Essential Tips for Checking the Reputation of a Chinese Company

So you’re looking for a supplier, you see some nice samples on Alibaba / Global Sources, and you’d like to do some research on the company before diving into negotiations.

This is prudent. More and more people are developing tactics to defraud buyers, particularly first-time buyers who hear of Alibaba and believe it is as simple and safe as Amazon…

Thankfully, you may research the organization’s credibility and reputation online, in official databases, and through service providers.

There are primarily seven methods a Chinese supplier can defraud an importer. They can be divided into two groups:

Inappropriate Behavior

• Disappearing after a deposit or sample fee is wired.
• The price rises after a deposit is made.
• Price increases from one order to the next without regard for increases in production costs.
• Infringement on intellectual property rights (selling the buyer’s design to other customers).
• Transparency is lacking (subcontracting outside of an approved facility, changing a component without notice, etc.).

Insufficient Expertise or Experience

• Unreliability: late deliveries, inconsistency in communication…
• Inability/reluctance to meet the desired quality standard.

Even if you are the most hands-off buyer, you must be on the lookout for scams. And any small fraud (for example, pretending to be a manufacturer when they are actually a trading company) IS a fraud. If they lie about this, they will lie about everything else as well.

So, how do you vet a Chinese company? Here are a few pointers.

• Try to get in touch with the company directly and speak to someone in customer service or sales. This can give you a good sense of whether they are responsive and professional.
• Ask around for referrals or recommendations from other businesses or individuals who have done business with Chinese companies.
• Search online for reviews or testimonials from past customers. – Use a reputable business research service like Dun & Bradstreet to get detailed information about the company, including financials, management, and history.
• Check to see if they’re registered with the Chinese government. You can do this by searching the Chinese Chamber of Commerce website.
• Make sure you understand their business model and how they operate. A good way to do this is to speak with other businesses that have done business with them in the past.
• Get a clear understanding of their financial stability. This can be done by requesting financial statements and speaking with their bank.
• Check their references and reputation. You can do this by searching online and speaking with other businesses in their industry.

Following these steps will significantly reduce your chances of being scammed.