The Pricing War has spread throughout the globe and doing business in china is not uncommon in the contemporary market place. Many foreigners are either afraid, or do not understand how to deal with the Chinese companies, due to lack of understanding of the local culture or due to inability to communicate because of the language barrier.

Most of the Chinese businessmen are good and trustworthy. (of course, some frauds do exist.) Foreign businessmen are always confused by the business registration and credit status of Chinese Companies. The following are some tips that help foreigners to understand what to take note when dealing with Chinese companies.

1. Mode of contact
To avoid being traced by law enforcement authorities, most scammers will provide a false company address, telephone number and fax number or persuade buyers to contact them by mobile phone only.

You should only work with companies that provide phone line contact instead of just one mobile number.

2. Business license and credit status
Legal companies in China have to register with the Chinese government authorities to obtain a unique company registration number. If your business partner cannot provide you with a unique company registration number, never deal with them.

To check the company registration number, you can ask any of your friend to check for you in China bureau of industries, if you have problem in communicating in mandarin. You can always contact their local Bureau of Industry & Commerce, which is the only government organization responsible for the registration of legitimate companies or enterprises in China.

You may only like to work with businessmen in China who have the legal business registration in their government authorities.

3. Incredibly low prices
If the prices they offer are too good to be true, you should be more careful. Most scammers make profit by selling replicas or fakes goods to overseas consumers.

Please note that, the local government will confiscate all fakes goods if they found any. If your company found to be involved in any of this activities, you may runs in big trouble.

4. Payment and shipment terms
The small companies will never accept L/C as a term of payment. They usually prefer Western Union, and T/T etc. They also never deliver goods through formal channels; preferring instead to deliver samples Express by Fedex, TNT, EMS to avoid examinations from Chinese customs.

5. Visit their company or factory in person
The best way to assess the business is to visit these companies. You will never know the capability of the company unless you visit it.

Always acquire the credit information of them at the initial stage, and then you can have a better judgment on whether you should resume the negotiation or not.

6. Reference books
Read books to learn more on how to deal with Chinese businessmen and what to look for. This reference book I found in Amazon has some useful tips and advise for businessmen or people who planing to work in China.