How to Read a Chinese Business License — Line by Line

By Sol Research Desk · free guide · toolkit repo

The single document that separates real manufacturers from well-written websites. This guide decodes every field, shows you the four-name cross-check professionals run, and tells you exactly where to verify it for free.

Every legitimate supplier in China — factory, trading company, or one-person export shop — operates under a business license issued by the market regulator. The problem: most importers receive one, glance at the red stamp, and file it away. The license is not a formality. It is a map of who you're actually dealing with, and almost everything that matters is printed on it — if you know how to read it.

This is Step 1 of the VERIFY system. Here's the full decoding.

Where you'll see the license

1. The supplier sends it (ask — a real company sends it in minutes; hesitation is itself data)
2. The Alibaba/1688 storefront — check the "Qualification" or 资质 section, where platforms display verified licenses
3. You pull it yourself from the official registry (next section — this is the version nobody can photoshop)

Where to verify it for free

The authoritative source is the National Enterprise Credit Information Publicity System (gsxt.gov.cn) — run by the market regulator itself. Search the exact Chinese company name or the 18-digit code. The site can be slow or fussy from overseas connections and may require a mainland mobile number for some detailed views.

In practice, professionals also use Qichacha (企查查) or Tianyancha (天眼查) — commercial registries that mirror government data with faster interfaces and better search (both have English-capable apps and freemium tiers).

What you're looking for on any of these:

• 经营状态 (status): 存续 / 在业 (active) — anything reading 吊销 (revoked) or 注销 (deregistered) ends the conversation
• 经营异常名录 (abnormal operations list) — companies flagged for failing annual reports or unverifiable registered addresses
• 严重违法失信 (serious dishonesty blacklist) — self-explanatory
• 行政处罚 (administrative penalties) and court filings — patterns matter more than single civil disputes

The license, field by field

A standard license has nine fields that matter to a buyer. Here's each one and what it tells you.

1. 统一社会信用代码 (Unified Social Credit Code)

The 18-character ID every Chinese company carries. It encodes, in order: the registration authority, the entity type, the six-digit administrative region, a nine-digit organization code, and a check digit computed with the ISO 7064 MOD 31-2 algorithm.

What to do with it:

• Copy it into gsxt/Qichacha and confirm it resolves to the same company name. A fabricated license often fails this test — the code either doesn't exist or belongs to a different company.
• Check the issue date. Licenses reissued recently aren't suspicious, but a "long-established factory" whose code resolves to a company registered last year is lying about something.

2. 企业名称 (Company name)

Chinese company names follow a legal formula: region + chosen name + industry + organization form. Decode 深圳 (Shenzhen) 市 ××× 实业 有限公司 like this:

• Region (深圳市) — where the company is registered. Compare with the factory address they claim. A Dongguan factory with a Shanghai-registered company is common and explainable (HQ + plant), but the addresses should connect.
• Industry word (实业 / 科技 / 贸易 / 电子 / 日用品…) — a hint, nothing more. 实业 (industrial) suggests manufacturing; 贸易 (trading) says trading outright; 科技 (technology) is the favorite label of companies that are neither.
• Organization form (有限公司 = limited company; 厂 = factory, often a sole proprietorship) — note that 个人独资企业 (sole-proprietorship factories) have unlimited liability for the owner and weaker paperwork discipline. Not a dealbreaker; a reason for tighter contracts.

The name itself is not the verdict. The 经营范围 below is.

3. 法定代表人 (Legal representative)

The natural person legally accountable for the company. Your sales contact is usually not this person — that's normal. What matters:

• The name on the bank account you wire to must be the company name — never the legal rep's personal account, never the salesperson's account. (This is red flag #2 in the toolkit.)
• If the legal rep of the "factory" is also the legal rep of five other shell companies in the registry, you're looking at a serial shell operator. Qichacha shows these affiliations automatically.

