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How to Identify a Legit Chinese Supplier

China is the fastest growing economy and considered the “factory of the world”. According to a United Nations report, about 28.7% or the global production is done here. Not just that, most of the production done here is more economical as compared to the other parts of the world. Therefore, importing products from China for the business is usually a natural choice for many people around the globe. However, it is often challenging to choose the right Chinese supplier from thousands of them for your business.

Carefully check your supplier's information to know if they are legit or not before closing a deal

Before 2020 arrived, if anyone wanted to do business with Chinese companies, they would buy an air ticket, and land in China to find an appropriate supplier/manufacturer/source and secure a deal. However, traveling anywhere, and similarly to China these days, is not fun.

Even though the pandemic situation in China is largely under control, and most businesses are back to their normal, but internationally, it is still not so easy to travel right now.

Now when your situation does not allow traveling to China, you have to deal with suppliers without physically meeting them. Therefore, it becomes quite challenging to identify if they are a legit supplier/company/manufacturer for the business or not.

In this article, we will discuss how you can identify a genuine supplier among a million others in China.

So What Choices Do You Have in Choosing a Chinese Supplier?

Many small and medium business owners like to import goods from China. However, they lack in confidence in dealing with the Chinese suppliers and companies. There could be several reasons, including the language barrier, complicated international trading process, scams, or bad quality products.

There are some golden rules that apply to doing business with any Chinese supplier, regardless of the situation worldwide. To avoid being cheated, it is necessary to evaluate the company for their standing before making a deal.

If you are short on time, and have a little bit extra budget at your disposal, it is always recommended to hire a local agency for your help in business with Chinese companies.

However, if you have more time than money, then some hard work and extensive research could potentially do the job just as well.

How Can You Identify a Genuine Chinese Company or Supplier?

There are a number of methods you can use to identify potentially a genuine supplier among the not so trustworthy ones. Beware that no method actually guarantees 100% authenticity on any company’s legal standing or reputation. However, by keeping your sensors on during your conversation with the supplier, and using multiple methods, you can have a good idea if it seems safe enough to go ahead with the supplier for your business or not.

Method 1: Request Your Supplier for Chinese Business License and Other Certificates

There are several certificates that you should be asking for whenever you are engaging with a Chinese company or supplier.

1 – Check Their Business License (营业执照)

Every company in China needs to have a business license issued by the government. This is not a secret document. In fact, the law requires every company to display their business license at a prominent location at their business place. To verify if your supplier is legit, it is a good idea to ask them about their business license. Verifying the business license is usually the first step when doing due diligence on a Chinese supplier. You may often find a company who is reluctant to show their business license upon your request. If this is the case, then probably something is not right.

The business license in China gives you some basic, yet official information about the company. As such, it allows you to check that your supplier is registered and operates legally. Let’s discuss this in a bit detail.

Here it is what a China business license looks like:

China business license

The China business license is only issued in Chinese language. You may use the “Google Translator” or the “Baidu Translator” application on your mobile phone to translate the content on the image of the business license to English. Beware that this machine translation may give you good enough information, but may not be accurate. To make sure about the license content, you may make use of a human translation service for more accuracy.

Chinese government usually issues business license in both “Portrait” (vertical) and “Landscape” (horizontal) orientation. However, both copies contain the same information. Different companies may show you license in different orientation.

The business license provides the most important data, which includes:

18-Digit Chinese Business Registration Number:

This unified business registration number provides useful information about the company:

  • First digit: Registering authority
  • Second digit: Entity type
  • Digit 3-8: Registering region
  • Digit 9-17: Organization code
  • Last digit: Check digit
Official Company Name:

When registering, a company may choose only a Chinese name or both Chinese and English names. Most companies in China are registered with their Chinese names only. They do not officially register an English name. A lot of English company names you may find on buying platforms, such as Alibaba, are using their unofficial names.

Type of entity
Official Address:

This is the registered address of the company, which can be different from their factory address.

Legal Representative:

This is the name of a person who is legally representing the company. This is typically the owner or the co-owner of the company.

Registered Capital:

Depending on the type of a company, the registered capital can be as low as 10,000 CNY or as high as 20 million CNY or above. For example, a small trading company may register for relatively a low capital, but big manufacturing companies may register with large amounts in capital.

Date of Incorporation:

It is generally good to do business with a Chinese supplier who has been in the market for at least 2-3 years.

Expiration Date
Business Scope:

The business scope defined on the business license covers exactly what a company is legally permitted to do. The business scope is typically very specific. Anything not mentioned on the business scope is deemed illegal. For example, it may include “manufacturing and trading of electrical equipment” and “no trade of items subject to license approval”. However, if the company is offering services outside this business scope, then you should obviously see this as a red flag.

