Verifying a Chinese Business License With a Factory Audit

Most small businesses look to the “East” for suppliers and China is a highly sought after destination.

However, the key concern for these buyers is identifying reliable suppliers and safeguarding themselves from any potential risks. We will take a look at some simple ways to do this .

If you are a buyer looking for new suppliers in China, you might end up with a list of a couple of potential good ones. Of course you then want to find out whether these suppliers are indeed reliable and experienced, or whether it’s a scam, so make china company verification with a Factory Audit is very useful at this stage in.

When a factory audit is conducted by a third party quality control company, they always collect as much information as possible about the supplier of your choice. A large part of an audit consists of document collection. However, at the site it is not possible to verify these documents, especially business licenses, as they could be problematic. Chinese government authorities cannot legally protect your business if you are doing ‘business’ with illegal companies. However, there is only so much you can do to find out whether or not the license is legitimate.

First, what is a business license? Each legal company has to register itself with a local Chinese Bureau of Industry and Commerce or a similar government agency. Rural companies tend to register at a provincial level, but urban companies usually register at the city level. The company then gets a unique company number, which will be printed onto a nice document: the business license.

Then, how can we help you verify this unique company number and the business license? A QC company can check the business license itself for signs of forgery. There are several common ‘mistakes’ that we know how to find, such as false names or addresses, but this requires a close look and an experienced eye. At the factory, the auditor usually has to work his way through many documents, so he simply does not have the luxury to sit back with one document and take his time to inspect it. Therefore, this is much better done at the office. If any discrepancies are found in the document you can be certain the business license is a fake.

When there is no sign of forgery on the business license, it is not necessarily a legitimate document. The unique company number could still be false. Even though we possess the skills to find out the truth, an investigation might have inconclusive results. Sometimes it is sufficient to search for the supplier directly online through the website of the relevant Bureau of Industry & Commerce. However, note that all information from the Bureaus is in Chinese. At a provincial level in industrial provinces, like Guangdong province, information about business licenses is accessible online, but in less developed regions and on other governmental levels information is usually not readily available. In this case QC staff will contact the Bureau directly. It then depends on the Bureau how long it will take to get information and they will usually ask you to come by the Bureau in person an discuss the options.

As you can see, verifying a Chinese business license is a unique company registration number requires quite some effort, because there is not one database where all the numbers can be found. The registration system in China is very decentralized, which makes it hard to just go ahead and verify the business license by yourself. As a third party inspection company, AQF can definitely help out.

china company verification

Something About China property bonds

To many global investors, bonds from China’s property sector are toxic nuclear waste, not to be touched at any cost. To others, they come with a more pragmatic “handle with care” warning. I belong to the latter camp.

From just a handful of bonds 10 years ago, the sector has grown to contribute 9.5% of the Asian US dollar bond market with US$51bn of bonds trading. That is nearly a third of all high-yield corporate bonds in the region.

Over this period, the sector has gone through three cycles of downturns and upturns. Several Chinese property companies have issued, redeemed and refinanced their offshore bonds. Companies with credit ratings ranging from Single A to Triple C have managed to issue bonds, which chinese trade credit actively in the secondary market. Yet, a feeling of unease persists.

Perhaps the first source of discomfort is the fact that offshore Chinese property bonds are deeply subordinated, since they are issued by offshore-incorporated entities, which inject the bond proceeds as equity into their onshore companies and service their debt only out of equity dividends received back from the mainland. The difficulties in repatriating equity funds out of China mean that the offshore principal effectively has to be refinanced. In case of bankruptcy, the onshore lenders have the first claim over the onshore assets.

While this structural weakness is undoubtedly true, it applies to every other bond issued by Chinese businesses, including investment-grade bonds far beyond the property sector, since the structure was born out of regulations prohibiting the issuance of debt or guarantees by mainland companies. (Only recently have the authorities begun to relax this prohibition, and the first few offshore bonds are now coming out with direct guarantees from mainland operating companies.)

ANOTHER SOURCE OF discomfort is the government’s meddling in the property sector through various measures, including the flow of credit to the builders, rules for financing land purchases, obtaining mortgages, and mortgage down-payment requirements. The harshest controls came in 2010 when the government restricted the number of apartments that an individual could purchase.

Property prices are a sensitive subject everywhere, and China is no exception. The government presses the brakes if the prices are speeding too fast and pushes the accelerator if property construction flags too much so as to threaten the overall economic growth.

This government intervention makes asset values volatile in both equity and debt markets, and raises the cost of capital to the sector.

