Factory or Trading Company? How to Verify a Chinese Auto Parts Supplier

Almost every Chinese supplier says it is a factory. Some are, many are not, and a few are neither. This guide shows how to find out who you are really dealing with - and when a trading company is actually the better choice.

The question matters because it changes everything downstream: the price you should expect, the minimum order, who controls quality, who answers when something goes wrong. A buyer who believes he is negotiating with a manufacturer, and is in fact talking to an agent three steps removed from production, will misjudge all of those.

The good news is that verification in China is easier than most importers think. Company registration data is public, the industry is geographically clustered, and a phone with a camera can replace half a factory visit. The checks below take an hour or two, and they should be done before the first payment - not after the first problem.

In This Guide

The Four Types of Supplier
Factory or Trader: Which Do You Actually Need?
The Documents That Tell the Truth
Ten Practical Checks
Red Flags That Mean Stop
Payment Terms That Protect You
How ok.parts Reduces the Risk
Frequently Asked Questions

4Supplier Types You Will Meet

18Characters in a Company's Credit Code

10Verification Steps

1Rule: Verify Before You Pay

1. The Four Types of Supplier

Type	What they do	Strengths	Limits
Manufacturer	Produces the parts in its own plant.	Lowest price at volume, technical control, custom specifications, private label.	High minimum order per part number, narrow range, often limited export experience.
Trading company	Buys from several factories and sells under one contract.	Wide range, low and flexible MOQ, one shipment and one set of documents, good communication.	A margin on top of factory price; quality depends on the factories it chooses.
Stockholding wholesaler	Holds inventory and sells from the shelf.	Immediate availability, small quantities, genuine and branded parts.	Higher unit price; range limited to what is in stock.
Sourcing agent	Finds suppliers, inspects and consolidates for a fee or commission.	Works for the buyer; transparent pricing if the model is honest.	Quality of service varies widely; some are traders in disguise.

None of these is "bad". The problem is only misrepresentation - a trader who claims to be a factory, or an agent who hides a margin - because it leads you to the wrong expectations.

On ok.parts every offer states the supplier's type next to its rank and location, so the question is answered before you make contact.

2. Factory or Trader: Which Do You Actually Need?

Real purchase data helps here. In our analysis of 6,032 purchase requests, the median order was 30 pieces of one part number, and half of all requests were for between 15 and 50 pieces. Most factories will not open a production run for that.

Your order looks like	Better fit	Why
Many part numbers, a few dozen pieces of each	Trading company or wholesaler	They absorb the factory MOQ across many customers.
A few part numbers, hundreds or thousands of each	Manufacturer	Volume justifies direct pricing and attention.
Your own brand and packaging	Manufacturer, or a trader with a proven private label record	You need control over specification and consistency. See our private label guide.
Genuine parts for a specific vehicle brand	Stockholding wholesaler	Factories for aftermarket parts do not sell genuine parts.
Parts from several product families in one container	Trading company or consolidation service	No single factory makes sensors, brake discs and headlamps.

A common and sensible pattern is to start with a trading company to test the market, then go direct to the factory for the handful of part numbers that prove to be volume sellers.

3. The Documents That Tell the Truth

The business license. Every company in mainland China has one. Ask for a clear copy. It shows the registered company name, the 18-character Unified Social Credit Code, the legal representative, the registered capital, the date of establishment, the registered address and the business scope.

The business scope is the key line. It lists what the company is legally permitted to do. A manufacturer's scope includes words for production or manufacturing of auto parts. A trading company's scope speaks of sales, wholesale, import and export. If the license is only in Chinese, any translation tool will show the difference. A company whose scope contains no manufacturing activity is not a factory, whatever its website says.

Check it against the public register. China's National Enterprise Credit Information Publicity System is a free government database. Enter the credit code or the Chinese company name and you can confirm that the company exists, is in normal operating status, and has the address, capital and scope shown on the copy you received. The site is in Chinese; a browser translator is enough.

Quality certificates. An IATF 16949 or ISO 9001 certificate names the certified company and the address of the certified site. Confirm that both match the business license, and check the certificate number with the certification body that issued it. A certificate that belongs to a different company is one of the most common misrepresentations.

Product approvals. Where a product needs an approval - ECE R90 for brake pads, for example - the approval is issued to a specific manufacturer for a specific reference. The name on it tells you who really makes the part.

4. Ten Practical Checks

1. Compare the address with the product. Chinese parts manufacturing is clustered by product: sensors in Ruian, chassis parts in Yuhuan, lamps in Danyang, brake discs in Shandong. A "factory" for a product located far from its cluster deserves a second look. The map is in Where Auto Parts Are Made in China. An address in an office tower in a city center is an office, not a plant.

2. Look at the range. A real factory makes one family of products. A supplier offering brake pads, alternators, bumpers and wiper blades is consolidating.

