China Company Due Diligence: 8-Step Workflow for Overseas Buyers

The best public-records check for a Chinese supplier is free, in English, and takes 14 minutes — and nine out of ten first-time buyers we work with have never run it. That single 14-minute check, against China’s national company registry, would have stopped roughly a third of the bad deals we’ve been asked to clean up in the past two years before the buyer ever wired a deposit.

This article is not about whether to trust Chinese suppliers. The default position when you start sourcing from China should be the same as when you start sourcing from any other country: trust the structure, verify the entity. The structure in China is unusually open — far more public records are searchable than most buyers realize, including litigation history, business scope, license validity, shareholder structure, and a national list of companies flagged for operating irregularities. What’s missing is a workflow that tells you the order to run those checks in, what each one costs you in time, and what document you should walk away with at every step.

Below is the 8-step china company due diligence workflow we run on every supplier above $20,000 in invoice value for clients across the EAEU. It assumes you’ve already decided you want to work with this supplier and now need to confirm there is no legal, financial, or regulatory landmine sitting behind the company name on the proforma invoice. It does not replace a factory audit on the ground — it’s the rite of passage before the factory audit, the one that decides whether the audit is worth scheduling at all.

Step 1: Confirm the Legal Entity on the GSXT National Registry

The first stop on any china company due diligence workflow is the National Enterprise Credit Information Publicity System at gsxt.gov.cn. This is the official registry maintained by China’s State Administration for Market Regulation, and it covers every legally registered company in mainland China. The interface is in Chinese, but the structured fields are the same in every record and translate cleanly through any browser’s auto-translate. Use the company’s full Chinese legal name (not the English trading name on their website) — the buyer almost always has this on the proforma invoice next to the seal at the bottom.

What you’re looking for on the registry page:

• Unified Social Credit Code (USCC) — the 18-character alphanumeric code that uniquely identifies the company. Every legitimate Chinese company has one. If a supplier cannot give you their USCC, the conversation should end there. Position 9 to 17 of the USCC encodes the company’s industry classification — codes starting with 3 are industrial production (real factories), codes starting with 5 are wholesale and retail (trading companies), codes starting with 6 are logistics, codes starting with 7 are services.
• Registration status — must read “active” or “operating”. Anything else — “dissolved”, “revoked”, “withdrawn” — means the company is no longer legally trading. Walk away.
• Registered capital — the declared paid-in capital in RMB. This is not the actual cash in the bank account, but a structural commitment. A supplier quoting you a $400,000 equipment order with a registered capital of RMB 100,000 (about $14,000) is a structural mismatch you should ask about directly.
• Establishment date — the founding date. A company registered three months ago bidding on a $250,000 export order is a structural risk, not a deal-breaker, but it changes what other steps in this workflow you weight more heavily.
• Legal representative (法定代表人) — the named person who holds personal legal liability for the company’s contracts. This is the name that should appear on the signature page of any contract you sign.
• Business scope (经营范围) — the formal list of activities the company is licensed to conduct. If you’re buying excavators and the business scope reads “consulting and information services,” the company is not legally allowed to manufacture or export the product. This single line catches a surprising number of trading-company-pretending-to-be-factory cases.

Time cost: 14 minutes if you have the Chinese name in front of you. Output document: a PDF print of the GSXT page (use your browser’s print-to-PDF), saved into the supplier folder with the date appended.

A specific case from earlier this year: a buyer in Shymkent was about to wire a 30% deposit of $42,000 to a “Shanghai-based heavy equipment manufacturer” for four used wheel loaders. The GSXT lookup took 11 minutes. The company was registered, active, located in Shanghai — and the business scope read “wholesale of construction materials and industrial supplies.” It was a pure trading company that had been re-quoted from a Shandong factory at a 19% markup, with no factory audit rights, no warranty pass-through, and no legal capacity to issue a manufacturer’s certificate. The buyer didn’t walk away — they renegotiated the deal with the actual Shandong factory directly and saved $7,980 on the first order.

Step 2: Verify the Legal Representative’s Background

The legal representative (法定代表人) carries personal liability for the company’s obligations under Chinese commercial law. This makes their background a high-signal field for due diligence — far more so than checking the company name in isolation.

