How I vet a Chinese supplier before paying the deposit

TL;DR: Before you wire a deposit to a Chinese supplier, get the business licence, check court and risk records, confirm whether you're dealing with a factory or a trading company, and size the first order so the deposit is an amount you can afford to lose.

Last updated: November 2026

The first time I wired a deposit to a factory in Guangdong, my due diligence was a nice Alibaba storefront and a sales rep who replied within ten minutes. The goods did show up. They were also six weeks late, from a different company than the one on my invoice, and the "factory" turned out to be a trading company two layers removed from the people actually making the product.

Nothing about that was a scam. It was just a supplier I didn't understand, and I paid for it in margin and stress. Since then I've used the same checklist every time. None of it is secret, and most of it takes an evening.

Start with the business licence

Every legally registered company in mainland China has a unified social credit code. It's 18 characters long and printed on the business licence.

Ask for a photo of the licence before you discuss price. A real supplier will send it without fuss. If they stall or send something blurry, that tells you a lot already.

Once you have it, look at these fields:

• Company name in Chinese. Your contract, invoice and the bank account you pay into should all match this name. Not a similar name. This one.
• Date of establishment. A company set up four months ago isn't automatically bad, but it shouldn't be calling itself "15 years of experience."
• Registered capital. This is a declared figure and often not paid in. Treat it as a weak signal at best.
• Business scope. If the scope says trading, import and export, and the rep says they own the injection moulding line, ask them to explain.
• Legal representative. Note the name in case it turns up behind other companies.

Check the risk records

Chinese commercial databases pull in court and administrative records, and these are where the real warning signs live.

These are the warning signs I care about most:

1. Abnormal operations listing. Companies get put on this list for things like not filing an annual report or not being reachable at their registered address. One old resolved entry is common. A current one is a reason to pause.
2. Court judgments and enforcement cases. A few disputes for a large manufacturer is normal. A small company with a pile of unpaid supplier judgments is telling you how it treats the people it owes money to.
3. Dishonest judgment debtor records. This is the blacklist for companies that ignored court orders to pay. I won't send a deposit to anyone on it.
4. Recent changes. A new legal representative, a sudden address move or a change in shareholders in the last few months is worth one polite question.

The catch is that most of this is in Chinese, behind paid databases, and the pages are dense. That's the part that tripped me up for years.

Manufacturer or trading company?

Both are fine. Trading companies often handle small orders better.

The problem is when you think you're dealing with one and you're dealing with the other, because your price, lead time and quality control all depend on it.

Ask directly: "Is the factory address the same as your registered address?" Then ask for a short video walking from the gate to the production line, filmed that week. Photos of the factory tell you nothing about capacity, quality or certifications, so don't read them that way.

Gotchas that cost me money

These are the gotchas that have cost me money.

• The bank account name doesn't match. "Please pay our Hong Kong company" or "pay my personal account this time." Stop and verify before you send anything.
• Certificates you can't trace. A CE or FCC certificate in a PDF proves little on its own. Ask which lab issued it and check the report number with that lab.
• Samples from a different source. Ask for the sample to ship from the same address that will ship production, and keep the waybill.

Structure the first payment to limit damage

Even after all the checks, the first order is a test. The usual terms are 30% deposit and 70% before shipment.

On a first order I try to do the following.

• Keep the order small, even if the unit price is worse.
• Pay the balance only after a pre-shipment inspection or, at minimum, a detailed photo and video set of the packed goods with your labels visible.
• Use Alibaba Trade Assurance if the supplier is on Alibaba.
• Write the product spec, packaging, tolerances and lead time into the purchase order, in both English and Chinese if you can.

Your exposure on that first order is the deposit. Decide in advance how much you're willing to lose while learning, and size the order to fit.

Where I ended up

After doing the records part by hand with a translation app too many times, I built a manual China supplier background check service called Forthsource.

A person reviews the supplier's Qichacha record, reports the company and risk fields above in plain English, and gives a verdict. It's not an audit and it doesn't check quality or certifications. It just means I'm reading the records before I wire money, which is the step I used to skip.

Whatever you use, do the checks. An evening of reading is cheaper than a lost deposit.