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

Are you Dealing with a China Trading Company or a Factory?

by Matt Slater September 30, 2013

China Trading Company or a Factory

When you’re buying products from a Chinese company, a common issue is whether you’re dealing directly with a China trading company or with a factory.

This is because many such trading companies in China will be ‘unclear’ at best regarding the issue of who they actually are.

Despite their best attempts to disguise the truth, it is actually quite simple to find out if a factory is, in fact, a China trading company.

What’s the Difference Between a China Trading Company and a Factory?

It can be quite challenging to determine if your supplier is a China trading company or a manufacturer. Some will even blatantly pretend to be a manufacturer when they are not.

This has some implications when you’re trying to source from them:

  • It is much harder to assess the factory that will actually be manufacturing your product
  • It is harder to hold the trading company liable in the case of defective products
  • It may be easier for the trading company to ‘disappear’ or otherwise evade communication

These are rare scenarios, but as with all due diligence it is well worth making sure that nothing is amiss in order to reduce your exposure to risk.

So how can you determine whether you’re communicating with a China trading company or an actual Chinese manufacturer?

Viewing the Company’s Business License and Registration Records

As always, the first step is to ask for a copy of the company’s business license. This is always the starting point, and we make this point frequently here. The business license will tell you explicitly what kind of company you’re dealing with.

Once you’ve got a copy of the business license, you’ll need to look at the ‘Business Scope’ label (经营范围 – Jīngyíng Fànwéi).

The 'Business Scope' on the business license will tell you (in Chinese, of course) what category of company you’re dealing with by listing all of the products or services it is officially permitted to offer.

See China Checkup’s glossary of common business scope terms for some examples of the key business scope text you can identify from a Chinese business license.

What if you don’t want to let the company know that you’re researching them, though? Or, what if you don’t feel comfortable trusting the business license document they’ve shown you? In either case, the next step is to view the company’s registration record. Since 2006, these have been made available online to the general public by the AIC (Industrial and Commercial Administration Bureau, 工商行政管理局, Gōngshāng Xíngzhèng Guǎnlǐjú) for each province of China.

You need to identify which province the company is registered in, find the AIC website for that province, and then use the company’s registered Chinese name to search for their record. You can then use this public record to corroborate the information shown on the business license, or to check a company’s category (trading company or manufacturer) without them knowing.

Following this process will identify if they are indeed a China trading company. But note that this process must be done in Chinese, because Chinese is the only official language of mainland China.

 

Verify a China Company?

Order online & get peace of mind

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



 

If you’d like a convenient, streamlined way to have this process completed for you, you might consider a China Checkup company verification report. We use our expertise and knowledge to research a Chinese company you’re interested in, including translating and explaining their public registration record, plus other information you’ll find useful in assessing them.

Further Reading




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

Liquid error (relatedblogs line 277): internal
Top 5 Cities for China to Europe Freight Trains
With the high cost of sending freight by air, and the slow speed of sea freight, Chinese exporters are increasingly utilizing China to Europe freight trains as a means of sending their produce west. As might be expected, the majority of these trains depart from cities located far from China's coastl
Read More
Chinese Company Registration Status Terms Glossary
Chinese Company Registration Status Terms Glossary
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
Read More
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 accounts and offshore entities, rather than to their o
Read More


Also in Safer, Better Business in China

10 Most Popular China Sharing Services
10 Most Popular China Sharing Services

by Matt Slater August 13, 2019

Visit any Chinese city these days and you are bound to see rows and rows of brightly colored shared bicycles - they are the most visible of the many China sharing services.

Whilst shared bicycles might be the most well known, they are far from the only popular shared service in China though.

Keep reading to learn more about how shared bicycles and some of the other popular China sharing services work, including battery packs, sports equipment and cars!

Continue Reading

China ISO 45001 Certificate - An Introduction
China ISO 45001 Certificate - An Introduction

by Matt Slater June 14, 2019

Have you received a China ISO 45001 certificate and wondered what it is, if it is real and how to check it?

Replacing the previous standard OHSAS 18001 in 2018, this new international standard specifies the requirements for occupational health and safety.

The uptake of certification to this standard in China has been quick and many Chinese organizations are providing their clients with copies of their China ISO 45001 certificate. Learn more about it here.

Continue Reading

8 Most Useful China Map Websites
8 Most Useful China Map Websites

by Matt Slater May 21, 2019

Whether you are planning a trip to China, researching a specific location, or trying to figure out how bad the Beijing rush hour is, there are plenty of good reasons to use China map websites.

Although most international map websites cover China, these websites face various restrictions which mean they can't provide a service as in-depth as their Chinese counterparts, so it is a good idea to know your options.

In this article we introduce the 8 most useful China map websites, including both international services available in your language, and some impressive domestic websites only available in Chinese.

Continue Reading