following June 30 to submit their annual return.

From our experience, this is the most common type of China abnormal business operations, occurring in approximately 3% of companies we verify.

2. Failure to Disclose Other Information on Time

In addition to submitting annual returns, Chinese companies also have to report significant changes such as registered capital contributions and shareholder transfers.

If this is not done within 20 working days the AIC can apply abnormal business operations status.

Despite verifying thousands of companies we have yet to come across a company with this type of abnormal business operations status.

3. Concealing Facts or Falsification

Another sure fire way for a Chinese company to get abnormal business operations status is not being honest with the AIC.

Get caught and "concealing facts or falsification" is the term that can be applied in many situations, such as submitting false financial information.

We have also yet to observe a company with this abnormal business operations status.

4. Unable to be Contacted

If the AIC has tried many time to get in touch with a company, but they can't be tracked down, this will also raise abnormal business operations status.

This might happen if a company has changed office without notifying the AIC.

This status appears in approximately 2% of the companies we verify.

What are the Implications of Abnormal Business Operations Status?

The most obvious outcome of a company having abnormal business operations status is that it could negatively effect their reputation. 

If a company is unable to meet their basic reporting requirements, it suggests that they might have poor management systems in place and/or be running into some financial difficulties. 

Certainly, if a Chinese company can't meet their reporting requirements, you should be having second thoughts about whether or not they are able to handle the production and delivery of your order on time.

Although they might have just run into some unfortunate circumstances, the odds are that abnormal business operations status indicates larger problems at the business.

There may be some bigger implications for companies listed as having China abnormal business operations status. 

It is suggested in this article that it could even result in restrictions on the company's legal representative travelling, the company registering on Alibaba platforms and lead to difficulties acquiring bank loans.

Can China Abnormal Business Operations Status be Removed?

When actions have been taken to address the AIC's concerns, Chinese companies can apply for abnormal business operations status to be removed.

The AIC commits to review such cases within 5 working days of receiving evidence.

Even when an abnormal business operations status has been removed, a historical record of the case is still kept on their file and is generally publicly available.

Does my Supplier have China Abnormal Business Operations Status?

Finding out is easy with our verification reports. A check for Abnormal Business Operations is included in our China Pro Verification and Full Scope Verification services.

Take a look at our verification reports now.

Matt Slater
Matt Slater


Hi there, I'm a British-Australian Engineer and Entrepreneur, based in Brisbane, Australia.

Frustrated by the scarcity of concise, high-quality and timely information about Chinese companies, I founded 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 safely.

Connect with me:
info@chinacheckup.com LinkedIn profile


Related Articles

In Which Provinces are Chinese Companies Concentrated?
In Which Provinces are Chinese Companies Concentrated?

As you’d expect for the world’s most populous nation, there are a huge number of Chinese companies. But where in China are they located? Are there certain provinces with high concentrations of companies? In this article we find out which provinces...

What are China Clearance Documents?
What are China Clearance Documents?

China clearance documents are the standard paperwork you will need to prepare when importing products from a Chinese company. When you order products from China you will want to make sure they arrive on time and without any unexpected delays - bot...

How Many Companies in China?
How Many Companies in China?

Just how many companies in China are there exactly? We’ve been asked this question a few times and decided to go and find out. Given that China has a population of over 1.3 billion we knew that it would be a large number. Happily, answering the qu...

Also in Safer, Better Business in China

7 China Trade Fairs for Sourcing Products
7 China Trade Fairs for Sourcing Products

by Matt Slater November 22, 2017

Sourcing from China involves making a lot of decisions, and one of the best choices you can make is to visit one of the huge China trade fairs.

Visiting a trade show helps you to meet a wide range of suppliers, discuss requirements face-to-face and build the beginnings of a succesful business relationship.

China has an incredible number of exhibitions and they vary in size and scope tremendously. Choosing one of these China trade fairs will help to make the most of your time and expense.

Continue Reading

Countries That Register Company Names in Chinese
Countries That Register Company Names in Chinese

by Matt Slater November 13, 2017

If you saw a list of company names in Chinese it would usually be safe to assume that they are companies from Mainland China, Hong Kong or Taiwan.

But did you know there are some other countries where it is possible to register company names in Chinese?

In recent years some countries have found a new stream of clients from Chinaa process which they help facilitate by allowing companies to be established with an official Chinese name.

Continue Reading

6 Asia Business Airports That Get You Nearer Downtown
6 Asia Business Airports That Get You Nearer Downtown

by Matt Slater October 24, 2017

Read how business travelers are saving time by using Asia business airports to get them closer to downtown.

New airports are usually far from downtown making them difficult to reach during rush hour.

Happily, the rise of Asia business airports is offering new alternatives.

Continue Reading