QR Code:

You may scan the QR code to see the details of the company on government’s official database: National Enterprise Credit Information Publicity System (NECIPS). Cross check all the details on the database to see if they are same as mentioned on the business license you received from the company.

Verifying business license is a good document to good to start with, but checking other documents can also come in handy.

2 – Bank Account Certificate (开户许可证)

If they have this certificate, it proves that they are a genuine holder of the bank account, and your money actually goes to the company.

However, a company may operate more than one bank account, for example, to handle different currencies or different modes of business. Nevertheless, the take away here is that, always transfer money to company’s back account, and not to any personal accounts.

3 – ISO 9001 Certificate (ISO9001质量管理体系证书)

Requesting for ISO9001 certificate is usually a good measure to ensure that the organization’s quality management system is certified. Cross check the details on the certificate, and also verify the certification authority.

4 – Test Reports (测试报告)

Request for the test reports of the items to confirm that the goods are being produced to the standard you require. Make sure the test reports are of the same items that you are interested in. Check the details of the report to see if the report actually contains the information that you need. Some supplier’s may show you the test reports of other items that you are not looking for.

5 – Purchase Invoice or Proforma Invoice (形式发票)

This is the invoice your supplier should provide you against the products you are buying. Carefully check all the details on the invoice, including product detail, price, name of the company, bank account information, and so on.

6 – Foreign Trade Registration Certificate (对外贸易经营者备案登记表)

This certificate is only required for the companies which are directly engaged in foreign trading. If a company does not possess this certificate, then they are possibly using a trading company to export their goods. If they posses this certificate, then it is good. Otherwise, check and confirm with them if they are using a third party to ship goods outside China.

7 – Customs Registration Certificate (进出口货物收发货人报关注册登记证书)

The Chinese companies who possess this certificate are registered with China Customs to make custom declarations. Not every company who is engaged in foreign trading possess this certificate, as they may use another broker for this process. Nevertheless, it is a good method to understand their capabilities.

Method 2: Ask Your Supplier for Reference

Ask you supplier for their bank’s reference letters to verify their credit worthiness.

You may also ask for their previous or other current customers as a reference, and do not hesitate to contact them. This will give you a great insight on supplier’s track record in producing the required items.

But, here is a catch. Many good manufacturers want to keep their customer list private, except when they work with some big customers that everybody knows. They may refuse, for the fear that their competitors may try to contact the customers and underbid them. So, this also may not be a fruitful method, but it is good if they provide you any reference to vet their claims.

Method 3: Use Search Engines to Find Out Their Reputation in the Market

Use Google, Bing and Baidu search engines to run a quick background check. Open a search engine, and type the company name and their phone number in the search field and hit search. The search results may display some useful information about the company. Such as, any exhibition or a trade show they might have attended recently, or an award that they have received from some reputed organization, and so on.

Now run the search for their negative reputation. Open a search engine, and search for “[company name] + fraud”, “[company name] + scam” and some other similar variations.

Use these helpful tips when performing search:

  • Run these search queries with their English name as well as Chinese names (with Chinese characters).
  • Use Google Chrome to perform these search queries. The search results may display references to some Chinese websites. The Google Chrome browser usually translates the Chinese websites to English automatically. If the browser does not translate these websites automatically, you can configure it to do so when required.
  • If they have provided you some images of their factory or manufacturing unit, use Google Images, Bing Images or Baidu Images to see if anyone else is using these images or not. There are chances they might have provided you images of some other factory that does not belong to them.

Method 4: Request for a Sample

Regardless of what you are buying, it is good to ask for their sample—even if you have to pay for it. When you have the sample in your hands, you can check the quality of the product to see it if fulfills your requirements. You may also know about their service and attitude.

If you have to pay for it, tell them that you want to wire transfer the payment directly into their company’s bank account. If they cannot provide you their account information, then the things are fishy.

Conclusion:

Doing business with Chinese company or a supplier requires due diligence. You should perform a proper check and verification for the companies to know that they are what they claim to be. Check all the details in the documents they provide to you very carefully. They may provide you a different document than what you requested, or the document that does not contain the relevant or complete information.

You would definitely not want to work with a supplier that is non reliable, often provides inferior quality products, or delays shipments. In this article, we introduced some tips that you can use to vet your supplier before making a final decision.

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Coronavirus: Traveling to China during Global Pandemic

Whether we like it or not, the novel coronavirus, also known as, COVID-19 is reality. It quickly became a global pandemic before the world could get ready for it. This pandemic has affected our lives and has forced us to live and act in a different way altogether. This means, a new and different world has emerged from the year 2020. Nobody really knows how long this lifestyle will stay. However, experts say that it may stay for many more years to come. We have to adjust our lifestyle to cope up with the changing world.