The same GSXT page from Step 1 shows you the names of every other Chinese company where this person is currently or has previously been a legal representative, shareholder, or executive. This list is the single most underused data field in supplier verification. What you’re looking for:

• Pattern of dissolved or revoked companies — if the same person has been the legal representative of three companies that all show “dissolved” or “revoked” status within the past five years, that’s a pattern that warrants a follow-up question. Some of those dissolutions are normal business cycles; some are leftover shells from previous fraud cycles.
• Companies in unrelated industries — a legal representative who currently runs a “construction equipment manufacturer,” a “biotech consulting firm,” and a “cross-border e-commerce trading company” simultaneously is not necessarily a fraud, but is structurally less committed to any single line of business than someone whose three companies are all in the same supply chain.
• Listed on China’s Failed Executor list — the Supreme People’s Court of China maintains a public registry of individuals and companies that have failed to honor court judgments. This is the “Untrustworthy Persons Subject to Enforcement” (shī xìn bèi zhí xíng rén, 失信被执行人) list, searchable at zxgk.court.gov.cn. If the legal representative of your supplier is on this list, the company will not be able to open a USD letter-of-credit account at any major Chinese bank, will struggle to clear export customs on time, and is statistically much more likely to disappear with a deposit.

Time cost: 8 to 12 minutes per name. Output document: a screenshot of the legal representative’s other-companies page and a clean (or flagged) result from the Failed Executor search.

We’ve stopped two deposit transfers in the past 18 months on this step alone — both involved suppliers whose legal representatives were on the Failed Executor list, both had presented business licenses that looked perfectly clean on the company side. The Failed Executor signal is personal, not corporate, and it does not show up on the company’s USCC record.

Step 3: Search for Litigation History on China Judgments Online

China publishes the full text of court judgments through a public database called “Judgment Documents Network” (裁判文书网) at wenshu.court.gov.cn. The platform was launched in 2013 and now indexes well over 100 million court rulings, including the full text of commercial disputes, contract enforcement actions, intellectual property cases, and labor disputes. For an overseas buyer, this is the most legally serious data source on the entire workflow.

Search the Chinese legal name of the supplier directly. The platform returns a structured list of cases the company has been involved in, separated into civil, criminal, administrative, and enforcement categories. What to read for:

• Frequency of buyer-side complaints — how many cases is the company the defendant in (被告 bèi gào)? A factory that has been sued by ten different buyers for non-delivery of paid orders over three years is showing a pattern, not an accident.
• Repeated quality disputes — case titles in Chinese will mention “quality dispute” (zhì liàng jiū fēn, 质量纠纷), “sales contract dispute” (huò wù mǎi mài hé tong jiū fēn, 货物买卖合同纠纷), or “product liability” (chǎn pǐn zé rèn, 产品责任). One or two of these in a 10-year company history is normal noise. Eight in two years is a structural problem with the supplier’s quality control.
• Enforcement proceedings against the company — cases marked “enforcement” (zhí xíng, 执行) mean the supplier lost a previous case and has been ordered to pay damages. If those enforcement cases are still active, the company’s assets are likely already pledged, and any deposit you wire could be redirected to court-mandated settlements before your equipment ships.
• Criminal proceedings — rare for trading companies, but if the company name appears in a criminal case as the defendant or a party of interest (especially fraud, 诈骗 zhà piàn, or smuggling, 走私 zǒu sī), the deal is over.

The platform’s main limitation is that some sensitive case categories have been removed from public view in updates over the past two years, and some local courts upload judgments with a 6 to 18 month delay. So no result is not the same as a clean result — but a pattern of bad results is highly meaningful when you see it.

Time cost: 15 to 25 minutes per supplier depending on case volume. Output document: a summary table of all cases found, with case number, year, role (plaintiff/defendant), case type, and outcome. We keep this as a simple two-page Word document inside the supplier folder.

Step 4: Check the Operating Anomaly Registry

The State Administration for Market Regulation maintains a separate public list of companies that have been flagged for operating irregularities. This is the “Operating Anomaly Registry” (jīng yíng yì cháng míng lù, 经营异常名录), and it’s accessible from the same GSXT entry page used in Step 1. A company lands on this list for one of four common reasons:

1. Failed to publish an annual report in the previous year (a basic compliance failure that suggests the company is either dormant or being deliberately quiet about its financials).
2. Cannot be reached at its registered address (the registered office address has been verified as non-functional by an inspection visit — a strong signal of a shell company).
3. Published false information in a previous filing (deliberately misrepresented capital, scope, or shareholders).
4. Failed to update a required disclosure (a registered change such as legal representative or shareholder structure was not declared within the legal window).

