Is This Chinese Company Real or Not?

by Matt Slater September 30, 2013

Is This Chinese Company Real or Not?

When you’re doing business with a company in China, one of your most basic concerns may be “is this Chinese company real or not?”.

In Mainland China all companies must be registered with the authorities and hold a valid business license. This is how we define whether or not a company is “real”.

“Is this Chinese company real or not?” might seem like an obvious question, but unfortunately we frequently prepare Company Verification Services for our clients that come back negative on this most basic of requirement.

Cause for Concern

Worrying whether or not a Chinese company is real is a very legitimate concern, for a number of reasons:

  • Just like any other country, China has no shortage of scammers and fraudsters
  • Some Chinese companies continue doing business despite having their business license revoked
  • Some Chinese companies have never had a business license at all
  • Some Chinese companies pretend to be suppliers when they in fact operate as middle-man trading companies
  • Sometimes you may even be dealing with a complex chain of traders, with everyone taking a cut of the deal
  • Some companies claim to be registered in Mainland China when they are in fact registered in Hong Kong or elsewhere

Protect Your Business

If you are dealing with a dubious company in China, you might be lucky and encounter no problems. However, if problems do arise, you’ll likely have a hard time dealing with them if it turns out that you were dealing with an unregistered company, a middle-man trading company pretending to be a supplier, or a company that’s had its business license revoked. It can be extremely difficult to apply any legal pressure to companies in such situations.

It’s also worth remembering that if things do go wrong, it is not necessarily malice or something intentional on the part of the Chinese company. If they encounter financial, legal or sourcing problems, a company might abandon an order or a contract despite having good intentions at the start of the relationship.

That would be little comfort to you when your supplier suddenly disappears though!

For all these reasons, it’s essential to find out if you’re dealing with a trustworthy, real company.

Chinese Company Real? How to Check?

There are a number of ways to check if the Chinese company you are dealing with is a real company or not.

Is There a Company Website?

The most basic of these checks, and one that anyone can perform, is to look for a company website. This may sound obvious, but in the past we have helped clients who were dealing with the fallout of outright fraud, where an individual acting alone pretended to be a real company and took “orders” for products. In some of these cases, simply checking for the existence of a company website would have raised suspicions before the trouble began.

Your first action will of course be an English language search using Google. Most Chinese companies have an English name and use it on their website. However, you should always remember that Chinese companies will be official registered and licensed under a Chinese name. If you don’t have it already, get hold of this and search for it on Google or Baidu. If that seems to check out then it seems that the company may exist, but you can’t make any assumptions beyond that at this stage.

Is the Company Registered?

Even if the company you’re dealing with seems to have an online presence, this does not confirm that it is a real company. You need to check that the company is correctly registered with the local AIC (Industrial and Commercial Administration Bureau, 工商行政管理局, Gōngshāng Xíngzhèng Guǎnlǐjú).

Each of China’s 34 provinces has its own AIC and they all work slightly differently. In any case, you need to find and visit the bureau’s website and search for registration records for the company using their Chinese name.

The AIC website for Shanghai looks like this, for example:

This basic check proves that the company is registered, however many of the AIC websites do not do a very good job of keeping their online records up to date.

For example, a company that has had its business license revoked may still be listed without any warnings. A more thorough check requires someone going in person to the local AIC and requesting their most up-to-date records in hard copy.

Does the Company Have a Valid Business License?

If the company appears to be correctly registered with the local AIC, the next step is to request a copy of their business license.

This is a very common request in business deals in China, so if the company you are dealing with puts up any resistance or creates hassle around the issue, be wary. A real company will be perfectly willing to send a copy of their business license.

The business license will of course be in Chinese, which might be difficult for you to decipher if you don’t have experience of the language.

China Company Verification report includes these basic checks and much more. We can give you the information you need to make a decision about whether or not to do business with a Chinese company.

Am I Really in Touch with the Company?

After performing the basic checks described above, you should be able to determine the answer to the question “is the Chinese company real or not?” and understand which Chinese company is behind the English name.

Following that, though, there are many more checks that you should make to ensure that the company is not only real, but that it is also trustworthy, capable of fulfilling your order, and so on.

Besides that, there is the much more basic issue of whether or not you are actually in contact with this company, or with a scammer who is fraudulently using their details. Stay informed about some common examples of Chinese company real life scams.

If you’d like a simple and convenient way to have Chinese company registration checks carried out, consider ordering our China Company Verification report. It’s quick, convenient and accurate, and provides the information you need in a standardized way.




Matt Slater
Matt Slater

Author

Hi there, I'm a British-Australian Engineer and Entrepreneur, recently moved back to Brisbane, Australia after nearly 9 years living in Shanghai. I founded China Checkup in 2013 because I was frustrated by the scarcity of concise, high-quality and timely information about Chinese companies.
My team are proud that China Checkup's verification reports now help clients worldwide do business in China safely. Have any questions? Email me at info@chinacheckup.com

 


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