Disclaimer: At Sesame Disk by NiHao Cloud, we welcome a diverse range of options and point-of-views. This post contains useful information for entrepreneurs. However, the following should be noted:
– In general, this article does not include any medical or legal advice. If you require any medical or legal advice, you may consult a relevant doctor or a lawyer specific to your case. International and your local authorities may also have issued some advice which you may follow.
Some of the points noted in this article may reflect the views of the writer only, and may not necessarily reflect the views of our team and the company.

Most countries are struggling in controlling the spread of coronavirus. However, no country has been able to control its spread better than China. This is a glaring fact, and denying this fact would be lying on its face.

A man waiting for his flight during coronavirus global pandemic
China took the first hit from coronavirus and bore huge losses to economy

Since China was the first country affected by coronavirus, there was no previous data or experience available on how to respond. That was why, China took extreme steps to control the spread. The whole country of 1.46 billion people was locked down for about four months. This was only done in efforts to control the transmission of coronavirus. Those four months included the most important time of the year in China, when families get together for the Chinese New Year, and businesses thrive. In the end, all those restrictions really helped the country in putting the brakes on the spread. And that too in a very short time.

However, the imposed lock down had a great toll on economy. China’s economy contracted 6.8% in the first quarter of 2020. During this time, some 460,000 Chinese firms closed. This is the first ever contraction recorded since the reforms were adapted by the end of Mao’s era in late 1970s. All these losses to businesses and economy, forced China, like every other country, to apply restrictions on entry and exit for travelers. However, despite all these restrictions, a recent outbreak of coronavirus happened in Nanjing city of China on July 20, 2021. This outbreak was of Delta variant, but brought under control within a month. This recent outbreak proved that slightest of oversight could be disastrous for the country. Therefore, China still remains on a high alert in avoiding any new spread of coronavirus.

So Who Can Travel to China?

China closed its borders to nearly all travelers on March 28 last year, when the pandemic started spreading throughout Europe. Travelers with visa issued after March 28 can enter China on those visas.

China eased its restrictions after almost a year in March 2021 for select number of travelers from 23 countries. Starting from March 15th 2021, China is providing facilitation for reunion, work, and business visa applicants. However, all applicants are required to be inoculated with COVID-19 vaccines produced in China and obtain a vaccination certificate.

So, now you can travel to China in one of the three ways:

  • If you are holding a valid Chinese residence permits for work, personal matters, and reunion
  • If you are holding a diplomatic, service, courtesy, or C visa
  • Or you may apply for a new Chinese visa only for work or emergency humanitarian needs. The humanitarian needs could be such as visiting a seriously ill family member, or getting urgent medical treatment. If you already hold a valid old visa, your previous visa will not be cancelled.

How Traveling to China During Coronavirus Global Pandemic is Different than Before

The entry and exit restrictions in China vary by traveler’s location and are based on a number of factors. These factors may include traveler’s nationality, travel history, residency status, and/or vaccination status. These restrictions could also vary between different cities and provinces of China.

Let’s take a look at each of these requirements a bit closely.

Nationality and Travel History

Allowance to enter China depends on the current situation of coronavirus in your country, or the countries you have been to in the recent past. This includes the countries of your layover where you changed your flight to enter China. Chinese authorities may or may not allow entry if you are not flying directly from your country of origin to your destination in China. In most cases, if there is a hitch in your itinerary, the airport staff would communicate the possibilities before boarding. Or, in worst case, the airport staff may even deny you from boarding.

Visa Services and Vaccinations

Various Chinese embassies and consulates have announced an easing of visa restrictions for persons who can prove they have been vaccinated against COVID-19 with a China-produced vaccine. This means, all foreign nationals holding proof of vaccination with a China-produced vaccine, and their family members, may apply for a visa to travel to Mainland China. Also, now they may apply without producing additional documentation such as letters of invitation. Currently, Chinese embassies are only accepting applications for the resumption of work or for other permitted activities, excluding tourism.

COVID-19 Tests

The requirements for negative COVID-19 nucleic acid and IgM serum antibody tests are stringent enough for slightest of causes. If you are not vaccinated, but your IgM serum antibodies level is higher than the set criteria, then this may mean you have recently been infected with novel coronavirus.

The airline staff would require you to present the test certificates when boarding the flight. You must take the The negative nucleic acid and IgM serum antibody tests at the designated labs or institutions within the last 48 hours of departure. Some of my friends informed me that they did receive the negative nucleic acid test, but their IgM serum antibodies were higher than the required criteria, and therefore they were denied traveling.

Health Code

China has introduced a “health code” for foreigners traveling to China. The health code is an effective public health managing measure used in China’s anti-epidemic battle based on technology. This health code records dynamic information about personal health, including normal respiratory symptoms and nucleic acid test results. You may contact your nearest Chinese embassy or consulate for the guidance on how to get this health code for travel.

