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

Why the 'Legal Representative' Isn’t the Person You Want to Speak To

by Matt Slater March 07, 2014

Legal Representative

We’ve previously written about how to find out the name of the legal representative of a Chinese company via their business license. In that article, we briefly covered what a legal representative actually is:

“There’s a good chance that this person won’t be someone with much real authority in the management of the company. … It could be a mistake to demand contact with the legal representative or to require their participation in your communications with the company. In many cases this person’s role as legal representative is not immediately relevant to the management of the company and it’s perfectly legitimate that they do not participate directly in your business relationship.”

We’ve noticed that some other company verification providers claim in their reports that anyone who isn’t the legal representative “is not authorised to represent” the company in question. This statement is highly misleading. It is in fact the norm that you will not deal with the legal representative of a Chinese company.

Demanding proof that you’re communicating with the legal representative of a company is akin to demanding to speak to the CEO, founder or owner of the company. By the nature of the role, there is only one in the whole company and chances are that they are not on the sales or marketing team. Also note that ‘legal representative’ will not be this person’s job title. It is a legal responsibility that they shoulder, but probably does not impact their day-to-day duties.

So whilst it’s true that someone other than the legal representative cannot undertake highly formal legal responsibilities for the company, other employees may very much be authorised by the company to represent it in business. If someone is in sales, representing the company is the main function of their job.

The issue here isn’t that the term ‘legal representative’ is confusing in itself. The real source of confusion is that apart from the legal representative, a standard Chinese business license doesn’t give any other names of real people. A major motivation to verify a Chinese company via their official registration is to confirm that you’re actually dealing with someone you can trust. People want to get hold of an officially recorded name of a real person, so they focus on the legal representative.

Verifying the company by their official registration record confirms that they are a real company that exists, as well as a range of revealing details about them. However, it’s much harder to prove that you are genuinely in contact with this company, or that the particular person you’re communicating with is trustworthy.

Because of this, we frequently get requests from clients who wish to confirm that a particular person does actually work for the company they are interested in. In these cases, we can verify that the company in question is officially registered, and take a close look at their registration details to see what insight can be gained from those.

Confirming with total certainty that a client is genuinely in contact with that company or that a particular individual works at that company is impossible, though. One of our main principles in researching companies is that we do not contact the company being researched, in order to stay totally impartial and independent (we also do this to be discrete and avoid revealing to the company that we’re doing research on them). This rules out contacting the company directly to ask about the names of their employees. They could legitimately refuse to give this information out anyway.

Alternatives to the Legal Representative for a Verified Name

Whilst the business license and AIC records of a Chinese company will only reveal the name of the legal representative, it is possible to get hold of other names through more involved research. The names of shareholders and the board of directors can nearly always be acquired by sending a lawyer to the relevant AIC to collect the records in hard-copy.

 

Verify a China Company?

Order online & get peace of mind

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



 

Again, it may be unreasonable to demand that all communication comes from a shareholder or director. Further  approaches to reassure yourself in these circumstances are:

  • Ask the company for references from previous clients. If the references are somewhat well-known and/or based in other countries, this can be quite hard to fake (although not impossible). It may also be possible to confirm with the reference that they dealt with this particular representative whilst doing business with the company.
  • Never make payments to personal bank accounts. A rogue employee or scammer would likely request payment to a personal bank account that they own. Ensure that you’re paying a business bank account, and check the company’s bank account license if possible.
  • Make physical visits to the company. This should be a step in any sourcing process, and will go a long way to confirming the authenticity of the company. Just make sure you avoid these common mistakes.
  • Send inspectors and auditors to the company. If it’s impractical for you or your staff to visit the company, it is wise to at least arrange for inspectors and auditors to handle this for you.

As you can see, there is no silver bullet for verifying a Chinese company or the person you’re communicating with. Background research is only one part of the process: verification, referencing, audits and inspections all play their part in doing business safely in China.

(If you’re new to China sourcing, it may be worthwhile to make yourself aware of the basics: read about sourcing safely and common warning signs.)




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

8 Most Useful China Map Websites
8 Most Useful China Map Websites
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 t
Read More
Top 5 Cities for China to Europe Freight Trains
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


Also in Safer, Better Business in China

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

Top 5 Cities for China to Europe Freight Trains
Top 5 Cities for China to Europe Freight Trains

by Matt Slater May 07, 2019

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 coastline and her seaports, but which Chinese cities have the most rail shipments?

We took a look at the data and found that the top 5 cities for China to Europe freight trains are each provincial capitals with huge populations - with Chengdu in Sichuan province leading the way. 

Continue Reading