Five verification levels that separate real factories from trading companies and scams — with specific checks you can do before spending a dollar.
Most buyers who lose money to Chinese suppliers don't lose it to outright fraud. They lose it to factories that look legitimate, communicate well, and simply cannot deliver what they promised. The problem isn't detecting scams — it's detecting mismatches between what a factory claims and what they actually do.
Factory verification has five levels. Most buyers stop at level one. This guide walks through all five, with specific checks you can run from your desk before wiring any money.
The five levels of factory verification
Level 1 — Document verification (30 minutes, free)
Level 2 — Cross-reference verification (2 hours, free)
Level 3 — Technical capability check (1–2 hours, free)
Level 4 — Sample validation ($200–$2,000 depending on product)
Level 5 — On-site audit ($300–$800)
Levels 1 through 3 catch the majority of problems. They're also free and fast. Do not skip them because you're in a hurry.
Level 1: Document verification
Request three documents before any serious conversation:
Business license (营业执照) — Check that the registration type includes manufacturing (制造业 or 生产). If the scope is trading (贸易) or technology (科技) without manufacturing, you're talking to a trading company. This isn't always bad, but it changes the negotiation dynamic and pricing structure.
Export license or foreign trade registration — A factory that has never exported may not understand FCC, CE, or RoHS requirements. Ask for their customs registration code and verify it against China's customs database. A factory that exports regularly will have this ready.
ISO 9001 certificate (if they claim to have one) — Note the certificate number and the issuing body. Search the certificate number on the issuing body's website. Fake ISO certificates are common; real ones take 30 seconds to verify. If the certificate doesn't check out, that's not a minor issue — it's a factory that falsified credentials.
Level 2: Cross-reference verification
This is where most buyers stop doing homework. Don't.
Alibaba vs. 1688 cross-check — Search the factory's company name on 1688.com, China's domestic wholesale platform. If the same company sells the same products at 20–40% lower prices on 1688, you've learned two things: they're a real factory (traders don't list on 1688), and the Alibaba price includes a "foreign buyer premium." Use the 1688 price as your negotiation baseline.
If you can't find the company on 1688 at all, two possibilities exist: they're exclusively export-focused (uncommon for mid-size factories), or they're a trading company using a different registered name.
Customs data search — Services like Panjiva, ImportGenius, or Jungle Scout's supplier database show export records. Look for the factory's name in shipment records. A factory that claims to export $5M annually but has no customs record in the past two years is inflating their experience. This check costs $50–$100 through most data providers and is worth it for any order over $10,000.
Website and social media audit — Real factories in China increasingly have WeChat public accounts, Douyin (TikTok) factory tour videos, or at minimum a Chinese-language website. A factory with only an Alibaba page and no other web presence is not necessarily fake, but it's a weak signal. Look for video content showing actual production floors, not just product renders.
Level 3: Technical capability check
For electronics buyers, this is the most important level and the one general sourcing guides skip entirely.
Product scope alignment — Ask the factory to describe the last three products they manufactured that are similar to yours. Ask for the BOM (Bill of Materials) of one previous product at a component level. A factory that can't produce a detailed BOM doesn't engineer products — they assemble them from modules they buy elsewhere. This distinction matters enormously for quality and customization.
Engineering conversation test — Send a technical question that requires engineering knowledge. For a Bluetooth speaker factory: "What's your approach to enclosure resonance dampening below 200Hz?" For an IoT device factory: "How do you handle antenna de-tuning when the housing material changes from ABS to PC+ABS?"
A real factory's engineering contact will answer in specific terms. A trading company will either ignore the question, forward it slowly, or give a generic response about "high quality materials." This test filters out traders with 90% accuracy.
Equipment and line verification — Ask for photos of their SMT line, reflow oven, and testing jigs. Then ask follow-up questions: "What model reflow oven do you use?" "How many zones?" "What's the oldest active SMT line in your facility?" Fake answers are easy to spot if you know the equipment. A real factory will know their line configuration without checking.
Level 4: Sample validation
A sample that works is not enough. A sample that matches your specification is what matters.
Functional test — Confirm the sample does what you need. This is the easy part.
BOM verification — Open the sample and identify the key components. For electronics, this means checking IC markings against your approved BOM. A factory that substituted a cheaper Bluetooth module without telling you has demonstrated they'll do it in production too. Catch this now.
Build quality inspection — Check solder joint quality under a microscope, housing tolerances with calipers, and cable strain relief. The sample represents the factory's best effort. If the sample has cold solder joints or 0.3mm housing gaps, production will be worse.
Certification check — If the factory claims FCC or CE certification for a similar product, ask for the test report and cross-reference the accreditation number with the lab that issued it. A $50,000 production run based on a fake certificate is a common and expensive mistake.
Level 5: On-site audit
If your first order exceeds $20,000 or you're entering a long-term relationship, visit the factory or send someone who knows what to look for. An on-site audit covers everything above plus direct observation of production discipline, ESD compliance, incoming QC processes, and worker training levels.
For a complete breakdown of what to check on-site, see our factory audit checklist.
Five red flags that should disqualify a factory immediately
- Refuses to share their business license — No exceptions. Any legitimate factory has this.
- Wants payment to a personal account or different company name — Wire fraud is real. Payment details must match the business license exactly.
- No engineering contact available — If all communication goes through a sales agent with no technical escalation path, you're working with a trader.
- Certification documents that don't check out — One fake certificate means they'll fake others.
- Price is 30%+ below every other quote — This isn't negotiation skill. It means they're planning to substitute components, skip testing, or disappear after the deposit.
When you're ready to pay
Complete levels 1–3 before sending a sample payment. Complete level 4 before placing a production order. Complete level 5 before any order over $20,000 or any exclusive supplier relationship.
The verification process takes 2–3 days of focused work and costs nothing for the remote stages. The alternative is discovering problems after you've wired 30% deposit and spent six weeks waiting for production that doesn't meet spec.
If you're at the verification stage and need an engineering-led review of your supplier shortlist, our sourcing service includes full factory verification as the first step — before any money changes hands.