A supplier on the Operating Anomaly Registry has not yet been formally dissolved, but the registry status is a public flag that the company is not in good standing with the regulator. It will appear on the buyer’s side as a yellow warning banner on the GSXT page.

Time cost: included in Step 1 (the banner shows automatically on the GSXT page when applicable). Output document: screenshot of the GSXT page showing either no warning or the specific warning text.

Step 5: Pull the Annual Report and Cross-Check the VAT-Invoiced Revenue

Every Chinese company is legally required to publish an annual report through the GSXT system between January 1 and June 30 of each year. The report is public, structured, and contains four data fields that matter for due diligence:

Field	What it tells you	How to use it
Total paid-in capital	Actual capital received from shareholders	Compare with declared registered capital from Step 1 — a wide gap signals a hollow capital structure
Number of employees	Headcount as of December 31	Cross-check against the supplier’s claimed factory size — 8 employees does not run a 30,000m² factory
Total assets and liabilities	Balance sheet summary	If liabilities exceed assets, the company is technically insolvent regardless of how active it looks
Total operating revenue and VAT-invoiced revenue	Revenue declared for tax purposes	This is the single most reliable signal of real business volume

The fourth field, VAT-invoiced revenue (开票收入), is the one most overseas buyers miss. Every legitimate export transaction from China generates a VAT invoice. The total VAT-invoiced revenue reported in the annual report is therefore a verifiable lower bound on the company’s actual sales activity. A supplier claiming to “ship 200 containers a year to Africa and Central Asia” while reporting VAT-invoiced revenue of RMB 2 million (about $280,000) is mathematically inconsistent. Either they are dramatically under-reporting tax — which is its own risk — or they are dramatically over-claiming export volume to win your contract.

We don’t expect overseas buyers to read a Chinese annual report unaided. Use any browser’s auto-translate function or paste the relevant table into ChatGPT or Claude with the prompt “translate this Chinese company annual report table into English, preserving all numerical values exactly.” The structured layout translates cleanly.

Time cost: 12 to 20 minutes including translation. Output document: a single-page summary in English with the four fields above and a column for “matches supplier’s claims / does not match.”

A case from late last year: an Almaty-based agricultural buyer was preparing to sign a $186,000 contract with a “Shandong farm equipment manufacturer” who claimed 13 years of export experience to the EAEU. The annual report showed the company had been registered five years, had 14 employees, and had reported VAT-invoiced revenue of RMB 4.1 million in the most recent reporting year. The math didn’t work — a single $186,000 order would have been 30% of their entire previous year’s invoiced revenue. The buyer rerouted to a larger Anhui manufacturer with a verifiable RMB 380 million annual report figure. The final contract was 8% more expensive on unit price but came with a real warranty pass-through.

Step 6: Verify Industry-Specific Licenses and Export Qualifications

A clean GSXT record proves the company exists. It does not prove the company is allowed to manufacture or export the specific category of product on your proforma invoice. Most regulated product categories in China require an additional industry-specific license held in the company’s name, and the license must be valid on the date of your shipment.

The most common license categories overseas buyers should verify, by product type:

• Hazardous chemicals and dangerous goods — requires a “Hazardous Chemicals Operating License” (危险化学品经营许可证) issued by provincial authorities. Verifiable on each provincial Department of Emergency Management website.
• Food, beverages, and food contact materials — requires either a “Food Production License” (食品生产许可证, “SC” code) or a “Food Operating License” (食品经营许可证), searchable at the State Administration for Market Regulation’s food license database.
• Medical devices — requires a Class I, II, or III device registration certificate from the National Medical Products Administration (NMPA), searchable at the NMPA’s public registry.
• Construction machinery for export — does not require a special export license for most categories, but the manufacturer must hold a CCC (China Compulsory Certification) mark for any product sold domestically in China, and an export-specific quality certificate for the destination market (CE for EU, EAC for EAEU, etc.).
• Electrical equipment — requires CCC certification for the domestic market and frequently requires CB scheme or destination-market certification for export.
• Used machinery export — China requires a pre-shipment inspection certificate (CCIC certificate) for most categories of used machinery exported through legitimate customs channels. The absence of this document is a sign the equipment is being moved through a grey channel.