4. 注册资本 (Registered capital)

Read this carefully, because it's the field most importers misinterpret:

Since the 2014 registration reform, most industries have no paid-in requirement. The number printed on the license is usually 认缴 (subscribed) — a promise, not a bank balance. ¥5,000,000 subscribed capital can legally mean ¥0 paid in.

The honest signal is 实缴 (paid-in) capital, which companies must disclose in annual reports (when they choose to disclose at all). Practical translation: don't be impressed by big numbers, and don't dismiss a great factory for a small one. Registered capital tells you about paperwork ambition, not solvency.

5. 成立日期 (Date of establishment)

Two patterns worth attention:

• Registered 2024 + quoting 15 years of history — someone is telling stories. The registry doesn't lie; the website does.
• Registered 3 months ago + asking for 50% deposit on a large order — new companies aren't evil, but they carry maximum counterparty risk with zero track record. Small trial orders, tighter payment terms, third-party inspection non-negotiable.

6. 公司类型 (Company type) & 7. 营业期限 (Business term)

Limited company (有限责任公司) is standard. Check the term end date — licenses marked 长期 (long-term) are normal; an expiry date next year is worth a question.

8. 经营范围 (Business scope) — the most important field on the document

This is the line that settles the factory-vs-trader question, which is the question behind half of all sourcing disappointment.

The scope is a list of approved activities. Look for these keywords:

A company whose scope contains only 销售/批发 (sales/wholesale) with no 生产/制造 is a trading company — whatever their Alibaba badges say. That's not automatically bad: good trading companies earn their margin with sourcing muscle, QC, and English-speaking staff. But you deserve to know what you're paying, and factory prices should not silently become trader prices.

One caveat: many manufacturers hold their production license under a related entity (the factory) while quoting you through their sales arm (the trading company) — extremely common in export. The correct response isn't panic, it's the four-name check below.

9. 住所 (Registered address)

Cross-check three addresses: the license address, the Alibaba storefront address, and the factory address from your video call. They don't have to be identical, but the story has to connect. Registered in an office tower while claiming a 20,000 m² production floor? The production floor belongs to somebody else — maybe a partner, maybe nobody.

The 5-minute protocol: the four-name check

After you've decoded the license, run the check that catches most fraud before money moves. Collect these four names:

1. Company name on the business license
2. Company name on the Alibaba/1688 storefront qualification page
3. Bank account name you're instructed to wire to
4. Company name that will appear on the export declaration (ask; they know)

All four should be the same legal entity — or connected through entities you can see in the registry (same legal rep, shared registered address, or a documented parent/subsidiary link).

You wire money, so rule 3 is where the scam lives: the invoice says Shenzhen ××× Industrial Co., Ltd., the bank account belongs to Guangzhou ××× Trading Co., Ltd. — maybe "the finance company of the group," maybe the last you'll see of your deposit. If the beneficiary name doesn't match the contract entity, the wire doesn't leave.

What a suspicious license looks like

• Checksum failure — the 18-digit code doesn't resolve to this company in the registry (fabricated or edited document)
• Scope says manufacturing, address is a residential compound or office tower — licensed on paper, producing nowhere
• Registered capital ¥10M, established 6 weeks ago, legal rep runs 4 other companies — shell topology
• The license copy arrives with fields blurred "for privacy" — the privacy of whom, exactly?

Any single item is a question. Two or more is an answer.

Where this fits

License decoding is Step 1 (V — Validate) of the six-step VERIFY system in this toolkit. The remaining five steps — factory video verification, reference checks, cross-channel sampling, written specifications, and record checks — build on it.

Free templates in this repo: quality inspection checklists, Incoterms cheat sheet, negotiation email scripts, and a landed-cost calculator.

Need the complete system? The China Sourcing Playbook packages all 25 templates, the full verification protocol, and 10 AI sourcing prompts.

Found this useful? Star the repo — it's the signal that tells us to keep publishing. Wrong somewhere? Open an issue or a discussion; corrections from practitioners make the toolkit better for everyone.

Get all 25 templates — The Playbook →