When overseas buyers work with Chinese manufacturers, most of the attention goes to price and lead time. But in almost every bad story, the warning signs were already there long before the disaster – they were just ignored in the rush to “place the first order and see what happens”. A red flag does not always mean “walk away immediately”. It means “this supplier carries higher risk than normal, so you either reduce exposure, add verification steps, or replace them”. Below are 10 common red flags I see again and again, plus a simple response for each.
Red flag 1: They only offer personal bank accounts, not a company account
For a legitimate factory, receiving payment into the company’s corporate bank account is normal. The worrying pattern is: the PI header says “ABC Industrial Co., Ltd.”, but when it is time to pay, they only give you a private bank account in someone’s personal name or a third-country account, with explanations like “company account is inconvenient”. Once you pay into a personal account, it is much harder to hold the legal entity liable if something goes wrong.
Basic rule: for anything beyond small samples, insist on paying to a corporate account whose account holder name matches the full legal company name on the business license. If they argue strongly against this simple requirement, that supplier does not deserve to be your key partner.
Red flag 2: Different names on the Alibaba page, contract and invoice
Some suppliers show one name on their Alibaba page, a different company on the contract, and yet another trading company on the invoice, explaining it away as “all our own companies”. For you, that “all the same” is a huge risk. If a dispute arises, you will not even know which entity to sue, and any search on business licenses or court records may end up pointing to the wrong company.
Your response should be to ask for a consistent set of company details: full legal Chinese name, unified social credit code, registered address and corporate banking info, then check that against the contract party, PI header and shipper. If they cannot or will not align these, consider using our Background Check Service to clarify the real legal structure before you proceed.
Red flag 3: They refuse to share their business license or full Chinese name
Some suppliers only use an English trade name in chats. When you ask for the Chinese legal name or a copy of the business license, they dodge the question, send a blurred image where you cannot read the number, or claim “in China we don’t share this”. In reality, a Chinese business license is an openly displayed certificate; a normal company has no reason to hide it from customers.
If they consistently refuse to provide a clear, complete business license, two possibilities exist: either there is no legal entity behind the story at all, or they are deliberately separating you from the real legal entity to avoid future claims. In that case, you may still place a tiny test order if you wish, but you should not build any serious or long-term plan around this supplier.
Red flag 4: They avoid live factory video tours during working hours
Photos on websites and Alibaba can be staged or stolen. A random live video call during working hours is much harder to fake. When a factory that claims to have dozens of machines and many workers always finds excuses to avoid a live walkthrough – “the workshop is messy today”, “workers don’t like being filmed” – yet only sends you carefully curated photos, that is a strong signal.
Your response: Make three concrete requests: a live call on a working day, walking through the production area; showing a few key machines and their nameplates; and briefly filming the factory gate and address sign. If they keep failing or refusing to meet these simple requests, you are likely not seeing the real situation.
Red flag 5: Their lead times and capacity promises are far beyond industry norms
If all other factories in the same niche quote 45 days for a full container, and this one promises 20 days, or if factories with similar size and equipment claim half the output of what this supplier boasts, something is off. In a few rare cases, they might truly be more efficient. More often, it is a textbook case of “promise anything to win the PO”.
Instead of either blindly trusting or flatly rejecting them, break down the claim: ask how many shifts, how many workers per shift, how many machines are actually running, how many pieces per machine per day. Then make sure the promised lead time and penalties for late shipment are written into the contract.
Red flag 6: For the very first order, they insist on 100% upfront and keep pushing for fast payment
In many industries, a reasonable deposit is normal. But when a factory insists on 100% upfront for the first deal and keeps pushing you to send money “today, now”, it usually means either a very tight cash flow or a mindset focused solely on grabbing cash, not building a relationship.
Your response: propose a structure you are comfortable with, like 30% deposit + 70% before shipment or after inspection, or milestone-based payments. If they strongly reject any form of balance payment and would rather walk away from the order than accept it, that tells you all you need to know about their priorities.
Red flag 7: They avoid written confirmations and rely only on calls and vague promises
Some suppliers seem extremely cooperative in chats – they verbally agree to everything – but as soon as you write down specifications, packing, quality standards and remedies in an email or contract and ask for confirmation, they switch to vague language like “we will try our best” or “no problem, we are flexible”. This reluctance to commit in writing is itself a risk.
Your response: Turn all key points into a written checklist: specs, materials, testing standards, labels, documents, delivery dates and what happens if the goods fail. Ask them to confirm in email and, ideally, sign and stamp the contract.
Red flag 8: Court records show multiple contract disputes, enforcement and blacklist entries
This one takes some homework or a third-party check. Many problematic factories already “leave footprints” in Chinese court and enforcement databases: unpaid invoices, sales contract disputes, and entries on the “dishonest person” blacklist. These do not automatically mean they are scamming you right now, but they do mean their track record on contracts and payments is worse than average.
If a background check reveals a long history of such cases, you should change your strategy: keep orders small, avoid heavy upfront payments, make your contract more detailed, and always include third-party inspection when feasible.
Red flag 9: Frequent changes of contact person, email and payment information
Staff changes happen. But when your contact person keeps changing every few weeks, emails shift from company domain addresses to free personal accounts, and payment accounts are changed again and again, it points to either chaos inside the company or deliberate fragmentation of identities and accounts. If you see this pattern – business cards with a company-domain email that is rarely used, real communication happening on personal Gmail or Hotmail, sudden “resignations” where new staff know nothing about previous agreements – it is time to limit your exposure.
Red flag 10: Strong resistance to quality control and third-party inspection
A factory that is confident in its quality is usually open to reasonable QC processes and independent inspection. A worrying supplier reacts very differently: when you suggest third-party inspection, they become defensive; when you ask for QA reports or internal QC procedures, they wave it off with “we always do QC”; when you propose to write inspection and failure handling into the contract, they accuse you of “not trusting them”.
Your response: Can you afford to lose this shipment if things go wrong? If not, then saving a few hundred dollars on inspection fees and a bit of negotiation time is a false economy. Prefer factories that are willing to put quality commitments into the contract and to accept third-party inspection – that is how you build a supply chain based on shared rules, not on whoever talks the loudest.
Conclusion: the more red flags you see, the smaller the orders and the toughter the terms should be
Any single red flag on its own does not automatically disqualify a Chinese supplier. But when several of them appear together, you are no longer facing “normal business risk” – you are actively stepping into a minefield. The rule of thumb is simple: the more red flags you see, the smaller the orders should be, the more staged and conditional your payments should be, and the deeper your background checks and inspections should go.
If you already have a Chinese factory in mind and have spotted one or two of these signals, it is often worth ordering a proper background check or a factory audit before you wire a serious deposit. Turning messy Chinese records on registration, shareholders, lawsuits and blacklists into a clear English risk report gives you the information you need to decide how much to order, on what terms, and whether this supplier truly deserves a place in your long-term supply chain.