Numerous documents comprise the portfolio of materials that serve as the foundational record for your business relationship with a Chinese company. In particular, there are seven key documents that you should request – and ensure are verified – from a Chinese manufacturer or supplier: Chinese Business License, Chinese Bank Account Certificate, Foreign Trade Registration Certificate, ISO 9001 Certificate, Customs Registration Certificate, Test Reports, and Proforma Invoices.
Validating every document that is a part of a Chinese business relationship remains an important step in the due diligence process.Ensuring these seven documents are legal and legitimate will bring you one step closer to a successful and sustainable business relationship with a Chinese company.
We’ve previously discussed the importance of verifying the vast range documents, certificates, forms, and reports when working with a Chinese supplier. While you should always conduct due diligence on every form in the portfolio of materials that form the foundation of your relationship with your Chinese company, there are seven key documents that you should always request — and verify – when working with a Chinese supplier to ensure the entity is a valid, trustworthy company. Reluctance on the part of any Chinese supplier to supply you with these documents serves as an early and important warning sign that you may be dealing with a suspicious, shady or fraudulent operation.
Chinese Business License
The most important document is the Chinese Business License (营业执照), a fundamental document that indicates the company is legally registered to do business in Mainland China. All companies must possess this document which also includes their 18-digit business license number, also known as the Unified Social Credit Code.
Chinese Bank Account Certificate
The Chinese Bank Account Certificate (开户许可证) provides details on the company’s official bank account in Mainland China. The information on this certificate provides you with the account to which you should make – and from which you should receive – payments. The Chinese Bank Account Certificate verifies that the entity holds the account legitimately (as opposed to a personal or offshore account). You may encounter several certificates that the Chinese company uses to handle various aspects of its business or process different currencies with different business partners. This situation is completely legitimate provided there is a separate certificate for each bank account.
Foreign Trade Registration Certificate
The Foreign Trade Registration Certificate (对外贸易经营者备案登记表) provides official registration information about the company — namely, that it is authorized to conduct foreign trade – and the company’s official English name (which should correspond with the bank account, discussed above). Any company that is directly engaged in importing and exporting goods must possess this document. Note that other companies not engaged in foreign trade may not be required to hold this document; rather, those companies may be using a third-party trading company to ship goods and products. (In this case, the shipping company would be required to hold the Foreign Trade Registration Certificate.)
ISO 9001 Certificate
The ISO 9001 Certificate (质量管理体系证书) provides information about the company’s quality management system and its certification by the ISO organization. In particular, a valid ISO 9001 Certificate ensures that the company has systems in place for quality management, management responsibility, resource management, product realization, measurement, analysis, and improvement programs. The ISO 9001 covers a company’s specific business scope for the products and goods it is authorized to manufacture. This certificate also provides the company’s English name and can serve as a useful cross-reference against the Foreign Trade Registration Certificate, described above. As part of your due diligence you will want to understand the specific factories or facilities to which the ISO 9001 Certificate applies, as it does not provide blanket coverage for all facilities under a corporate structure.
Customs Registration Certificate
The Customs Registration Certificate (进出口货物收发货人报关注册登记证书) provides information on a company’s ability to make customs declarations with China’s customs officials. Any Chinese company that exports or imports goods out of or into China is required to hold a valid China customs registration certificate. If a Chinese company does not hold a valid China customs registration certificate, that company could be using a third-party trading company to export its goods out of China.
Test Reports provide information about the standards and requirements of a particular product at various points across its manufacturing lifecycle. These reports should be specific to the products that you are procuring from the Chinese supplier. It’s also important to research the standards and requirements for the country into which you are importing your merchandise or goods, as products manufactured in China must also meet the import destination country’s standards. Toys and electronics are two categories that face particularly stringent oversight.
Proforma Invoices (形式发票) ensure that payment will be routed to the correct company and bank account. This supplier-generated document should include information that matches information provided on other documentation discussed above, including its official name (both in Chinese and English) and its bank account information. Review the contents of the invoice carefully to ensure product descriptions are accurate and payment terms (and amounts) are correct.
With all official Chinese business documents, it’s important to verify their legitimacy – a process that is complex and challenging.
We can help. Nuna Network helps you determine the authenticity of documents and much more, transforming the due diligence process and making it easier to establish relationships with Chinese companies.