How to verify a supplier in China before you send a deposit

Most supplier fraud and most supplier disappointment start the same way: a good-looking catalogue, a friendly sales rep, a low quote and a request for a deposit. Verification is the work you do before the deposit. It costs a few days and a few hundred dollars, and it prevents losing the deposit or, worse, receiving a container of goods that fail inspection.

This guide gives a practical order of operations for a small importer. It is general business guidance, not legal advice, and no check is perfect: the goal is to make fraud expensive and to spot mismatches early. Before you send a large payment, consider a third-party audit or a professional vetting service.

Step 1: Confirm the company exists and who it is

• Ask for the business license. A Chinese company has a business license showing its registered name in Chinese, a Unified Social Credit Code (an 18-character identifier), legal representative, registered capital, address, date of establishment and business scope.
• Check it against the official register. The National Enterprise Credit Information Publicity System (gsxt.gov.cn) lets you search a company by name or credit code and shows its registration status. Some provincial versions are easier to use with a Chinese-speaking colleague or a translator. Make sure the name, code, address and legal representative match the license the supplier sent.
• Check the business scope. A company whose scope does not include manufacturing or trading in your product category deserves a follow-up question.
• Check the age and capital. A company registered a few months ago with minimal capital that claims twenty years of experience is a red flag. Registered capital is not the same as paid-in capital, so do not read too much into a large number.
• Match the company name to everything else: quote, proforma invoice, contract, bank account holder, and the seller's name on the commercial invoice.

Step 2: Work out whether it is a factory or a trading company

Neither is automatically bad. A trading company can offer lower minimums and multiple products; a factory offers control and usually a better price at volume. The problem is misrepresentation. Ask directly, then verify.

• Ask for a live video tour of the production floor at a time you choose, not a recorded one. Ask them to show a specific machine and hold up today's date.
• Ask for the factory address and check it on a map and satellite imagery. A "factory" whose address is a residential tower is a warning.
• Ask which processes are done in-house and which are outsourced.
• Ask for the names of the equipment and the monthly capacity. Vague answers suggest a trader.

Step 3: Check their track record and references

• Request two or three references from overseas customers in your market, and actually contact them. Ask about on-time delivery, defect rates, and how problems were resolved.
• Look at their export history. Public bill-of-lading databases and trade-data subscriptions can show whether a supplier ships to the U.S. and how often, using the names on the manifest.
• Search their name and address along with words such as "scam," "fraud" and "review" in English and Chinese, and check on-platform ratings and transaction history if you found them on a marketplace.
• Verify certificates. If they claim ISO 9001, CE, UL or a product-specific certification, ask for the certificate number and verify it with the issuing body or accreditation database. Fake certificates are common. A certificate for a different company name or a different address does not cover your supplier.

Step 4: Screen for forced-labor and sanctions risk

The Uyghur Forced Labor Prevention Act (UFLPA) creates a rebuttable presumption that goods made wholly or in part in the Xinjiang region, or by entities on the DHS UFLPA Entity List, are made with forced labor and are barred from entry. CBP detains shipments on this basis and importers carry the burden of proof. Products with cotton, polysilicon, aluminum, tomatoes and some other inputs deserve extra attention. Screen the supplier's name and its known sub-suppliers against the DHS UFLPA Entity List, and ask for a supply chain map showing where raw materials originate. Also screen names against the Treasury OFAC sanctions lists and the Commerce Entity List.

Step 5: Samples, then inspection

• Order a paid sample from the actual production line, not a hand-picked showpiece. Test it against your specification, and if needed have it lab tested for the standards that apply to your product category.
• Write the specification, tolerances, packaging and labeling into the contract, with photos of the approved sample attached.
• Book a third-party pre-shipment inspection before the balance is paid. Inspectors check quantity, workmanship, function, packaging and labeling against an agreed sampling standard, and give you a report with photographs.
• For a large or repeat program, consider a factory audit covering capacity, quality systems and working conditions.

Step 6: Protect the payment

• Pay only to an account in the verified company's name. A request to pay a personal account or a company with a different name is the classic sign of a fraud or a diverted payment. Confirm any change in bank details by phone with a number you already had, not one in the email asking for the change.
• Do not pay 100 percent up front to a new supplier. A common pattern is a deposit to start production and the balance against inspection or copies of shipping documents. Confirm what is customary in your product category.
• Consider a payment method with recourse such as a letter of credit, a marketplace escrow or trade assurance program, or a bank wire with the deposit kept modest for a first order.
• Get everything in a written contract stating the legal names, product specification, price, Incoterm, delivery date, inspection rights, remedies for defects and late delivery, and which law and dispute forum applies. Consider enforceability in China before assuming a foreign court can help.
• Protect your intellectual property. If you supply designs, use a non-disclosure, non-use and non-circumvention agreement written for enforcement in China, and consider registering your trademark in China before you share your brand with a factory.

Red flags checklist

• Price far below every other quote for the same specification
• Refusal of a live video call or unscheduled tour
• Business name, bank account and invoice names do not match
• Payment demanded to a personal account or third-country account
• Pressure to pay quickly because of a "special price"
• No verifiable address, or a virtual office
• Certificates that do not check out
• Communication only by a messaging app and no company email domain

How much verification is enough?

Match effort to exposure. For a $1,000 sample order, steps 1, 2 and 6 may be enough. For a $20,000 order, add references, certificate checks, a paid sample and an inspection. For a program above that or one with safety, regulatory or IP exposure, add a factory audit and formal vetting. Keep a file for each supplier with everything you collected, and use it later in your supplier scorecard once the shipments start.

Sources

• National Enterprise Credit Information Publicity System (China): gsxt.gov.cn
• U.S. Department of Homeland Security, UFLPA Entity List and CBP UFLPA enforcement information
• U.S. Treasury OFAC and Commerce BIS restricted-party lists

Reviewed September 21, 2026. This guide is a process outline, not a guarantee against fraud. Confirm legal points, including UFLPA obligations, with a qualified attorney.

Frequently asked questions

How can I check if a Chinese supplier is real?

Ask for their business license with the 18-character Unified Social Credit Code and check it on China's National Enterprise Credit Information Publicity System (gsxt.gov.cn). Confirm the name, address and legal representative, then match the company name to the contract, invoice and bank account holder.

How do I know if a supplier is a factory or a trading company?

Ask for a live, unscheduled-time video tour of the production floor, check the address on satellite imagery, ask which processes are in-house, and compare the business scope on the license. Trading companies are legitimate but should say what they are.

Is it safe to pay a Chinese supplier a deposit?

A deposit is normal, but pay only to an account in the verified company's name, keep the first deposit modest, tie the balance to a pre-shipment inspection or shipping documents, and put terms in a written contract. Be wary of requests to pay a personal or differently named account.

What is UFLPA and why does it matter when choosing a supplier?

The Uyghur Forced Labor Prevention Act creates a rebuttable presumption that goods made wholly or in part in Xinjiang or by listed entities are made with forced labor and cannot enter the U.S. Importers carry the burden of proof, so screening suppliers and their raw material sources before ordering is important.