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6 tips for background

checks on Chinese



I frequently lament about the number of importers who take high risks

by not doing any quality control. But the most under-rated tool to reduce
risks in China is certainly running a background check on potential

I listed 6 tips below, from the easiest to the most advanced and expensive.

1. Choose the right target

Do not waste time searching information about the company mentioned in
the salespersons signature, or on the trade showss booth. They might
actually steer you toward another company when time comes for

Ask for the company name and address that will be mentioned on the
invoice. Or, better yet, ask for a pro forma invoice (if both parties already
have a good idea of the products & pricing) and look at the company name
on that document.

2. Spot unscrupulous
There are two ways to notice unscrupulous companies.
The first one is to tell potential suppliers that youll have their
factory audited before any PO is issued, and later their production
inspected before any shipment is authorized. Mention it right away, from
the first encounter/email. If the supplier refuses it or looks flaky, it is a red

(By the way, factory audits are the right tool to verify a suppliers claims about
their production capability. Most quality control firms, and some sourcing
agents, can audit a factory based on a checklist that corresponds to your needs.
Prices range from 300 to 900 USD for one day of work, in the main production

The second one is to search these databases of the Chinese Supreme Court.
Search the Chinese name of their company (in China, not in Hong Kong),
and see if you find it there. You will be able to see if they were given a
sentence, and if they failed to pay the damages. Unfortunately this is only
available in Chinese.

3. Make good use of search

engines and B2B directories
Open Google or Bing and search [company name] + scam, [company
name] + dishonest, and a few variations. Importers who got a bad
experience often try to leave a trace about it on the web (example here).

While searching the suppliers company name, you will likely find the
profiles they created on several B2B directories. Look at the addresses and
phone numbers associated with the suppliers company. If they are not the
same, or if the supplier doesnt respond when you give him a call, he will
have some explaining to do.

If the company has a paying account on a B2B directory, some information

on their profile might have been verified by the directory itself:

For example, Global Sources checks important data (depending on the

amount of the contract) such as start date, number of staff in each
department, factory ownership, amount of sales, brand names, and so on.
On the contrary, be careful with Alibaba. A Gold Supplier status means
nothing. Read here about a real-life example of a supplier that was taking
advantage of it.

In any case, the general tendency is to show more and more of these data
out there, in the open. It contrasts strongly with Chinas culture of opacity,
and I think it is a very good thing.

With a Google search, you might also see that they participated in trade
shows recently. This is a good sign. A booth is an investment to get new
customers. And repeated presence in the same trade show is the sign of a
company that cultivates relationships with the same customers.

4. A sample request is a good

occasion to check two things
If you need to pay for the initial sample charge, insist on wiring money on
their company bank account. If they cant give you that information, they
are probably not a serious supplier.

If you need to pay the courier fee for sending the samples, dont just give
your account number to the supplier instead, ask your courier to pick the
samples up. This way, you know the suppliers address, and you can
compare it to the address on their business registration (which you should
have asked for beforehand).

5. Background checks, on the

I recently found China Checkup, which provides background check services
that correspond to foreign buyers needs.

And we also provide this service to some of our clients, as a good

complement to factory audits. The price for checking one company is only a
few hundred dollars.
Note that the target company is NOT aware that one of their customers is
running this type of verification on them. In many cases, though, the
customer should be proud of it it shows they are a serious customer,
investing to build a solid and long-term supplier base.

6. Background checks, together

with professional advice
If you dont like DIY solution, a lawyer or accounting firm that works in China
can help you. If you are not familiar with Chinese business practices, they
can smell inconsistencies or red flags and warn you.

If you are about to place a large order with a new supplier, I highly advise to
work with a lawyer, both for due diligence and for drafting an OEM

Note that, in this case, the supplier knows an investigation is under way.
Again, I believe importers should not be apologetic about this.

Anatomy of a China scam


I was recently contacted by a reader from Australia, who was scammed

by a Chinese supplier. She gave me a lot of details, so I suggested that she

writes what happened to her (including any suspicious signs she should
have noticed).

The content of her email is pasted below. I inserted some comments along
the way.
The company name is Coke Tex Co. Ltd. and they say they produce Bamboo
Baby products like bamboo cloth nappies, bibs, baby clothing.

Thats a wide range of products. Obviously they dont produce it all by

themselves. And, with a company name like this, it is very probably an

Only after we sent them the deposit ($3,600) back in October 2012 and
there was no action from their side to start up the order, I started to look
for suspicious signs.

Due diligence should start before an order is given.

