# How to tell if a Chinese supplier is a factory or a trading company | Confirm Supplier

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Confirm Supplier guide (CNAL Consulting, Spain). Workshop photos, assembly line videos and forwarded certificates do not prove that the company signing your contract manufactures anything. The registered business scope does answer it.

## Why it matters

A trading company is not a scam, but it changes four things: who is liable for a defect (you claim against whoever signed, not whoever manufactured), the margin (there is a middleman in the price), quality control (a trader does not control the line) and traceability (if it switches factories between orders, your product changes without notice).

## The field that answers it: business scope (经营范围)

Every Chinese company has a business scope registered with the market regulation authority, printed on the business licence and published on its GSXT record. It is binding: a company cannot lawfully invoice activities outside it.

Verbs indicating production: 生产 (production), 制造 (manufacturing), 加工 (processing), 研发 (research and development).

Verbs indicating trade: 销售 (sale), 贸易 (trade), 批发 (wholesale), 进出口 (import and export).

If the scope contains only trade verbs and no production verbs, the entity that will invoice you is not authorised to manufacture. That is not interpretation; it is what their registration says.

Manufacturer example: LED灯具的研发、生产、销售 (research, production and sale of LED lighting). Trading company example: 日用百货、电子产品、机械设备的批发与进出口 (wholesale and import and export of general merchandise, electronics and machinery). Three unrelated categories; no factory does that.

## The nuance almost nobody tells you

A trading company invoicing you does not mean the factory does not exist. It is common and legitimate for a factory to route exports through a trading company so it does not handle foreign trade formalities itself. The useful question is not whether there is a middleman, but who exactly manufactures and what that company's relationship is to the one signing the contract. An honest supplier answers without discomfort.

## One check that no longer works

For years the advice was to check the foreign trade operator filing, because without it a company could not export. Since 30 December 2022 that prior filing is no longer required and operators obtain import and export rights automatically. Any guide still offering that check as proof is out of date.

## Secondary signals that corroborate

- Registered address: look it up on a Chinese map. An industrial park fits a factory; floor 18 of a central office tower does not.
- Catalogue breadth: a factory makes variations within one product family. Textiles, electronics and kitchenware together indicate a trader.
- Registered capital: a weak signal that needs care. See https://confirmsupplier.com/en/resources/registered-vs-paid-in-capital/
- Sector permits: certain categories require a production permit (生产许可证).
- The phone test: ask about tolerances or the cycle time of a specific machine. A factory answers on the spot.

## What the business scope will not tell you

It confirms the company is authorised to manufacture. It does not confirm that it still manufactures today, its capacity, whether it subcontracts, or whether the building in the photos belongs to it. That requires on the ground verification.

## Quick questions

- Is buying from a trading company bad? Not necessarily. It adds quality control, consolidation of small orders and problem solving capacity. The problem is not the middleman but being told they are a factory when they are not.
- How do I check the factory is in the same group? Ask for the Chinese legal name and USCC of the factory, not just the trader's, and verify both entities separately. Corporate links are searchable.
- Does an ISO certificate prove it? Not on its own. Confirm holder, scope and validity. A forwarded PDF establishes none of that.
- Can I look it up myself? Yes, it is on the licence and on GSXT. See https://confirmsupplier.com/en/resources/how-to-verify-a-chinese-company/

Related guides: What is the USCC (https://confirmsupplier.com/en/resources/what-is-the-uscc/) · Does a Chinese company have a VAT number or tax ID (https://confirmsupplier.com/en/resources/chinese-company-tax-id/)

A €500,000 order. A €250 report. China Simple Confirmation Report: €250 + VAT. China Due Diligence Report: €900 + VAT.

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