Why it matters
A factory and a trader can send you the exact same quote, the same catalogue, and the same friendly WeChat messages. The difference shows up later, where it costs you money. A real manufacturer controls the price (no hidden middle margin), sets the true minimum order, and — most importantly — can actually change something on the line when your inspection fails. A trader controls none of that. When a defect shows up, a trader can only forward your complaint to a factory you've never met and hope. So the first question on any new supplier isn't "what's your price" — it's "are you the people who make this."
Check 1 — the business license & registered scope
Every registered Chinese company has a business license (营业执照) with a unique 18-digit Unified Social Credit Code. Ask for a photo of it. The single most telling field is the business scope (经营范围) — the activities the company is legally registered to do:
- A real factory's scope contains words like manufacturing, production, or processing (生产 / 制造 / 加工) tied to its product category.
- A trading company's scope reads wholesale, retail, trade, or import and export (贸易 / 批发 / 进出口) — and no manufacturing.
Also glance at the registered capital and the registration date. A company claiming a large factory but registered six months ago with token capital is worth a second look. The license is the fastest filter you have, and it's free.
Check 2 — cross-check the official registry
A license photo can be edited. Verify it against the source: China's National Enterprise Credit Information Publicity System at gsxt.gov.cn, the government registry every legitimate company appears in. Enter the company's exact registered Chinese name or its credit code and confirm the legal name, status (should be existing / 存续), registered capital, and business scope all match what the supplier told you. A mismatch — or a company that simply isn't there — is your answer. (The site is in Chinese and occasionally asks for a slider check; a translation tool or a sourcing partner gets you through it.)
Check 3 — see the floor
Paper proves registration, not production. The only thing that proves production is the production line. You have three ways to see it, in rising order of certainty:
- Live video walk. Ask them, with no notice, to video-call you and walk from the front gate through the line to the machine making your product. A trader will stall, send a pre-recorded clip, or show an "associated" factory. A real factory just walks.
- Third-party audit. A firm like SGS, TÜV, Bureau Veritas, or QIMA visits the registered address and reports what's actually there — machines, workers, capacity, the name on the gate. This is the gold standard before a large first order.
- Go yourself. Or send someone you trust. Nothing beats standing on the floor.
One caveat: an ISO 9001 certificate is not proof of a factory. It's a quality-management certificate a trader can hold too, and it's commonly forged or borrowed. Trust the license scope and a site-named audit, not a framed certificate.
Red flags that say "trader"
- Won't share the business license, or shares one whose name doesn't match the company you've been talking to.
- The bank account for your deposit is in a different name than the company (or a personal account).
- The address resolves to an office tower or residential block, not an industrial zone.
- "We have several factories" for wildly different products — a hallmark of a trader fronting many suppliers.
- Refuses an unannounced video call but is happy to send polished photos.
Is a trading company always bad?
No. A good trading company or sourcing agent earns its margin — handling export clearance, consolidating multiple suppliers into one shipment, managing communication and quality across factories you couldn't reach alone. Plenty of successful importers buy through traders on purpose. The danger isn't the trader; it's not knowing you're using one — paying a hidden markup, depending on someone with no control over the line, and having no route to fix a defect at the source. Decide deliberately, and price it in.
Where Mila Sourcing fits
This whole check is what we do before you ever wire a deposit. Every supplier in our network is matched to a verified factory — license scope confirmed, registry cross-checked, the floor seen — so you get direct manufacturer pricing and a real route to fix problems at the source. That's the core of Sourcing Activation and Full Production Management.
Related, if you're vetting suppliers right now: