By SupplierVerify Team | Published: March 17, 2026
Every legitimate Chinese company has a business license (营业执照). But not all licenses are created equal. A company registered as a "trading company" can legally buy and sell products — but cannot manufacture them. A company with a "manufacturing license" can produce goods — but may not have export rights. Understanding the difference between license types is one of the fastest ways to catch a supplier who is misrepresenting what kind of company they are. Here's a field guide to reading and interpreting Chinese business licenses.
China uses a unified "three-in-one" business license (三证合一) that combines the business registration certificate, tax registration certificate, and organization code certificate into a single document. Every registered company has one. The license displays a unique 18-digit Unified Social Credit Code (统一社会信用代码) — this is the company's fingerprint, and it's the single most reliable identifier for searching government databases. Key fields on every license include: company name in Chinese, company type (有限责任公司 / 股份有限公司 / 个人独资企业 etc.), legal representative, registered capital, date of establishment, business term, and — crucially — business scope.
The "business scope" (经营范围) on a Chinese license is not a marketing description. It is a legally binding list of permitted activities. A company can only conduct business within its registered scope. Doing business outside the scope is technically illegal and can void contracts. The scope is written in a specific order: the first-listed activity is the company's primary business category. If the first item is "销售" (sales) or "批发" (wholesale), the company is primarily a trader. If the first item is "生产" (manufacturing) or "制造" (fabrication), it is primarily a manufacturer. This ordering is intentional and legally significant — it defines what the company told the government it actually does.
What the license says: Business scope begins with 生产, 制造, or 加工 (manufacturing, fabrication, processing). May also include 销售 (sales) as a secondary activity — meaning the factory can also sell its own products.
What this means for you: This is what you want if you're sourcing directly. The company is legally permitted to manufacture goods. But — and this is important — "legally permitted to manufacture" does not automatically mean "currently manufacturing your product category." You still need to verify capability.
What the license says: Business scope begins with 销售, 批发, 零售, or 贸易 (sales, wholesale, retail, trade). Manufacturing-related terms (生产/制造) are absent from the scope.
What this means for you: This company buys from factories and resells. They cannot legally manufacture. If they're presenting themselves as a factory, they are lying — and that lie alone disqualifies them. Trading companies aren't inherently bad — many provide valuable sourcing, QC, and logistics services — but you should know what you're paying for and adjust your pricing expectations accordingly.
What the license says: Business scope includes both manufacturing (生产/制造) and trading (销售/贸易), with manufacturing listed first. This is the "factory + trading" hybrid.
What this means for you: These companies have manufacturing capability but also resell other factories' products. The risk: they may produce some products in-house and outsource others — including yours — without telling you. An industrial-and-trade license should prompt the question: "Which of your listed products do you actually manufacture, and which do you source?"
What the license says: Business scope includes 咨询 (consulting), 服务 (services), 技术开发 (technology development), or 进出口 (import/export) — but no manufacturing.
What this means for you: This could be a sourcing agent, a quality control service provider, or a consulting company. Some service companies present themselves as "your factory partner" or "manufacturing solutions provider" — language that obscures the fact that they produce nothing. Service companies can be legitimate partners, but if you think you're buying from a manufacturer, a service-company license is a red flag.
The registered capital (注册资本) is the amount the company claims as its capital base. The paid-in capital (实缴资本) is the amount shareholders have actually contributed. A company with ¥10 million registered capital but ¥50,000 paid-in capital is not as well-capitalized as it looks. Since 2014, China allows companies to set registered capital without immediately paying it in — meaning the registered capital number can be essentially aspirational. Always check paid-in capital for a truer picture of financial substance.
A company established less than 2 years ago is inherently riskier. They have less operating history, less financial track record, and less to lose by disappearing. Fraudulent suppliers frequently register new companies after old ones accumulate complaints — so a recent establishment date combined with other red flags (personal bank account, prices below market) is a high-risk profile. That said, China's manufacturing sector is dynamic, and genuinely capable new factories do emerge. Establishment date should inform your risk assessment, not make it alone.
Chinese business licenses have status indicators. The status you want to see is 存续 (active/in existence) or 在业 (operating). Statuses that should stop you immediately: 吊销 (revoked — the license has been canceled by authorities, effectively the company is dead), 注销 (deregistered — the company has been formally closed), 停业 (suspended — operations are halted), and 清算 (in liquidation — the company is being dissolved). If the license status is anything other than active/operating, do not send money — the legal entity may not even exist anymore.
Chinese companies are required to file an annual report with SAMR. Companies that fail to file are flagged as "abnormal operation" (经营异常). This is public information and appears in the NECIPS database. A company with missing annual reports is either negligent (bad sign for your order) or has something to hide (worse sign). Multiple consecutive years of missed filings suggest a company that is not seriously operating.
If every buyer did just this before sending a deposit — obtain the Chinese business license, check the business scope for manufacturing terms, verify the status is active (存续), compare the registered address to the address the supplier gave you, and search the company name in China Judgments Online — approximately half of the supplier fraud cases we investigate would never happen. These are not complex checks. They take 5 minutes if you know where to look and what to look for. The tragedy is that most buyers never ask for the license at all — or accept an English "translation" without verifying the original.
Our Safety Shield report includes a full business license analysis — license type, business scope interpretation, registered vs. paid-in capital, license status check, and annual report compliance. You get a plain-English summary of what the license actually means for your sourcing decision.
Get a Business License Analysis