How to run due diligence on a Chinese company

Before you commit a large order and a large payment, you should be able to answer one question with confidence: is this company actually real, and is it who it claims to be? A surprising number of import losses come not from bad goods but from sending money to an entity that was never quite what it appeared. Due diligence is how you check, and the basic version is something you can do yourself before a single carton is made.

This is general information, not legal advice. For a significant order, consider a professional verification service.

Start with the business licence

Every legitimate Chinese company has a business licence, and you can ask for a clear colour copy of it. From that licence, capture two things above all: the exact registered Chinese company name, and the long unique company code that identifies the entity in the official records. The English trading name a supplier uses is not the legal name, and the legal name is what matters.

Read the licence for more than just the name. It will show the legal representative, the registered capital, the registered address, the business scope and the company's current status. A business scope that has nothing to do with the goods you are buying is a flag worth asking about.

Verify against the official registry

A licence on its own can be edited or faked, so the real check is matching it against China's official public company registry. The registry lets you confirm that the entity exists, is in good standing, and has the details the supplier gave you. If the registered name, code and status on the registry do not match the licence you were sent, stop and ask questions before you go further.

Verifying the company is real is the first step, not the last. A genuine registration proves the entity exists, not that it can make your product well.

Match the name to where the money goes

This is the check that protects your payment directly. The company you verified should be the same name that receives your funds. A mismatch, where the verified company is one entity but you are asked to pay a personal account or an unrelated company, is one of the clearest warning signs there is. Recipient-name matching is exactly the discipline covered in the first payment to China checklist, and it belongs at the centre of your due diligence.

Look past the paperwork

A clean registration tells you the company is real. It does not tell you the company is good. To get closer to that, layer on:

• Track record. How long has the entity existed, and does its history match the supplier's claims?
• Capability. Does the registered scope and size fit a company that can make your product at your volume?
• References and reputation. What do other buyers say, and can you see real production rather than stock photos? This connects to how to vet a 1688 supplier.
• On-the-ground eyes. For a big order, a third-party inspector or sourcing agent who visits the site is worth far more than any document.

Know the limits and when to pay for help

You can do the licence and registry checks yourself, and you should. But the registry is in Chinese, deeper financial and legal checks take expertise, and a site visit takes someone local. For a large or first-time order with a new supplier, a professional verification service or a qualified adviser can be cheap relative to what is at stake.

A due-diligence checklist before a big order

• Obtain a clear copy of the business licence.
• Record the legal Chinese name and the unique company code.
• Match those against the official public registry, including status.
• Confirm the payment recipient is the verified company.
• Sanity-check the business scope, age and size against the order.
• Gather references and, for big orders, arrange a site check.

Do the work before the money moves, not after. Once you have verified who you are dealing with and confirmed the recipient matches, you can make a request to pay them on Alipay from Naira with confidence the funds are going where they should. The check is cheap; the mistake it prevents is not.