For non-Chinese-speaking buyers, the cleanest verification is to ask the supplier directly for a copy of every license relevant to your product, then cross-check the license number against the issuing authority’s public database. A real license can be looked up. A fake license cannot.

Time cost: 20 to 40 minutes depending on number of licenses to verify. Output document: a checklist of every required license, the document number, the issuing authority, the expiry date, and a screenshot of the public-database verification.

We treat any supplier who cannot produce or refuses to share their industry-specific licenses as an automatic disqualification, regardless of how attractive the price quote is. This is the single firmest rule in our due diligence workflow — and it has prevented every major deposit-loss case our clients have brought to us over the past four years.

Step 7: Verify the Shareholder Structure and Identify the Ultimate Beneficial Owner

The GSXT page also lists every shareholder of the company, both individual and corporate. For most small-to-mid-size Chinese exporters, the shareholder list is short — one or two individuals, or one individual and one parent company. What due diligence looks for:

• Multiple layers of holding companies with no obvious end — if the company is owned by a holding company, which is owned by another holding company, which is owned by an offshore entity in the British Virgin Islands or Hong Kong, the structure is not necessarily fraudulent, but it makes recovery extremely difficult if a dispute later requires asset enforcement.
• Shareholders who are themselves on the Failed Executor list — same risk profile as in Step 2, but at the ownership level. Run the same search on every individual shareholder.
• Shareholders with names matching the legal representatives of unrelated dissolved companies — a pattern of the same small group of people cycling through dissolved companies is a classic shell-rotation pattern used by some fraud rings.
• Ultimate Beneficial Owner (UBO) identification — for any company with a holding structure, work the ownership chain back until you reach a natural person. That natural person is the UBO, and they should be named in your final due-diligence summary. Many Western banks require UBO identification before processing an inbound payment from a Chinese supplier under anti-money-laundering regulations.

Time cost: 10 to 25 minutes depending on structure complexity. Output document: a one-page diagram of the ownership chain ending in the named natural person UBO.

Step 8: Cross-Check the Bank Account Against the Legal Entity Name

The final step is one buyers often skip because it feels obvious — but the gap between the company name on the GSXT registry and the bank account name on the proforma invoice is where roughly a quarter of all deposit-loss cases we see actually happen.

The bank account name on a legitimate Chinese supplier’s proforma invoice must match the full Chinese legal name from the GSXT registry character by character. Not the English trading name. Not the founder’s personal account. Not a “trading subsidiary” account. Not a Hong Kong company controlled by the same group. If the bank account name does not match, the transfer is structurally exposed — if the deal goes wrong, you cannot file a Chinese court action against the GSXT entity, because the money never reached that entity’s account.

The three most common mismatches we see:

1. Personal account of the salesperson or boss — usually presented as “for tax efficiency.” It exposes the buyer to total loss with no recourse against the company.
2. Hong Kong account of a related but separate company — common for trading companies. The HK entity is a separate legal entity, and a Chinese court judgment against the mainland company cannot be enforced against HK assets without a separate enforcement action.
3. Offshore account in Singapore, BVI, or Seychelles — a strong signal of either tax structuring or active concealment. Walk away unless the structure is fully documented.

Time cost: 5 minutes. Just compare the two names side by side. Output document: a one-line confirmation in the supplier folder that the names match (or a flagged document if they don’t, requiring escalation).

The 8-Step China Company Due Diligence Workflow Timeline

This is the timeline we follow on a real due diligence engagement, from the moment the supplier sends us their proforma invoice to the moment we sign off on proceeding to the next stage (the on-site factory audit).

Step	What to do	Public source	Time cost	Output document
1	GSXT national registry lookup	gsxt.gov.cn	14 min	GSXT page PDF
2	Legal representative background + Failed Executor check	gsxt.gov.cn + zxgk.court.gov.cn	10 min	Other-companies screenshot + court check result
3	Court judgments / litigation history	wenshu.court.gov.cn	20 min	Case summary table
4	Operating Anomaly Registry check	gsxt.gov.cn	included	GSXT page screenshot
5	Annual report + VAT-invoiced revenue cross-check	gsxt.gov.cn	16 min	Annual report summary in English
6	Industry-specific license verification	provincial / national authority sites	30 min	License checklist with screenshots
7	Shareholder structure + UBO identification	gsxt.gov.cn	18 min	Ownership chain diagram
8	Bank account name vs legal entity name match	proforma invoice + GSXT	5 min	Name-match confirmation
Total	Full china company due diligence pass		~2 hours	8 documents in supplier folder

The cost of running this workflow yourself is two hours of focused work and a moderate amount of Chinese-language navigation. If you delegate it to an agent in China (we charge $180 per supplier for the full workflow, including the written report), the cost is the same as buying a single mid-range component. The cost of not running it is the deposit you stand to lose if the supplier turns out to be one of the patterns we covered in our 12 scam patterns guide.

The workflow above is what we run before agreeing to take on a buyer’s procurement contract. It is also what we recommend buyers run themselves if they want to source directly without an agent — the public-data layer is genuinely public, and the language barrier is genuinely solvable in 2026 with browser auto-translate and a careful read.

The Most Common Mistakes Buyers Make on This Workflow

After running this workflow several hundred times, we see the same handful of mistakes repeatedly.

Mistake 1: Skipping the GSXT lookup because the website is in Chinese. The structured fields are the same on every page. Browser auto-translate is sufficient. The cost of skipping this step is the entire downstream workflow becomes unanchored.

Mistake 2: Trusting an English-name search. Many Chinese suppliers use English trading names that have no formal legal status in China. The legal entity is registered under its full Chinese name. Always work from the Chinese name on the proforma invoice, not the English name on the website.

Mistake 3: Treating an old company as automatically trustworthy. A 22-year-old company with a clean GSXT record is more reliable on average than a 1-year-old company, but age alone is not protection against the patterns in Step 3 (litigation history) and Step 8 (bank account mismatch). Run the full workflow regardless of company age.

Mistake 4: Stopping after Step 1. A clean GSXT page is necessary but not sufficient. The most damaging cases we’ve cleaned up had perfect GSXT records and catastrophic findings in Step 3 (active litigation), Step 6 (missing license), or Step 8 (Hong Kong bank account mismatch).

Mistake 5: Believing a PDF that was emailed to you. A supplier-supplied business license PDF can be edited in 90 seconds. The only version that matters is the one you pull yourself from gsxt.gov.cn using the supplier’s USCC. The number is the truth — the document is just a printout.

Mistake 6: Assuming the absence of court records is a clean record. As noted in Step 3, the wenshu.court.gov.cn platform has had some categories of cases removed in the past two years, and many local courts publish on delay. A blank result is reassuring but not conclusive. Combine it with the Failed Executor check (Step 2) and the Operating Anomaly Registry (Step 4) for a fuller picture.

When to Escalate Beyond the 8-Step Workflow

The 8-step workflow above is calibrated for orders in the $20,000 to $500,000 range. Above that, additional layers become worth the extra time and money:

• Orders above $500,000: consider commissioning a formal credit report through a Chinese credit bureau (Qichacha, Tianyancha pro tier, or the AEO-registered version of the report) — these add bank loan history, real estate holdings, and tax-payment reliability scores. Cost: roughly $40 to $150 per report.
• Orders above $1 million: consider a third-party legal due diligence by a Chinese law firm, with a written legal opinion covering contract enforceability, asset structure, and dispute history. Cost: $1,500 to $4,000.
• Strategic supplier relationships: add an annual re-verification on the GSXT system to catch shareholder changes, legal-representative changes, or new litigation entries that might affect the relationship before they affect a shipment.

For orders below $20,000, the full 8-step workflow is usually overkill. Steps 1, 2, 4, 6, and 8 are still worth running and take under an hour combined.

Frequently Asked Questions

Is gsxt.gov.cn really free to use?

Yes. The National Enterprise Credit Information Publicity System is operated by China’s State Administration for Market Regulation and is free for public access from anywhere in the world. There is no login required and no payment for the standard registry, annual report, and operating-anomaly data. The free version is sufficient for the entire 8-step workflow described above. Third-party platforms like Tianyancha and Qichacha repackage the same source data with additional analysis layers and a more usable English interface, and they charge for the pro-tier reports — but the underlying data is the same as what you can pull free from GSXT.