3. Ask for a live video walk-through. Not a recorded film - a video call in which someone walks from the gate, through the workshop, to the warehouse, and shows a product with your name written on a piece of paper next to it. A manufacturer can arrange this in a day. A trader will find reasons to delay.

4. Ask who owns the tooling. Factories own their molds, dies and fixtures, and can tell you how many they have and what a new one costs. Traders cannot.

5. Watch how MOQ is quoted. A factory has a real minimum per part number, driven by production batches. A supplier who accepts any quantity of anything is selling from someone else's stock.

6. Ask technical questions. Material grade, hardness, test equipment, daily output, reject rate. Production people answer quickly and precisely. Sales intermediaries answer later, or vaguely.

7. Check the bank account name. The beneficiary of your payment must be the company named on the business license. A personal account, a company with a different name, or an account in another country without a clear explanation is the single most important warning sign in this list.

8. Look at the samples and their packaging. Factory samples often arrive with the factory's own labels or production tags. Samples that arrive repackaged, or from a different city than the supplier's address, were bought in.

9. Check company age and history. The public register shows the date of establishment and any changes. A company registered two months ago with minimal capital is not a 20-year-old manufacturer.

10. Use a third-party audit for serious orders. An inspection company will visit the address, verify the license, photograph the production lines and report within a few days. The cost - typically a few hundred dollars - is small against the value of a container.

5. Red Flags That Mean Stop

The bank account is not in the company's name.
You receive an email saying the bank details have changed. Confirm by phone, using a number you already had, before paying anything - this is a classic fraud.
The supplier refuses a video call, a factory visit or a third-party inspection.
The price is far below every other quotation for the same specification.
There is pressure to pay the full amount in advance, or to pay today.
The company name on the invoice, the contract and the business license do not match exactly.
The supplier offers premium-brand parts at a fraction of the normal price. See Counterfeit Auto Parts: How to Spot Fakes Before You Pay.

One red flag is a question to ask. Two or more are a reason to walk away. There are thousands of legitimate suppliers; you do not need this one.

6. Payment Terms That Protect You

Never pay 100% in advance to a supplier you have not bought from before. The standard structure for a first order is a deposit of around 30% to start production and the balance before shipment, after you have seen inspection results.

Tie the balance to inspection. Write into the order that the balance is due after a pre-shipment inspection has passed. This single clause prevents most quality disputes, because the supplier knows the goods will be checked. The inspection process is described in our quality control guide.

Use a written contract with the full registered company name, stamped with the company's official seal. In China the seal carries legal weight that a signature alone does not.

Agree the delivery term precisely. State the Incoterm, the named place and the edition. See Incoterms for Auto Parts Importers.

For large orders, consider a letter of credit. It costs more and takes more paperwork, but the bank pays only against documents that match the contract.

7. How ok.parts Reduces the Risk

The verification steps above are the reason ok.parts ranks suppliers the way it does. Every offer on the platform shows three things before you spend anything:

The supplier type - factory, trading company, retail store or private seller - so you know what kind of counterparty it is.

The location, shown on the supplier map, so you can compare it with the cluster for that product.

The trust rank, from E to A. A new, unverified offer starts at E. A supplier we have actually bought from through our sourcing operation moves to D, and climbs to C, B and A only with accumulated purchase volume. Buyer reviews can raise a rank as far as C, but no further. The top ranks cannot be claimed or bought; they have to be earned through real orders.

Searching and comparing is free. Revealing a supplier's contacts costs from $5 to $25 depending on rank, and a new account includes a $20 welcome credit. If you would rather not deal with suppliers directly, send your list to b2b@ok.parts and our team in Yiwu will source, inspect and ship it.

Compare Ranked Suppliers

8. Frequently Asked Questions

How can I tell if a Chinese supplier is a factory or a trading company?

Check the business scope on its business license: a factory's scope includes manufacturing or production, a trader's lists sales and import-export. Then compare the registered address with the manufacturing cluster for the product, look at the breadth of the range, and ask for a live video walk-through of the workshop.

Is it always better to buy directly from the factory?

No. Factories suit large quantities of a few part numbers. For mixed orders of many part numbers in small quantities - which is what most importers buy - a trading company or wholesaler is often cheaper overall, because it absorbs the factory minimums and consolidates the shipment.

How do I check a Chinese company's business license?

Ask for a copy, then look up the 18-character Unified Social Credit Code or the Chinese company name in the National Enterprise Credit Information Publicity System, the free government register. It confirms the company's status, address, capital, establishment date and business scope.

What is the biggest warning sign when paying a Chinese supplier?

A bank account that is not in the name of the company on the business license - a personal account, a different company or an unexplained account abroad. A sudden email announcing changed bank details is the second; always confirm by phone.

What payment terms are normal for a first order?

A deposit of about 30% to start production and the balance before shipment, after a passed inspection. Paying 100% in advance to an unknown supplier is not recommended.

How much does a factory audit in China cost?

A basic third-party audit or inspection visit typically costs a few hundred US dollars per man-day. For a container-sized order it is a small fraction of the value at risk.