For many buyers, placing the very first order with a Chinese factory feels exciting and scary at the same time. The biggest fears are simple: you wire the money and the supplier disappears, or the goods arrive but the quality is nowhere near what was promised. On the other side, serious factories also hate this lack of trust and hesitation. A structured verification before your first order is not over-thinking things; it is how you put the relationship on a safer, more transparent footing.
Step 1: Know exactly who you are dealing with – verify the legal entity
Finding a nice Alibaba page or a friendly sales rep on WhatsApp does not mean you really know who you are trading with. What you actually need to confirm is: which legally registered company in China is quoting, signing the contract and receiving your payment; what its full Chinese name is; where it is registered; and whether the name on the bank account matches the company’s legal name. Once this “entity” is clear, any further checks on business license, lawsuits or blacklists will point to the right company instead of a completely different one with a similar name.
Step 2: Check the company’s official profile in Chinese government databases
Every Chinese company has an official “file” in government-run credit systems. It includes a unified registration number, registered capital, legal representative, shareholder structure, business scope and date of incorporation. Healthy companies are usually shown as “active” or “in business”. If you see warnings like “revoked”, “deregistered” or “abnormal operations list”, that is a clear red flag. All this information is public, but the interfaces are in Chinese and the details can be technical, which is why many overseas buyers struggle to use them without help from someone on the ground in China. If you need help digging into these records, checking our Background Check Service is a fast way to get the truth. You can also learn how to check these records yourself in our guide on checking Chinese companies without knowing Chinese.
Step 3: Focus on lawsuits, enforcement records and credit blacklists
A business license only tells you that the company once got registered. What really affects your payment risk is its history in Chinese courts: has it been sued for large amounts, has it been subject to enforcement actions, is it on the national “dishonest person” blacklist. If a factory has a long list of lawsuits and enforcement records, that usually means frequent disputes with customers or suppliers, or a very stressed cash flow. In that case, even if they are still operating, you should be extremely careful with payment terms and the size of your first orders.
Step 4: Verify its real production capacity, not just the photos
Websites and Alibaba stores can look impressive, but what you care about is whether those production lines, machines, workers and warehouses actually exist and match what they claim. (See why Alibaba verification isn't enough). Practical ways to check include: asking for a live video call during working hours, walking around the workshop; asking them to show a specific process or product detail on camera; comparing the address on their business license with what appears on their website, invoices and business cards. If the order value is significant, commissioning an independent on-site factory audit to take photos, shoot video and check documents on the spot can give you a much clearer picture.
Step 5: Use contracts and payment structure to keep risk within your comfort zone
No matter how trustworthy a factory looks, it is rarely a good idea to pay 100% upfront on the first deal. A more balanced approach is: use a written contract that clearly defines specifications, quality standards, delivery dates and remedies for non-conformity; structure payments as “deposit + balance after inspection or before shipment”; and for larger or more critical orders, build third-party inspection or factory audit into the contract and spell out what happens if the goods fail. This way, if something goes wrong, you have documents and a payment schedule you can rely on, instead of being completely exposed.
Step 6: When is a full background check or on-site audit worth the cost?
You don’t need a full due-diligence report for every small sample order. But when any of the following is true, a deeper check is usually worth it: the factory is likely to become your key supplier in a category; the order amount is beyond what you are prepared to lose; or you are about to entrust the long-term supply of a brand or store to this partner. In those situations, a report covering business-license checks, shareholder and controller information, lawsuits and enforcement records, blacklist status and, where needed, an on-site audit can help you see the factory’s real condition before you commit serious money.
Conclusion: verification is not about “trusting less”, but about “knowing more”
Background checks are not a sign that you are overly suspicious. They are simply a low-cost way to learn more factual information about a Chinese factory. The clearer the facts, the easier it is to decide how big your orders should be, what payment terms are acceptable, and what level of inspection or auditing you need. When placing your first order in China, the real danger is acting on assumptions instead of evidence. If you want someone in China to dig out these public but hard-to-read records and explain the risk to you in plain English before you decide, that is exactly what independent factory background checks and audits are designed for.
Ready to start? See our China Factory Audit Process to clear your doubts today.