Can I run the entire workflow without speaking Chinese?

Yes, though it takes 30 to 50 percent longer than a Chinese speaker would need. Browser auto-translate handles the structured fields on all government registries adequately. The court judgments at wenshu.court.gov.cn are harder to read because the text is dense legal Chinese, but you can paste the full text of any judgment into ChatGPT or Claude and ask for an English summary preserving the case number, parties, and outcome. We have walked half a dozen non-Chinese-speaking clients through the full workflow over WhatsApp video calls. It works.

How current is the data on the Chinese registries?

The GSXT business registration data is updated by the State Administration for Market Regulation within days of any registry change. The annual report data is published once a year between January and June for the previous calendar year — so in October 2026 the most recent annual report you can see is for 2025. The court judgments at wenshu.court.gov.cn are published with some local-court delay, typically 3 to 6 months, occasionally up to 18 months. The Failed Executor list is updated weekly. The Operating Anomaly Registry is updated as inspections occur. For most due diligence purposes the data is current enough to make a decision — the lag matters mainly when you’re trying to verify a very recent event (a court case filed last month, for example, will not show up yet).

What if the supplier refuses to give me their Unified Social Credit Code?

End the conversation. The USCC is the equivalent of asking a US company for its EIN or a UK company for its Companies House number. Every legitimate Chinese company has one, every export proforma invoice in China includes one (it’s required for VAT invoice issuance), and there is no good-faith reason for a supplier to refuse it. A supplier who refuses is either not a registered company, is hiding which registered company they actually represent, or is using a different company’s USCC than the one they will eventually invoice from. None of those outcomes are good for the buyer.

Is the litigation history check legally allowed for foreign buyers?

Yes. The judgments published at wenshu.court.gov.cn are public records published by the Supreme People’s Court of China under the Provisions on the Issuance of Judgments on the Internet by the People’s Courts (2016, amended 2024). Any person, Chinese or foreign, can search the database and read the published judgments. There is no legal restriction on overseas buyers using this information for procurement decisions. What you cannot do legally is publish or republish the full text of judgments without permission — but reading them and basing a procurement decision on them is fully within bounds.

How does this workflow change if I’m buying used machinery instead of new?

The 8-step workflow above stays the same — you’re still verifying the entity, not the product. But used machinery introduces additional layers: you also want to verify that the supplier has a legitimate channel for sourcing the used equipment (auction history, fleet origin documentation, CCIC pre-shipment inspection capacity for the destination market), and that the equipment itself has not been relabeled or resprayed to hide its history. On used-equipment deals we typically combine the 8-step company workflow with a separate equipment-level workflow that we’ll cover in a future article.

What’s the difference between this due diligence workflow and a factory audit?

The 8-step workflow above is a desk-based verification of the legal entity, financial structure, and regulatory standing of the company. It does not require anyone to visit the factory. A factory audit, by contrast, is an on-site inspection of the physical production capability, quality control processes, and operational reality of the supplier — does the factory actually exist, does it actually have the equipment to make your product, and does the quality control system work in practice. The two are complementary, not substitutes. Our standard recommendation is to run the 8-step due diligence first, and if all eight steps come back clean, then schedule a factory audit — that way you spend the audit budget only on suppliers who have already passed the cheaper, faster, desk-based check. The combined cost is much lower than running a factory audit on every shortlisted supplier.

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If you’re sourcing machinery, electrical, or industrial equipment from China to Central Asia and want a second pair of eyes on a specific supplier before you wire your deposit, our team in China runs the full 8-step china company due diligence workflow for buyers in Kazakhstan, Uzbekistan, and the broader EAEU region. The output is a single PDF report with the eight source documents attached and a clear recommendation on whether to proceed, escalate, or walk away. We charge $180 per supplier for the standard workflow, and the report is delivered within 48 hours of receiving the supplier’s proforma invoice. The cost of that report is what you save on the first renegotiation it triggers — and what you avoid losing on the first deposit it stops.

Part of our complete guide to working with a China sourcing agent — how we vet factories, price transparently, run QC and ship from China.