How to Vet a Supplier in China Before You Pay a Deposit
A polished catalogue and a quick reply prove very little. Here is the order of checks we run on every new factory, from the business licence to a third-party audit, before any money moves.
In this piece 6 sections
Most bad supplier experiences do not start with fraud. They start with a buyer who skipped a cheap check because the sales contact was responsive and the prices looked right. The checks below are ordered so that the free ones come first and the expensive ones only happen for suppliers who have already passed the basics.
Step 1: Check the business licence
Every Chinese company has a business licence carrying an 18-character Unified Social Credit Code. Ask for a scan, then look the code up yourself on the National Enterprise Credit Information Publicity System rather than trusting the image. You are checking three things: that the company exists and is active, that its registered name matches the name on your proforma invoice and bank details, and that its registered business scope actually includes manufacturing the product, not just trading it.
A mismatch between the company on the licence and the company receiving your payment is the single most common red flag. There are innocent explanations, such as a sister company that handles exports, but you want that explained in writing before you pay.
Bank details that change by email
If a supplier emails new bank details mid-order, phone your usual contact on a number you already have before paying anything. Payment-diversion scams on importers almost always arrive as a routine-looking email.
Step 2: Factory or trading company?
Plenty of suppliers on the big B2B marketplaces are trading companies that place your order with a factory they work with. That is not automatically bad: a good trader handles communication, consolidation and some quality checks. The problem is not knowing. Ask directly, ask for the factory address, and compare it with the licence. A real factory can usually show you its production lines on a live video call within a day; a trader will often hesitate or show you a showroom.
Marketplace badges help less than people think. Paid membership tiers and on-site verification badges confirm that some checks happened at some point. They do not tell you whether this supplier can make your product to your specification.
Step 3: Order paid samples, and keep one
Pay for samples, ship them by courier and test them as your customer would. Then keep one sealed, signed and dated: this becomes your golden sample, the physical reference that later inspections and disputes are measured against. A supplier that resists a written sample approval is telling you how disputes will go.
Step 4: Run a third-party audit for real orders
For any order you could not absorb losing, commission a factory audit from an independent inspection company. A basic manufacturing audit checks that the factory exists at the address, has the equipment and headcount for your volume, and runs some form of quality system. Certificates such as ISO 9001 are worth verifying with the issuing body, because copied or expired certificates are common.
| Check | Typical cost | What it rules out |
|---|---|---|
| Business licence lookup | Free | Shell companies, name mismatches |
| Live video walk-through | Free | Traders posing as factories |
| Paid samples | Product + courier | Quality far below the photos |
| Third-party factory audit | A few hundred US dollars per day on site | Capacity and quality-system gaps |
Step 5: Structure the payment
The common pattern is a 30% deposit by bank transfer with the 70% balance due before shipment. The protection is in what the balance is tied to. Make it conditional on a passed pre-shipment inspection against the golden sample, written into the purchase order, rather than on the goods being ready. Once the balance is paid and the container has left, your leverage is mostly gone.
Once the balance is paid and the container has sailed, your leverage is mostly gone. Tie the money to an inspection, not a date.
Put it in writing, in both languages
A purchase order should state the specification, the approved sample, the inspection standard, the Incoterm and the consequence of failing inspection. If the relationship matters, have a bilingual contract with the Chinese text reviewed, because that is the version a local court will read.
