Checking out the counterparty from China. Real advice.
Having decided to expand business contacts and begin cooperation with China, any business owner asks himself a question: “How to check a Chinese company for reliability?” And the main problem is not the difficulties of translation (there are translators for this), but the number of companies and contractors that operate in China, as well as the peculiarities of doing business and even the Chinese culture.
You can check the counterparty yourself, but if you are new to this business, it is best to contact the professionals from the UGL company, who since 2005 have been helping businessmen establish a profitable business with China.
In this article we will show what procedures a business owner will have to face and you will personally see that it is much more efficient and, most importantly, safer to use the services of our company.
Where does a supplier check in China begin?
Of course, with checking documents. If in Russia various security services deal with this issue, then when working with Chinese companies, you can check the documentation without their participation.
For this, UGL specialists check the statutory documents of a Chinese company, requesting them from the manufacturer, as well as performing an online check. After verification, we determine who we are dealing with – with a real manufacturing company or with a trader. The latter are very popular in China, they are a kind of intermediaries between the client and the manufacturer. Their earnings are the commission they receive from the manufacturer. However, often traders disguise themselves as manufacturers, misleading the client, our goal in the verification is to dot the and, to understand exactly who our client is working with.
When checking documents, we pay attention to:
- field of activity;
- date and place of registration;
- name of legal representative;
- company name;
- the company’s share capital.
Without knowing many of the nuances, a client can easily fall for a scammer. Let us give a simple example out of a hundred possible: the minimum capital of a large factory starts at 500 thousand yuan, all that is less than this amount indicates that it is a private entrepreneur or a fake company. Many of our clients do not know that in China, the registration of companies with an authorized capital of ten thousand yuan is allowed, which is the equivalent of an individual entrepreneur in Russia, therefore they take small companies for large enterprises.
That is why it is so important to use the services of professional consulting companies, since such “pitfalls” can be found everywhere.
Personal verification of a counterparty from China
Before signing a contract with a counterparty, we must visit his factory. The client may attend a preliminary inspection with our representative or entrust the inspection to us. In turn, we send a report with photos and videos captured at the factory. During the visit, we pay attention to the number of employees, the equipment used, the current execution of orders, stocks of raw materials and finished products, we look at how ordinary employees work.
Checking the details of the Chinese company
We always carefully monitor banking transactions through various communication channels. In addition to mail, we use instant messengers and telephones. The fact is that large Chinese enterprises do not pay much attention to their electronic security, so there are often cases when mail is replaced and instead of communicating with the manufacturer, the client negotiates with scammers.
Also in China, there is such a practice as the creation of twin companies. Under the same name, companies in Beijing and Shanghai can be registered that will not be interconnected at all. That is why we carefully check the details of a Chinese company before a money transfer.
How to protect yourself as much as possible when checking a supplier in China?
A guaranteed result and no risks can only be provided to you by a specialized consulting company that knows the Chinese market from the inside. Specialists of UGL Corporation Ltd. Since 2005, they have been providing marketing, consulting, agency and information services to large and small businesses.
If you ask for help from our specialists, you will receive:
- information on the current status of the company, including the amount of share capital;
- the composition of the founders
- information about the legal representative
- possible forms of settlements and terms of delivery of products;
- availability of export documents
- the actual manufacturing time of the products in production;
- availability of certificates and other information necessary for making decisions on further cooperation with a Chinese counterparty.
We will help you not only save time, but also take the first step towards building mutually beneficial relations with a trustworthy partner in China.
Still have questions? Call or email us.