Verify a Chinese factory before sending $50K

You've found your supplier on Alibaba. Quote looks good, samples arrived, MOQ matches. They're asking for 30% deposit — your first $15K. Stop. Run this protocol first.

1. Verify the business license (营业执照)

Ask for a clear PDF of their business license (营业执照). It must list:

• Registered company name (in Chinese characters)
• Unified social credit code (18 digits, starts with letter)
• Registered capital
• Business scope (must include manufacturing of your product)

Cross-check the license at gsxt.gov.cn (China's official corporate registry, free). If the registered scope says "trading" but they claim to be a factory — they're a middleman.

2. Match the bank account name

The wire must go to the registered company name on the business license. If they ask you to wire to a personal Hong Kong account, an "agent," or a slightly different company name → walk away. This is the #1 fraud pattern.

3. Use a third-party inspection ($150-300)

Services like SGS, Bureau Veritas, or QIMA send an inspector to the factory address. They confirm:

• The address is a real factory, not an apartment or warehouse rental
• Production lines exist for your product category
• Worker count roughly matches what the supplier claimed

This single $200 expense kills 90% of fraud cases.

4. Video call from the factory floor

Insist on a live video tour with the salesperson walking through production lines, showing equipment plates with serial numbers, and pointing the camera at the company sign at the entrance. A scammer reselling stock photos can't fake this.

5. Pay via secure terms

• Trade Assurance (Alibaba escrow): protects you up to the order value, but only releases on shipping documents — not quality
• Letter of Credit (LC) at sight: bank-to-bank, costs ~0.3% but protects both sides
• 30/70 wire: 30% deposit after PI signed, 70% after BL copy received — never pay 100% upfront

6. Order the inspection AT production end

Pre-shipment inspection (PSI) before the 70% balance. The inspector grades 80–100 sample units; if AQL fails, you renegotiate or refuse shipment.

Red flags to walk away from

• Email is @gmail.com or @qq.com (not company domain)
• Refuses video call "due to factory rules"
• "We can ship next week" for a custom product (real factories book 30–45 days out)
• Bank account in a different country than their license
• Their address on Google Maps is a residential building

The math on prevention

• $50K order, 0% verified → 5–8% chance of total loss = $2,500–4,000 expected loss
• $50K order, fully verified ($200 spent) → <0.1% chance of loss = $50 expected loss

Verification has a 25× ROI. Skip it once and you'll learn why.

For real numbers on your next order, run /en/calculator/b2b-margin-calculator/ — it shows the true landed cost so you know what's at stake.