Five checks to run before you pay a Chinese supplier

Most of the supplier disputes that reach us were avoidable at the point of the first deposit. Not by being cleverer about people: the person you are dealing with is usually exactly as pleasant as they seem. They come from skipping five unglamorous checks, all based on official company and court records in China, which together usually take a few working days for someone who reads Chinese.

1. Is the company on the invoice the company you have been talking to?

This is the single most common finding. You visited a factory, exchanged business cards, and agreed terms with a sales manager. The invoice, when it arrives, is issued by a trading company with a different name, sometimes registered in a different province. That is not necessarily fraud: trading intermediaries are a normal part of Chinese export, and a factory often sells through a related or unrelated trading entity for tax and licensing reasons. But it changes who owes you the goods, who is bound by the contract terms you negotiated, and who you would need to sue if something goes wrong.

Ask for the Chinese-language business licence (营业执照) and check the registered name character by character against the name on the invoice and the contract, and then against the official company register in China. An English name on a sales deck is not registered anywhere and proves nothing.

2. Does the company still exist, and in what condition?

The same register shows the registration status, whether the company has been placed on the abnormal operation list (经营异常名录) for failing to file annual reports or respond at its registered address, and whether it has been struck off. It also shows the registered capital and, since the 2024 Company Law reform tightened capital contribution timelines, increasingly the paid-up position, which tells you something about what could realistically be recovered if a dispute ends in enforcement.

A company on the abnormal operation list is not necessarily dishonest, but it is a company that is not maintaining its basic filings, which is a fair proxy for how it will behave when a dispute needs a response.

3. Is it licensed to do what you are buying?

The registered scope of business (经营范围) defines what a Chinese company has told the regulator it does. Under the Civil Code, a contract is not automatically invalid just because the seller's activity falls outside its registered scope, so this is not the contract-voiding risk it is sometimes made out to be. The real exposure is narrower and more practical: activities that require a specific licence or approval, such as food, chemicals, medical devices, or certain financial or cross-border services, can leave you without a valid VAT invoice (增值税发票) for the transaction, or without the import documentation your own customs clearance depends on, if the counterparty is not actually authorised to sell what it is invoicing.

4. Who is the legal representative, and what else are they connected to?

The legal representative (法定代表人) is a specific role under Chinese company law, not an honorary title, and it carries personal exposure: a legal representative of a company under enforcement can be placed on the consumption restriction list (限制高消费), which stops them flying business class, staying in certain hotels, or sending their children to fee-paying schools, and is a strong incentive to settle. Searching the same individual's name across other companies in the official records frequently surfaces a pattern worth knowing before you pay: a string of entities incorporated and abandoned, or an existing enforcement record.

5. Is there litigation or an enforcement listing already?

Court decisions and enforcement status can be checked in China's official court records, including the register of defaulting debtors (失信被执行人). A supplier already on that list is telling you, in advance and for free, what your own recovery prospects would look like if the deal goes wrong.

What to ask for before the first deposit

A short document list forces most of this into the open without a formal check: the Chinese-language business licence, a copy of the legal representative's ID, and a bank account in the name on the invoice, not a personal account or a third party's. A supplier that resists producing any of these has usually told you the answer already.

None of this requires anyone to travel. All five checks together take a few days for someone working in Chinese, and cost a small fraction of a typical first deposit. If a check raises a concern before you pay, or a payment has already gone out and something has gone wrong, supplier due diligence and commercial dispute resolution in China are the two services built around exactly this situation. The awkward truth is that the checks are almost always cheaper than the conversation that follows skipping them.