Filed Under:Supplier Verification| Viewed by: 3954 Persons
China's economy is booming, as world factory and world market, so as a ambitious foreign companies, you know you should have a plan in China.
But, we know it is not easy to do business with companies in another country, in totally different country, such as China.
Like it is in any other countries, trade dispute, scam, complaint and lawsuit happens here if you didn’t do your due diligence properly. Being in the trading and sourcing business for almost 10 years, there are quite something I want to share with Chinawhy readers – on how to make due diligence when dealing with Chinese companies.
Verify the Chinese companies and how
Before entering business relationship, the first and most important thing you need to make certain is that the so called “Chinese company” does exist, it is not a fake company, it is not a shell company(empty company), it is not a one man show, it is not a middleman, it should be a reliable company you can trust, it should be a real company that you can chase after if bad things happen.
So how can you judge if the Chinese company is real and legitimate? The most reliable way is to visit the Chinese companies address or hire a service provider such as Chinawhy to do the verification for you.
We do understand some small companies might not be able to afford the verification service, here some tips we would like to share:
a. ask the Chinese companies to send copy of business license, some of the local government have websites to allow you to check the basic registration information of the company. You can search the database of the local government using their Chinese company name, registration number. For example, Shenzhen city have a website http://www.szcredit.com.cn/index.TJ?method=index where you can search basic registration information of Shenzhen company.
c. if a “company” use mobile phone as their only contact information or if the company have same fax number with phone number, you should doubt their size.
d. for factory, the address should not look like XXX building, normally factory locates in rural area or suburb area of a city.
e. search the company name, telephone number and address of the company, see what you find
ask the Chinese company to send their company bank account, a company should have RMB company account and a company with import and export right should have foreign currency company account. If they don’t have, it is a negative sign.
For big amount payment, don’t never pay to personal account. For small amount such as sample payment, it is understandable if the supplier to ask to pay their personal account, which will make the accounting job easier. But for large amount payment, company account only.
It is common that many Chinese factories use export company to do the exportation, in that case, it is very important to include the third party company amount you will pay to in the contract between you and the factory.
No 100% advance payment, that is very fishy and risky, which make me feel that they either don’t have enough cash flow to keep business operative or WILL THEY RUN AWAY WITH YOUR MONEY?
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Chinawhy has been providing sourcing, verification, QC, shipping and other trade related service to more than 500 overseas buyers since 2006. Email us at email@example.com or call us at 0086 451 8333 0781 to book the service.