The discussion for this order started in April 2012. I was pleased with
lightning fast answers to my emails and requests for quotes, fabric details,

Easy communication does not mean serious company. When things are too
polished, it is nearly a suspicious sign in China

Finally I decided to pay 40% deposit that they requested so they start
working on my order, which they promised to finish and I expected to
receive here in Melbourne, Australia, before Christmas.

A 40% deposit? The norm is 30%.

To this day, we have not received even initial fabric swatches to approve the
fabric production, not talking about products samples.

Among few of suspicious signs I could mention:

asking us to pay to their personal card rather than companys account to

avoid taxes

Thats a huge red flag!

after checking, weve found the company has about 5 different mobile and
land line numbers on different web directories. The same with addresses
different address appeared on different website directories of their
companys profile
A bit of due diligence might have uncovered this.

after few months of discussion, they asked us to increase the order

amount stating that their minimum order amount should be $10,000
(obviously, wanted larger initial deposit being sent by us)

Suppliers often change the conditions when they feel the buyer has
invested a lot of time with them and is locked in. Not necessarily the sign
of a scam, but not a good sign.

Comparing to another Chinese factory weve been working for 4 years

with now, Coke Tex Co. Ltd. did not have registered business shipping
account (DHL, FedEx, etc. ). Serious factory cant operate without the one if
they regularly send samples to their clients around the globe

True. Thats also a red flag.

there has never been any replies to our phone calls: before or after
sending the money across

One more red flag.

their website is not developed

Not necessarily a bad sign.

started to discuss the order from April 2012, paid deposit in October 2012,
i remember being constantly pushed to pay so they start the order quickly

Not necessarily a very bad sign.

no replies after the initial deposit has been received by them

Obviously too late to react.

Looking for serious supplier to engage into trustful business relationship,

our partner travelled to Shanghai to meet with Coke Tex Co. Ltd.

Mr. Liu (presumingly the owner and negotiator with us via emails, his email
is liu@coketex.com) met him. He explained that their office is far away from
their factory so hed better take him to visit the factory as they cant do
both. I have great suspicions that our partner was taken to their own
factory at all. He was taken to some factory to be impressed and earn our

Yes, very likely.

From our experience, we want to warn any small business owners to take
the time (and spend the money if possible) to do a very thorough check up
on Chinese partners business before engaging into any relations: sending
your products designs, money, etc. Fast replies to your emails and great
communication, even meeting them personally, dont prove,
unfortunately, that the business is legible and trustful to work with. Before
even engaging into correspondence, wasting your time do check on them
first whether theyre worth your time or not.


Our mistake was also that we wanted to quickly place the initial trial order
and paid without the contract.

Yes, thats often what makes the scammers job much easier.

Hopefully some prospective buyers will search for that companys name
and will find this article, before they send a deposit

If you were scammed, or deceived in any way, in the past and you have an
interesting story to share (with lots of details), please let me know!

1. I feel for this buyer who got scammed. It stinks seeing that happen. I think as
its become so much more competitive, with so many suppliers (b/c of the internet),
many smaller buyers since the economic collapse and more smaller buyers trying
their hand at China these types of scams are more and more prevalent.
Buyers need to wisen up and do due diligence. As they saying goes, most folks in China
dont trust each other why would an overseas company trust them, especially when
they have to wire money? not sure if thats an actual sayingthat may just be how
people in the import industry talk

Have a great weekend, Renaud and thanks for sharing that.

o Renaud Anjoran says
February 23, 2013 at 11:18 AM
You seem to think there are more and more scams. Thats also my feeling, and it
might well be due to the higher number of small unprofessional buyers and to
websites like Alibaba.
You are right. Its funny how someone from Guangzhou wont trust someone from
Shantou, and yet foreign companies wire deposits and authorize shipments
without checking anything

2. Tommy says
February 25, 2013 at 3:43 PM
As a Chinese supplier,i hate this kind of behavior.But I think if customer can find the
person in China,we can get back the money for you.When you choose a supplier,pls
always do like this way:
1.only send money to company account,not personal account.
2.Never choose those companies with account no. in Hongkong or offshore account.
3.Most Chinese suppliers have city or province name before the company.Like the
company name mentioned in the article,it should be an offshore company

o Renaud Anjoran says

February 25, 2013 at 8:23 PM
Tommy, actually it is really hard to get the money back in these cases. But your
advice is valuable, thanks.

o Tatiana says
February 26, 2013 at 7:01 AM
So if it is offshore company, is it always scam to stay away from? Can anyone
clarify this pease.

