As most countries in the world, China also operates a national company register. No matter the size or business, all companies in Mainland China need to apply for a business license with the government’s Administration for Industry and Commerce (AIC).
Only with this license, companies in China are able to officially register their name and operate legally. The business license is therefore a good reference when doing due-diligence on your Chinese supplier.
In this article, I will explain how a China business license looks like and what information you can find on it.
How does a China Business License look like?
When a business license is issued to a company, it receives an official certificate (A3 format) and an official copy (A4). Every company in China should therefore be able to provide a copy of their business license. It doesn’t really matter whether this is a copy of the A3 or A4 format, as both contain the same information.
Usually, a supplier will be happy to share a copy of its license. If a supplier somehow cannot provide a copy, this is a clear red flag. You can find out about other red flags in the article: [How to Identify a Fraudulent Supplier in China?]
Business licenses look about the same throughout Mainland China. Small differences may be present depending on the location, as business license certificates are issued by local branches of the AIC.
Still, they are easy to recognize from the text “营业执照” (business license) in large font. If you receive a copy from a supplier, it typically looks like this:
All official business licenses are in Chinese. Therefore, I have translated the most important parts into English.
Which information is on a China Business License?
A business license provides basic information about the registered company. This information is particularly useful to determine whether a company is legitimate or not.
The image above states the most important data that can be found on the business license. It includes:
- 18-Digit Chinese Business Registration Number
- Official Company Name
- Type of entity
- Official Address
- Legal Representative
- Registered Capital
- Date of Incorporation
- Expiration Date
- Business Scope
- QR-Code
Understanding the information on a business license
You should learn about a few things to interpret the information on the business license correctly. Even if it is translated into English. In the next parts, I will explain the most important points.
18-Digit Chinese Business Registration Number
In October 2015, China introduced the ‘Three-in One’ business license. It is a combination of the old business license (15 digits), the organization code certificate and the tax registration certificate. All merged into one unified system.
Often referred to as the “Unified Social Credit Code”, this new registration number consists out of 18 digits. We can break these digits down to the following parts:
Official Company Name
If you are working with a supplier in China, it is most likely that you are dealing with a domestic company. Meaning, a company that is Chinese-owned rather than foreign-owned.
It is an important fact, as it has influence on the official name a company can carry. For example, when a Chinese-owned company wants to register with the Administration of Industry and Commerce, it has two options:
- Apply for a Chinese name
- Apply for both a Chinese and English name
In reality, most companies decide to only register a Chinese company name. As a result, the majority of the English company names you see on Alibaba, The Canton Fair etc. are actually unofficial.
Although this may sound worrying, you should be aware that this is a common practice in China. It is not really a problem, until you want to verify the company’s business license.
Because the company has chosen to register a company name in Chinese, you will need its Chinese name in order to verify their business license. Please keep this in mind when doing your own due diligence on a company in China.
If you don’t have the Chinese name, don’t hesitate to ask your supplier about it.
Business Scope
When you want to do business with a Chinese supplier, it is very important to check the business scope on their business license.
The business scope is made up of a list of business categories (often with clear exemptions). A company is only permitted to be active in the categories stated on the business license. On the license itself, it usually looks like this:
The Chinese government is extremely strict when it comes to registering the business scope. If a company defines a too wide business scope, it is very likely to be rejected by the authorities.
On the other hand, when it registers a too narrow scope, the company may encounter legal issues when operating outside it.
Typically, the business scope defined on the China business license is very specific and will cover exactly what the company is legally permitted to do. For instance, it may include categories such as “sale of mechanical equipment and parts” and “no trade of items subject to license approval.”
If the products or services you are considering to purchase are not within the business scope, there is no way that the company can legally provide these. If this is the case, you obviously should see this a big red flag.
Key takeaways
Every company in China needs to have a business license issued by the government. If you consider to do business in China, it is a good idea to ask your Chinese supplier about their business license.
The China business license provides basic, yet official information about the company. As such, it allows you to check whether your supplier is registered and operates legally.
Official business licenses are only available in Chinese. If you need to do a quick check, you therefore may want to make use of a verification service.
Just with a little effort, however, you can [Verify a Chinese Business License Yourself in 5 Steps]
Worried about the supplier you found online? Don’t worry, we can do a quick check for you!
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