I'm from China, working and living in Shenzhen. Here are my advice,
1. Ask people who is dealing with you to email you their business registration certificate, or tax certificate. Any company who is legally registered in China must have these certificates, which are usually issued by the local government. Of course there certificates are in Chinese, if you don't understand Chinese, tell your supplier you have Chinese staff (or friend) who will verify according to these documents, then nobody dare to cheat you any more, I think.
If people can't provide these documents, they're either crooks or SOHO people. SOHO (small office home office) usually work at home, they have very few employee or just 1 person. Not all SOHO are unreliable, however, you take bigger risk of dealing with them than legally regsitered company;
2. Make a friend with Chinese people, who can give a hand when needed. Here is an international business forum in China, fobshanghai.com. In this forum you may find some friends who are in the international trade business field;
3. Use your common sense to judge. When you contact your Chinese supplier, firstly you can visit their company web to know more about them, most of time what you know from the company web is better than what they actually are. Reading their email to you, is the spelling correct? is the article / email signature at official format? Always remember, better company has better-educated staff;
4. Internet is widely used and greatly helps people in different countries doing business with each other. Everybody knows China offer low price. My opinion is, when you find the source in China, you've already got very low price comparing to buy from else where, in this term, select a partner who is reliable is more important than who offer lowest. Do NOT buy from the one with lowest price, but people who offer reasonable price and provide better service.
5. To a certain extent, I think Alibaba.com is a reliable source. Sellers there need to pay $10k or above for registration, and are requested to submit business registration certificate when applying for registration. In case you enounter fraud there, you can also complain with ALIBABA and ask for their help, they're not officials but they may have some good suggestion for you to deal with the fraud case.
If these advice are helpful for you to do business with China, I will feel very happy. Good luck, guys !
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