7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies – Part: 1

7 Ways to Verify Chinese Suppliers Are Factories, Not Trading Companies

forward from  website:  jingsource

Part I:  2 Ways Often Suggested, But Don’t Work at All

Many importers are dying to know whether they are dealing with a factory or trading company when importing certain products from China. Because almost every Chinese supplier claims that they are factories, including suppliers on Alibaba, made-in-china, globesource and etc., though they are actually trading companies. So there are lots of blogs and articles that teach importers how to verify your suppliers on the Internet, but most solutions they suggested didn’t make any sense in reality.

In this article, I’ll first explain why solutions that lots people suggested doesn’t work, then offer 7 correct ways to find out what your supplier really is.

Part I:  2 Ways Often Suggested, But Don’t Work at All

1. Check Supplier’s Registered Capital

Some blogs mentioned checking the supplier’s registered capital to verify whether it is a factory. If with large registered capital, then it’s a factory, otherwise, it’s a trading company. But this is totally wrong. If your supplier is a small-scale factory, its registered capital will be likely less than trading companies. And the registered capital of the large-scale trading company can be very large, like more than 10 million CNY.

No matter you register a company or a factory in China, your registered capital is usually more than CNY 500,000. But it doesn’t mean you must have ¥500,000 in your hand at that time. It means during the next 10 year, the amount in your company’s account can be over 500,000 in any day, and it’s legal.

Another thing is you can easily borrow ¥500,000 to deposit in your company’s account for one day, then transfer it out the next day. It only takes hundreds US dollars to get this one day loan as there are many companies can offer this service.

2. Ask for Samples, Check the Address Where It Was from.

Some others recommend the importers to ask for samples before placing the order to the suppliers. Then you can check the product’s quality, and get the supplier’s office address. If the office address is the same place as the registered address on the business license, the supplier will be factory; otherwise, it’s a trading company.

But this method is not applicable in China, or even many other countries, because it’s quite normal that a factory’s office address is not the same as the registered address. Many middle and small scale factories’ workshops are rented, so they may change to rent another place after 2 or 3 years, but they won’t update the registered address at that time. And some factories’ workshop and office are divided into different places, even different cities.

Post time: Feb-12-2020