Renaud Anjoran says

February 26, 2013 at 10:08 AM
No its not. There are a lot of legitimate Hong Kong-based suppliers.
But when someone in the mainland pretends to be a manufacturer and
requires payment in a Hong Kong bank account, the buyer should ask for
explanations (and its for avoiding taxes does not cut it).

3. micheal says
March 2, 2013 at 3:20 AM
Hi Tommy, Whats your company called. i want to come to china and look for suppliers.

4. Tatiana says
March 19, 2013 at 11:20 AM
The story continues, i received notification from shipping company that the cargo is
waiting fro me in port melbourne. It took two weeks to call all my suppliers, email
everyone trying to find whose cargo that was. Coke Tex finally replied telling they were
sorry for delay with production and said they shipped the order partially so to avoid
being blamed they did nothing at all. asking to pay the rest 60%. I thought it was scam
and didnt want to pay. Storage charges accumulated. Liu deceased the value to
$1,200. I finally paid it and cleared the cargo, paid for storage..and received the
boxes full of plastic. No products. Total waste of time and money over $7,000.

o Renaud Anjoran says

March 19, 2013 at 10:18 PM
Ouch That hurts They are really professional scammers!

5. Yasass says
February 18, 2014 at 10:58 PM
Hi I am from USA
This is my storyThere is a company name TOOMLY dont purchase from them its a
fraud one.
They will send an email too once your order is placed.
Thank you for your order from Electronical Parts.
Once your package ships we will send an email with a link to track your order.
I send them five emails no reply no order
Spread this among your friends

6. Gerry Jonson says

April 8, 2014 at 2:47 AM
I communicated with the potential supplier for a couple of months trying to find out if
he is legitimated or a scam. He got me when I placed an order and sent the money.
After sending the money he never sent me a single e-mail. I kept e-mailing him telling
him that the tracking number he gave me was invalid. He never replied. I started
sending e-mailing him that he is a crook, a scam and that I must get him no matter
what, that I informed even the police, which I did of course!! After three months, I got a
package with wrong products, with an invoice of products heading to Russia! I could
not believe that could happen to me! It ruined all my business plan because my
customers were waiting for goods and I ended up loosing them, but understood what
happened later on and regained trust in me.
Buyers ordering from China, be careful and scare the potential suppliers the way you
can and I guarantee you most will run away if they find out that you know already their
game. Now I am cautious than ever before, after I was hit big time.

o Renaud Anjoran says

April 8, 2014 at 10:09 AM
Thanks for telling us about this. Thousands of other buyers make the same
mistake every month
o Kaity says
May 30, 2014 at 11:21 PM
did you contact the police in china? I was jet scammed and am wondering how to
go about getting them!

Renaud Anjoran says

May 31, 2014 at 1:42 AM
The police in China has other urgent issues to solve. They wont help a foreign

o Boris C. says
August 23, 2014 at 1:46 PM
If package was to be headed to client in Russia, how did you get a hold of that
package? Was invoice fake?

7. kjay says
April 15, 2014 at 4:56 AM
China scam-Company name BYSKOV CO .LTD.Beware of this company .Lost 4000$
deposit with no shipment.They are good at communications but a totally fraud
company to deal with .

8. Kaity says
May 30, 2014 at 11:18 PM
Do not do business with Dongguan Haizhou Packaging Co. Ltd. I found this company
through globalsources.com and they replied to an inquiry I made for packaging
products. I did receive a proof of my design so they seemed legitimate but have since
stopped returning my emails and I cannot get though by phone since I paid in full for
my order. Luckily it was a small order, so the amount lost was not so bad, but watch
out for them. I had a family member make a similar inquiry to them to see if they
would respond and low and behold they did, but will get back to me.

9. Boris C. says
August 23, 2014 at 1:42 PM
Hi Renaud
I will quote comments and ask questions I had in mind:
They did not have registered business shipping account (DHL, FedEx, etc. )
How do you check if supplier has business shipping account?
I have great suspicions that our partner was taken to their own factory at all. He was
taken to some factory to be impressed and earn our trust.
I read from experienced importer that to make sure its in fact factory and one which
belongs to representative is to exchange your business card with him and factory
manager and look for signs outside of factory if those will match with business cards
you got.
o Renaud Anjoran says
August 24, 2014 at 2:22 AM
How do you check if supplier has business shipping account? > I agree this is
not easy. Suppliers usually dont want to give their account number to customers,
for good reason.
How to make sure we visit the right factory > Yes, good practices. And also
come with someone who speaks the local language and and have that person
listen to the way the salesperson and the factory people talk to each other.