Flight Booking

For many countries, the flight operations are still restricted. As a result, most international routes are still not operating as they were operating before the pandemic. These restrictions on flights have caused the ticket prices to rise to extreme levels, and out of the reach of many. This price hike and flight schedules have generally made it difficult for most passengers to find their ticket on a flight.

Quarantine

You must undergo testing-on-arrival for COVID-19 and a mandatory quarantine. Some regions in China demand 14 days of quarantine, while others require 21 days. This may take place at a location designated by government (usually a hotel) or at your home. The stay at a hotel would cost you anywhere around 6000 Chinese Yuan (about $928) to 12,000 Chinese Yuan (about $1856), depending on the hotel’s star rating and services.

Things to Consider Before You Travel

  • Traveling Cost: Traveling during coronavirus global pandemic is expensive. Your traveling cost may vary depending on the price of your ticket, nucleic acid tests, quarantine requirements and the food cost during quarantine. Also, if you get unlucky to catch coronavirus during travel, the treatment for COVID-19 may also cost you some extra money.
  • Travel itinerary: Keep your travel duration as short as possible and avoid layovers, to avoid getting in contact with coronavirus during travel. If you can get on a direct flight from your country of origin to your destination in China, then that should be your best choice.
  • COVID-19 SOPs: Keep in mind the general standard operating procedures (SOPs) of wearing masks, maintaining social distancing and frequently applying hand sanitizer or wiping your hands off with alcohol based napkins. You must also follow airport and airline staff’s advice during travel to avoid unnecessary delays.
  • Quarantine Requirements: Obtain the latest requirements for quarantine before you plan your trip. It is also good to keep yourself updated with the latest situation before boarding. This will allow you to adjust your plan accordingly, if required.
  • Vaccination Certificates and Negative Nucleic Acid Test Reports: These are must to have during travel.

Best Practices

  • Always remember to consult the latest official information before making booking decisions.
  • Obtain your vaccination certificate and take the negative nucleic acid test 48 hours before your departure.
  • It is always good to consult your nearest Chinese embassy or consulate office for local information and requirements regarding boarding and departure.
  • You should also check with your airline regarding arrival procedures and quarantine requirements.
  • Before you plan your trip, you may also like to talk to your host, friend or some acquaintance in China for the local requirements and practices.

To prepare well for your travel, the more you know, the better it will be.

What to Expect after Completing Your Quarantine for Coronavirus?

After you complete your quarantine period in China, you will be allowed to carry on with your business. If you are an entrepreneur and traveling to China to work on your business, you may like to take a look at our article for the challenges you may face in your business.

As of August 27, 2021, about 56% of the population has already got the vaccine. Life in China is largely back to normal, but things can change fast in China. Regional lock downs are imposed every time there are new outbreaks of the virus.

The government still emphasizes on wearing face masks in public. Traveling in public transportation, including airplanes, trains, subways, taxis or public buses require you to show your QR health code and wear face masks all the time. All the restaurants, shopping malls, parks or other public areas also need to see your health code to allow entry.

In China, different cities have also maintained different restrictions on travel. The government has marked each city as Low Risk, Medium Risk, or High Risk area, depending on the current coronavirus situation. If you plan to travel within China to different cities, you must check with the local authorities regarding the requirements. The requirements may include a COVID test taken with the last 48 hours, vaccination and/or the green QR health code.

The color of the QR health code may change depending on the locations you traveled or people you met within the last 14 days
  • Green: If your health code displays in green color, then it means that you are not formerly or currently confirmed or suspected coronavirus case. If you get the green color, it means you are allowed to travel through local transport. You can also enter any public area, business (such as restaurant) or a public building (such as shopping mall).
  • Yellow: If your health code displays in yellow color then it indicates that you have been in contact with confirmed COVID-19 patients. It also indicates that you are having fever, cough, sore throat, and/or shortness of breath. If your health code is yellow, then you will have to quarantine as indicated by the health authorities. You will also need to check your temperature at least twice a day, and require to avoid crowded places.
  • Red: If your health code displays in red, then you are a certain or presumed coronavirus case. This may also mean that you have been in close contact with confirmed COVID-19 patients, including people who confirm in the health declaration that they have in fact been in unsafe contact with a confirmed coronavirus case within the past 14 days.

Disclaimer

The travel and other policies change quickly, depending on the current situation at large. You must double check with the local Chinese embassy, consulate or China visa center to ensure your trip.

The traveling restrictions and policies only apply to visa processing services offered by Chinese embassies and consulates in select locations. You must double check with your local Chinese embassy or consulate to determine if you are eligible to apply for visa, and information regarding travel requirements, quarantine and so on.

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