Some investors have also been scared away by stories of oversupply and ghost cities. The property development business model, by definition, consists of a long operating cycle, and there may be genuine demand/supply imbalances, as in any other industry, but the overwhelming majority of Chinese properties are built in response to actual demand from a rapidly urbanising population. The same goes for talk of speculative buying, when the reality is that most of the properties are bought for self-occupation. Buyers have to put up a minimum 30% down-payment, they are not over-leveraged and there is no subprime lending.

WHEN IT COMES to investing in Chinese property bonds, one should realise that there has already been one level of filtering – only those companies large enough to go through a rating process and the expense of issuing offshore actually end up selling dollar bonds. They are all listed offshore, most of them in Hong Kong, and are subject to audits and disclosures that go with the listing status. The additional scrutiny from equity analysts and investors that comes with listing also offers additional information for bond investors.

There has not been a single default in the sector so far, and only two distressed exchanges in 2009, both at 80 cents to the dollar. Some companies did go through financial distress during previous sector downturns, but they managed to sell land or unfinished projects to stronger players and stave off default.

This is not to argue that we would never see a default in the sector. We will, sooner or later. But the sector has genuine fundamentals, strong and weak players, and saleable assets that can be realised in times of distress.

So, how should one approach investments in Chinese property bonds? First of all, investors need to be prepared for the volatility that comes with the regulatory changes. Any crash in value following a regulatory tightening offers an opportunity to pick up the higher-quality bonds at more attractive prices. In fact, such moves also enable the stronger players to buy out the weaker ones or to acquire assets from the struggling players, and increase their market share.

The current downturn in the market is no different. It is true that the stock of unsold property is running above average; that the leverage has increased in the last 12-18 months in response to slowing sales; that margins are under pressure due to the pressure to liquidate stock; and that some of the weaker companies are likely to experience a liquidity crunch in the next 12-18 months, unless they slow down their expansion. But the current downturn is also an opportunity to pick up bonds issued by stronger companies, which will benefit from the tight conditions in the sector. The challenge is reading the credit fundamentals carefully enough to identify the winners.

Background check Chinese company

A new online service allows businesses to verify Chinese companies affordably. ‘China Checkup’ is an initiative of Matt Slater and makes official registration checks on Chinese companies accessible to businesses around the world.


For many countries China is a very important import and export destination. Obtaining background information is an important step in making informed decisions and doing business safely in China. It can also help you to avoid becoming a part of China’s booming fraud industry.

Matt Slater started his China business consulting company 2 years ago, and he is doing things differently to the rest. ‘China Checkup’ lets customers verify company in china online from just 49 USD. The whole process takes place via a secure online payments system. The new service has already received a very positive feedback from the market.

“There needs to be an affordable and streamlined way to obtain this information, which more and more companies require. This is what we hope to provide through China Checkup,” Mr Slater says.

Tips – How to avoid problems

Mr Slater also gave some recommendations for avoiding problems when doing business with Chinese companies:

1. Have a contract, and translate it into Chinese. The value of a clear contract isn’t just to have something to fall back on if disputes arise. It also ensures that both parties are on the same page.

2. Make it very clear that you’re serious about the relationship. Demonstrating commitment to the deal and its results from the start will serve to put off potential low-quality companies, and give high-quality companies the confidence to move forwards with you and your company. Make it clear from the beginning that you will be carrying out background checks, audits and quality inspections.

3. Take responsibility for quality. Don’t make the mistake of assuming that the other party will ‘fill in the gaps’ or handle any oversights not fully specified. Assume that it’s your responsibility to clearly and completely communicate your expectations.

4. Documents can be faked.  Take the view that documentation you are shown is meaningless until you can independently verify it through background checks and confirmations with the issuing authority.

5. Also remember that you get what you pay for. Some people doing business with Chinese companies think that the usual relationship between cost and quality doesn’t apply in China. This leads to deals going bad. China may be cheaper in general, but there is certainly a limit to this. Recognise that the other party also needs to make a fair profit; if you drive prices down too far, quality will inevitably be affected.

Trade with China

In the beginning of 2015, President Xi of China and President Obama announced an historic agreement committing our two countries to dramatic action in the fight against climate change.

This April, as a critical part of that commitment, leaders in government and business took an important step to realize that agreement: a trade mission to China, connecting America’s clean energy innovators with China’s vast energy markets. You can check china trade credit in CNbizsearch.

The opportunity is enormous. Under the joint climate agreement, China intends to peak its carbon emissions and generate one-fifth of its energy from clean sources within 15 years. The latter target alone amounts to building about a billion kilowatts of new, low-carbon capacity — a fleet of power plants roughly the size of the entire U.S. electrical grid.

China’s energy needs will require infrastructure. But even more so, they’ll require cutting-edge technology — advanced tools to harness new fuels, capture greenhouse gases, and manage energy demand on a massive scale.

By adopting some of the world’s most ambitious climate targets, the United States and China have opened up one of the world’s most expansive new marketplaces for low-carbon technology. And it’s a marketplace where American businesses are uniquely positioned to compete and win.

Over the past several years, American engineers and entrepreneurs have unleashed a wave of unprecedented growth in clean tech. American innovation has helped cut the price of high-tech batteries by more than 60 percent in six years. This week, they became cheap enough to power not just our cars, but our homes. Likewise, America’s solar electricity production has increased more than twentyfold since 2009. Our utilities have rolled out smart meters to nearly 40 million households, and their data is driving the world’s leading energy analytics companies.

All told, businesses that deliver advanced energy solutions are growing five times faster than the rest of U.S. economy. They’re creating thousands of good-paying jobs that can’t be shipped overseas. Early-stage investment from the private and public sectors is seeding a new generation of revolutionary ideas.

It’s worth noting that in many cases, smart policies have helped fuel that success. State-based energy regulations have stimulated demand for cleaner, more efficient technologies, and federal tax incentives have pushed their costs down. New standards under the Obama’s Clean Power Plan will do even more to drive innovation.

But credit belongs first and foremost to the businesses that have shouldered the risks — and today, America is reaping the rewards of a resurgent clean energy economy. Revenue soared to $200 billion last year, and U.S. companies claimed 15 percent of the global market for advanced energy in 2014.

The trade delegation that traveled to China, alongside many others in our industry, have an opportunity to capture an even larger share of that market. As China pushes hard to curb its emissions, it will need the kind of advanced, scalable clean energy technology that American businesses are ready to export.

That’s why leaders from the Department of Commerce, the Department of Energy, and 24 American firms, including mine, traveled from Beijing to Guangzhou this month to offer a host of next-generation climate solutions, spanning green buildings and data centers to smart grid software.

In the months ahead, our two countries will accelerate bilateral trade in low-carbon products and services. Our businesses will continue to grow and add jobs, and the cost of clean energy will fall. Earth’s two largest economies and two largest carbon emitters — which together account for half of all greenhouse gas pollution — will signal by the power of our example that we’re willing to lead in a new clean energy era.

In turn, concrete steps toward our shared climate commitments will continue to spur progress beyond our borders. Scaling the global clean energy economy is already driving down the cost of low-carbon technologies worldwide. More countries are getting the chance to invest.

They’re also looking ahead to the next United Nations Climate Conference. When the U.S. and China approach the negotiating table in November, the world will finally see the two most critical climate actors champion an ambitious, inclusive deal to drive down global carbon pollution.

If an agreement can be reached in Paris — and there is great optimism that it can — American businesses will turn the text of a treaty into tech that’s ready to ship all over the world. That’s good news for our economy, but even more so for our children, for whom climate solutions mean the difference between a livable planet and one that’s beyond fixing.

Tips on China company verification

The most secured way to verify chinese company is to visit the local administration of industry and commerce, check the company registration information of said company from local AIC with the information listed on their business license to see if they are the same.

You can find the following company information at local AIC: date of incorporation, address, legal representative, registered capital, contact information, business scope, business type, business term, annual inspection performance, etc.

Chinawhy offers inspection service in China(including local AIC visiting) for paid customers, However, we are happy to share some open company verification resources( regarding AIC visiting) with customers who are doing very small business and can't afford to pay for a proper company verification.

In a long run, China will build up a comprehensive company registration information inquiry system, but for now, we don't have a nationwide level official website offers such data inquiry service.

Some local AIC have set up website for users to check the basic information of a company found within their administrative area, I have checked whether these website are authentic by testing to check some local companies which I knew are legit, However, for many AIC website which offer online company information inquiry service, the results are not correct due to they haven't built up an complete online database of company registration information they possessed.

I know "Anhui zhongding holding"  is real and legit, so when I open www.szcredit.com.cn, I input the company name , then click to look for , you will find that this company is a Hongkong-funded enterprise and has one subsidiary company, you can also see the legal representative of this company, but if you want to inquiry more detailed information of this company, you will be charged. So in conclusion:
1)most AIC don't offer online company information inquiry service
2)among those AIC websites that offer online inquiry, many are not authentic due to database incompleteness.
3)Among the few AIC website that offer online inquiry function and have a complete database for accurate company information inquiry, most are paid, only a few are free. We are going to share with our fellow users if we found other free open resources for company verification.

Chinawhy have verified more than 2000 companies since 2006, our company verification service covers most part of Mainland China.